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Share Dealing - UK - October 2011

“Some of the most successful investors in recent years have been women yet in the UK sharedealing account ownership among women is significantly behind that of men. Providers have an opportunity to narrow this gap by giving women investors a higher profile in promotional campaigns and also placing more emphasis on product features that would appeal to women investors.”

– George Zaborowski, Senior Financial Services Analyst

Some questions answered in the report include:

  • How can share-dealing services be made more appealing to women?
  • What do experienced investors most want from a sharedealing service?
  • How can providers make trading in volatile markets less intimidating?
  • How can providers better support customers in times of distress?

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • Figure 1: Total revenues by stockbroking firms, 2006-16
          • Execution-only account growth continues but many accounts inactive in 2010
            • Figure 2: Number of accounts/portfolios held with execution-only and full-service stockbrokers, 2006-10
          • Portfolio segmentation
            • Figure 3: Number of execution-only accounts/portfolios, by type, 2010
          • Trading activity
            • Market factors
              • Economic uncertainty persists
                • Markets expected to remain highly volatile
                  • Weaker retail trading expected
                    • Demand for DMA expected to be limited
                      • Key regulatory developments
                        • Companies, brands and innovation
                          • Market share dominated by a few
                            • Figure 4: Share of total revenues by the five largest firms in each sector, 2006-10
                          • Adspend on online sharedealing doubles
                            • Market innovations
                              • The consumer
                                • Investment holdings
                                  • Figure 5: Financial product holdings, July 2011
                                • Planned investment activity
                                  • Preferred investment channels
                                    • What investors look for in a share-dealing service
                                      • Investor sentiment
                                        • Interest in self-directed investing
                                          • What we think
                                          • Issues in the Market

                                              • How can share-dealing services be made more appealing to women?
                                                • What do experienced investors most want from a sharedealing service?
                                                  • How can providers make trading in volatile markets less intimidating?
                                                    • How can providers better support customers in times of distress?
                                                    • Future Opportunities

                                                      • It’s cool to invest like a girl
                                                        • Differentiating from the competition in real-time
                                                        • Internal Market Environment

                                                          • Key points
                                                            • Weak outlook for retail investor activity
                                                              • Figure 6: Intended purchases of shares and equity-based unit trusts, government and corporate bonds and bond-based unit trusts*, sales of equities and unit trusts and FTSE 100**, Q3/Q4 2002-Q2/Q3 2011
                                                            • Interest in DMA access expected to be limited among retail investors
                                                              • Key regulatory developments
                                                                • RDR could push more into self-directed investing
                                                                  • EU’s MiFID review could supersede some aspects of RDR
                                                                    • FSA still considering a ban on platform rebates
                                                                      • Government launches review of UK equity markets
                                                                        • Taxing the rich
                                                                          • Summary of tax changes
                                                                          • Broader Market Environment

                                                                            • Key points
                                                                              • Slow economic growth ahead
                                                                                • Unstable stockmarket performance testing investor fortitude
                                                                                  • Figure 7: FTSE 100 and FTSE All Share – daily index movements, August 2006-August 2011
                                                                                • Consumer confidence remains suppressed
                                                                                  • Figure 8: GfK NOP Consumer Confidence Index, July 2005-July 2011
                                                                                • Opportunities to strengthen customer relationships
                                                                                  • Inflationary pressures expected to let up in 2012
                                                                                    • Figure 9: Monthly change in RPI and average weekly earnings, 2005-August 2011
                                                                                  • Low interest rates will continue to make shares attractive
                                                                                  • Competitive Context

                                                                                    • Key points
                                                                                      • Cash is king
                                                                                        • Figure 10: Ownership of savings and investments, July 2011
                                                                                      • Majority of new ISA funds go into the cash component
                                                                                        • Figure 11: Number of ISAs and amounts subscribed, segmented by type, 1999/2000-2010/11
                                                                                      • 15% of funds held in stocks and shares ISAs are invested in shares
                                                                                        • Figure 12: Market value of funds held in stocks and shares ISAs, 2010 (provisional)
                                                                                      • Collective investments the key competitor for retail investor funds
                                                                                        • Figure 13: Volume of regulated retail sales of investment trusts and unit trust/OEICs, 2006-10
                                                                                      • ETFs traded like shares
                                                                                        • New BTL loans increase by 10% in 2010
                                                                                          • Figure 14: New buy-to-let mortgage business, 2001-10
                                                                                      • Swot

                                                                                          • Figure 15: UK sharedealing market – SWOT analysis, 2011
                                                                                      • Who’s Innovating?

                                                                                        • Key points
                                                                                          • The rise of mobile share-dealing trading services
                                                                                            • Barclays
                                                                                              • Halifax Share Dealing
                                                                                                • TD Waterhouse
                                                                                                  • Hargreaves Lansdown
                                                                                                    • Traders’ club from CMC Markets
                                                                                                      • The Barclays SmartWoman initiative
                                                                                                        • International Trader from Barclays Stockbrokers
                                                                                                          • Shareprice.co.uk offers free real-time share prices to iPad traders
                                                                                                            • Selftrade offers free data package for frequent traders
                                                                                                            • Market Size and Forecast

                                                                                                              • Key points
                                                                                                                • Overall revenue at stockbroking firms rises by 10% in 2010
                                                                                                                  • Figure 16: Total revenues by stockbroking firms, 2006-10
                                                                                                                • Commissions play a less important role in 2010…
                                                                                                                  • Figure 17: Stockbroking revenue streams, by firm type, 2009 and 2010
                                                                                                                • …but should regain relevance in 2011’s highly volatile market
                                                                                                                  • There are now over 4.5 million execution-only accounts in the UK
                                                                                                                    • Figure 18: Number of accounts/portfolios held with execution-only and full-service stockbrokers, 2006-10
                                                                                                                  • Majority of execution-only accounts were inactive in 2010
                                                                                                                    • Assets held with execution-only firms rose by more than a third in 2010
                                                                                                                      • Figure 19: Number of accounts and the value of assets managed, by execution-only and full-service stockbrokers, 2006-10
                                                                                                                    • Pre-tax profit margins remain healthy
                                                                                                                      • Figure 20: Total costs as a proportion of total revenues, 2006-10
                                                                                                                    • Five-year forecast
                                                                                                                      • Figure 21: Total revenues by stockbroking firms, 2006-16
                                                                                                                    • Continued revenue growth expected
                                                                                                                      • Figure 22: Total revenues by stockbroking firms, 2006-16
                                                                                                                    • Although only representing a very Forecast methodology
                                                                                                                      • Fan chart explanation
                                                                                                                      • Portfolio Segmentation

                                                                                                                        • Key points
                                                                                                                          • Strong growth in execution-only accounts worth between £50,000 and £1 million
                                                                                                                            • Figure 23: Number of accounts/portfolios, by value band – nominee accounts only, 2010
                                                                                                                          • Number of execution-only SIPP accounts up by nearly a fifth
                                                                                                                            • Figure 24: Number of execution-only accounts/portfolios, by type, 2010
                                                                                                                          • Continued growth in derivative accounts expected
                                                                                                                            • Figure 25: Number of active spread bet and CFD accounts held by execution-only stockbrokers, Q1 2006-Q4 2010
                                                                                                                        • Trading Activity

                                                                                                                          • Key points
                                                                                                                            • Trade volumes fall back from their 2009 highs
                                                                                                                              • Figure 26: Number of stockbroker trades, by investment type, 2006-10
                                                                                                                            • Private client bargains decline by 4.6% in 2010
                                                                                                                              • Figure 27: Historical bargain volumes* (shown on a quarterly basis), Q1 1998-Q3 2010
                                                                                                                            • Purchases exceeded sales in 2010
                                                                                                                              • Figure 28: Bargain volumes*, by asset class, 2010
                                                                                                                          • Market Share

                                                                                                                            • Key points
                                                                                                                              • Market share increasingly top heavy
                                                                                                                                • Figure 29: Share of total revenues, by the five largest firms in each sector, 2006-10
                                                                                                                              • Revenue growth continues for most top brokerages
                                                                                                                                • Figure 30: Total revenues for selected stockbrokers, 2009 and 2010
                                                                                                                            • Companies and Products

                                                                                                                              • Key execution-only brokers
                                                                                                                                • Barclays Stockbrokers
                                                                                                                                    • Figure 31: Key financial data for Barclays Stockbrokers Ltd, 2009 and 2010
                                                                                                                                  • Halifax Share Dealing
                                                                                                                                      • Figure 32: Key financial data for Halifax Share Dealing Ltd, 2009 and 2010
                                                                                                                                    • Hargreaves Lansdown
                                                                                                                                        • Figure 33: Key financial data for Hargreaves Lansdown plc Group, 2010 and 2011
                                                                                                                                      • Selftrade
                                                                                                                                        • The Share Centre
                                                                                                                                            • Figure 34: Key financial data for The Share Centre Ltd, 2009 and 2010
                                                                                                                                          • TD Waterhouse
                                                                                                                                              • Figure 35: Key financial data for TD Waterhouse Investor Services (Europe) Ltd, 2009 and 2010
                                                                                                                                            • Key spread-betting firms
                                                                                                                                              • Capital Spreads
                                                                                                                                                  • Figure 36: Key financial data for London Capital Group Holdings plc, 2009 and 2010
                                                                                                                                                • City Index
                                                                                                                                                    • Figure 37: Key financial data for City Index Ltd, 2009 and 2010
                                                                                                                                                  • CMC Markets
                                                                                                                                                      • Figure 38: Key financial data for CMC Markets plc, 2010 and 2011
                                                                                                                                                    • IG Index
                                                                                                                                                        • Figure 39: Key financial data for IG Index Ltd, 2009 and 2010
                                                                                                                                                    • Brand Communication and Promotion

                                                                                                                                                      • Key points
                                                                                                                                                        • Online sharedealing adspend doubles in the past year
                                                                                                                                                          • Figure 40: Total advertising expenditure on investment products and services, by product category, 2007-11
                                                                                                                                                        • IG Markets, Selftrade and CMC Markets account for two fifths of adspend
                                                                                                                                                          • Figure 41: Top ten advertisers – stockbrokers and sharedealers only, 2009-11
                                                                                                                                                        • Internet-based advertising accounts for more than half of all adspend
                                                                                                                                                          • Figure 42: Total advertising by stockbrokers and sharedealers only, by media type, 2009-11
                                                                                                                                                        • Note about NMR data
                                                                                                                                                        • Channels to Market

                                                                                                                                                          • Key points
                                                                                                                                                            • Buying and selling shares
                                                                                                                                                              • Other ways shares can be acquired
                                                                                                                                                                • Most full-service broker client funds under discretionary management
                                                                                                                                                                  • Figure 43: Full-service stockbroker assets, by management channel, 2007-10
                                                                                                                                                                • 80% of execution-only trades now conducted online
                                                                                                                                                                  • Figure 44: Online trades as a percentage of execution-only trades, 2007-10
                                                                                                                                                              • Investment Holdings

                                                                                                                                                                • Key points
                                                                                                                                                                  • Most people still steer clear of equity-based investments...
                                                                                                                                                                    • Figure 45: Financial product holdings, July 2011
                                                                                                                                                                  • ...while less than one in ten have a sharedealing account
                                                                                                                                                                    • Figure 46: Financial product ownership, July 2011
                                                                                                                                                                  • Some interest in more exotic trading instruments
                                                                                                                                                                    • Equity-based investments yet to break out of their traditional market
                                                                                                                                                                      • Building a female-friendly account
                                                                                                                                                                      • Planned Investment Activity

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Three in ten expect to increase their equity holdings
                                                                                                                                                                            • Figure 47: Savings and investment plans, by product, July 2011
                                                                                                                                                                          • Still scope to grow revenues for share-dealing services
                                                                                                                                                                            • A grown-up portfolio, and a chance to play at being a day trader
                                                                                                                                                                              • Planned activity highest among the young
                                                                                                                                                                              • Preferred Investment Channels

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • The high street still dominates
                                                                                                                                                                                    • Figure 48: Channels used to buy shares and other types of investments, July 2011
                                                                                                                                                                                  • IFAs are failing to turn transactions into relationships
                                                                                                                                                                                    • Broker clients make up in quality what they lack in quantity
                                                                                                                                                                                      • Figure 49: Holdings of equity-based investments, by channels used to buy investments, July 2011
                                                                                                                                                                                    • A contrast between young and old
                                                                                                                                                                                      • Figure 50: Use of key channels to buy shares and other types of investments, by gender, age and household income, July 2011
                                                                                                                                                                                  • What Investors Look For in a Share-dealing Service

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • No frills – just low charges
                                                                                                                                                                                        • Figure 51: Features that investors look for in a share-dealing service, July 2011
                                                                                                                                                                                      • Price becomes even more important to key target groups
                                                                                                                                                                                        • Figure 52: Features that investors look for in a share-dealing service, by equity ownership, July 2011
                                                                                                                                                                                      • Making it easy for people to shift their investments online
                                                                                                                                                                                        • Figure 53: Features that investors look for in a share-dealing service, by channels used to purchase investments, July 2011
                                                                                                                                                                                    • Investor Sentiment

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Low interest rates can’t overcome a lack of spare cash
                                                                                                                                                                                          • Figure 54: Investor sentiment, July 2011
                                                                                                                                                                                        • Higher earners looking to maximise their savings income
                                                                                                                                                                                          • Figure 55: Agreement with the statements on savings and investment sentiment, by gender, age, socio-economic group and household income, July 2011
                                                                                                                                                                                        • Huge scope to capitalise on low interest rates
                                                                                                                                                                                          • Figure 56: Financial product ownership, by agreement with savings and investment sentiment, July 2011
                                                                                                                                                                                      • Interest in Self-Directed Investing

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Time and complexity mitigate against stock picking
                                                                                                                                                                                            • Figure 57: Approach towards self-directed investment, July 2011
                                                                                                                                                                                          • Older people more prepared to deal with investment complications
                                                                                                                                                                                            • Figure 58: Agreement with statements on savings and investment sentiment, by gender, age, socio-economic group and household income, July 2011
                                                                                                                                                                                          • Further potential to expand the market
                                                                                                                                                                                            • Figure 59: Financial product ownership, by approach towards self-directed investment, July 2011
                                                                                                                                                                                        • Investor Segmentation

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • A split between traders and builders
                                                                                                                                                                                              • Figure 60: Key trading segments, July 2011
                                                                                                                                                                                            • Do investors want a helping hand?
                                                                                                                                                                                              • Or do they just want to be left to get on with it?
                                                                                                                                                                                                • Figure 61: Key features in an online share-dealing service, by trading segments, July 2011
                                                                                                                                                                                              • Not all investors are equal
                                                                                                                                                                                                • Figure 62: Investment ownership, by trading segments, July 2011
                                                                                                                                                                                              • Signs that Builders and Traders are ready to dip their toes in the market
                                                                                                                                                                                                • Figure 63: Investment intentions among non-product holders, by trading segments, July 2011
                                                                                                                                                                                              • Where do the Builders buy their shares?
                                                                                                                                                                                                • Figure 64: Channels used to buy investments, by trading segments, July 2011
                                                                                                                                                                                              • And to whom will the Traders turn in the future?
                                                                                                                                                                                                • Figure 65: Channels that non-users would consider for future investment purchases, by trading segments, July 2011
                                                                                                                                                                                              • Traders confirm their interest in self-directed investment
                                                                                                                                                                                                • Figure 66: Savings and investment sentiment, by target groups, July 2011
                                                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                                                • Figure 67: Total revenues by stockbroking firms, 2009-16
                                                                                                                                                                                            • Appendix – Investment Holdings

                                                                                                                                                                                                • Figure 68: Financial product ownership, July 2011
                                                                                                                                                                                                • Figure 69: Most commonly-held savings and investment products, by demographics, July 2011
                                                                                                                                                                                                • Figure 70: Next commonly-held savings and investment products, by demographics, July 2011
                                                                                                                                                                                                • Figure 71: Other commonly-held savings and investment products, by demographics, July 2011
                                                                                                                                                                                                • Figure 72: Least commonly-held savings and investment products, by demographics, July 2011
                                                                                                                                                                                                • Figure 73: Most popular products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
                                                                                                                                                                                                • Figure 74: Next products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
                                                                                                                                                                                                • Figure 75: Other products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
                                                                                                                                                                                                • Figure 76: Least popular products that respondents don’t currently own but are considering arranging over the course of the next year, by demographics, July 2011
                                                                                                                                                                                            • Appendix – Planned Investment Activity

                                                                                                                                                                                                • Figure 77: Savings and investment plans, by product, July 2011
                                                                                                                                                                                                • Figure 78: Equity-based plans, by demographics, July 2011
                                                                                                                                                                                                • Figure 79: Stocks and shares ISA, by demographics, July 2011
                                                                                                                                                                                                • Figure 80: Individual company shares, by demographics, July 2011
                                                                                                                                                                                            • Appendix – Preferred Investment Channels

                                                                                                                                                                                                • Figure 81: Channels used to buy shares and other types of investments, July 2011
                                                                                                                                                                                                • Figure 82: Most popular regular, occasional and one-time users of channels to buy shares and other types of investments, by demographics, July 2011
                                                                                                                                                                                                • Figure 83: Next most popular regular, occasional and one-time users of channels to buy shares and other types of investments, by demographics, July 2011
                                                                                                                                                                                                • Figure 84: Financial product ownership, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
                                                                                                                                                                                                • Figure 85: Financial product ownership, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
                                                                                                                                                                                                • Figure 86: Financial product ownership, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
                                                                                                                                                                                                • Figure 87: Financial product ownership, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments, July 2011
                                                                                                                                                                                            • Appendix – What Investors Look For In A Share-dealing Service

                                                                                                                                                                                                • Figure 88: Desired share dealing features, July 2011
                                                                                                                                                                                                • Figure 89: Most popular desired sharedealing features, by demographics, July 2011
                                                                                                                                                                                                • Figure 90: Next most popular desired sharedealing features, by demographics, July 2011
                                                                                                                                                                                                • Figure 91: Other desired sharedealing features, by demographics, July 2011
                                                                                                                                                                                                • Figure 92: Desired share dealing features, by most popular current financial product ownership, July 2011
                                                                                                                                                                                                • Figure 93: Desired share dealing features, by next most popular current financial product ownership, July 2011
                                                                                                                                                                                                • Figure 94: Desired share dealing features, by other current financial product ownership, July 2011
                                                                                                                                                                                                • Figure 95: Desired share dealing features, by least popular current financial product ownership, July 2011
                                                                                                                                                                                                • Figure 96: Desired share dealing features, by most popular channels used by regular, occasional or one-time users to buy shares and other types of investments
                                                                                                                                                                                                • Figure 97: Desired share dealing features, by next most popular channels used by regular, occasional or one-time users to buy shares and other types of investments
                                                                                                                                                                                            • Appendix – Investor Sentiment and Interest in Self-Directed Investing

                                                                                                                                                                                                • Figure 98: Savings and investment sentiment, July 2011
                                                                                                                                                                                                • Figure 99: Agreement with the statements on savings and investment sentiment, by demographics, July 2011
                                                                                                                                                                                                • Figure 100: Disagreement with the statements on savings and investment sentiment, by demographics, July 2011
                                                                                                                                                                                                • Figure 101: Financial product ownership, by agreement with savings and investment sentiment, July 2011
                                                                                                                                                                                                • Figure 102: Financial product ownership, by disagreement with savings and investment sentiment, July 2011
                                                                                                                                                                                                • Figure 103: Financial product ownership, by agreement with savings and investment sentiment, July 2011
                                                                                                                                                                                                • Figure 104: Financial product ownership, by disagreement with savings and investment sentiment, July 2011
                                                                                                                                                                                            • Appendix – Investor Segmentation

                                                                                                                                                                                                • Figure 105: Target groups, by demographics, July 2011

                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                            • Barclays Bank plc
                                                                                                                                                                                            • City Index
                                                                                                                                                                                            • Forex Capital Markets
                                                                                                                                                                                            • Hargreaves Lansdown Plc
                                                                                                                                                                                            • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                                                            • ICAP
                                                                                                                                                                                            • IFX Markets
                                                                                                                                                                                            • Insynergy Investment Management
                                                                                                                                                                                            • Lloyds Banking Group
                                                                                                                                                                                            • London Capital Group
                                                                                                                                                                                            • London Stock Exchange plc
                                                                                                                                                                                            • NatWest
                                                                                                                                                                                            • Paddy Power Plc
                                                                                                                                                                                            • Research in Motion Uk Ltd.
                                                                                                                                                                                            • Royal Bank of Scotland Group plc
                                                                                                                                                                                            • Saxo Bank A/S
                                                                                                                                                                                            • Société Générale Group
                                                                                                                                                                                            • Talos Securities Ltd
                                                                                                                                                                                            • TD Waterhouse

                                                                                                                                                                                            Share Dealing - UK - October 2011

                                                                                                                                                                                            £1,750.00 (Excl.Tax)