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Equity Investing - UK - September 2018

“2017 was a bumper year for the equity investing market, but this is unlikely to be repeated in 2018, with Brexit looming. Competitive pressures are growing, even among the once-niche online platform providers, and the flow of new customers is inhibited by low levels of investable assets. Ethical and micro-investing show potential to expand the market and reach the next generation of investors.”
– Rich Shepherd, Senior Financial Services Analyst

This Report looks at the following areas:

  • Micro-investing could hold the key to building a pipeline of new investors for the future
  • Ethical investing could become the new normal

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • 2017 proves to be a record year for net fund sales
              • Figure 1: Forecast of the value of gross retail sales, 2013-23
            • Intermediaries increase their share of distribution
              • Figure 2: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2013-17 H1
            • Low investable assets suppressing flow of new investors
              • Figure 3: Household savings ratio, 2008-17
            • Regulatory changes cause uncertainty
              • Companies and brands
                • M&G remains top of unchanged company rankings
                  • Figure 4: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
                • Platform competition hots up while costs and charges get strategic
                  • The consumer
                    • Almost half of people with savings or investments are uncomfortable with risk
                      • Figure 5: Level of comfort taking risks with savings, aggregated, June 2018
                    • Stock-picking remains among most popular approaches
                      • Figure 6: Investment product ownership, June 2018
                    • Only 12% of non-investors intend to invest in the next year
                      • Figure 7: Intentions to invest, June 2018
                    • Online investing has become the firm favourite among investors
                      • Figure 8: Channels used to invest, June 2018
                    • Investors show impressive confidence in decision-making
                      • Figure 9: Attitudes towards investing, June 2018
                    • More than a third say they would be likely to consider micro-investing, rising to over half of Millennials
                      • Figure 10: Consideration of micro-investing, June 2018
                    • What we think
                    • Issues and Insights

                      • Micro-investing could hold the key to building a pipeline of new investors for the future
                        • The facts
                          • The implications
                            • Ethical investing could become the new normal
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • 2017 proves to be a record year for net fund sales
                                    • Net retail sales bounce back dramatically in 2017
                                      • Intermediaries increase their share of distribution
                                        • Low savings ratio and low investable assets
                                          • Regulatory changes cause uncertainty
                                          • Market Size and Forecast

                                            • 2017 proves to be a record year for net fund sales
                                              • Figure 11: Value of gross and net retail sales, 2013-18
                                            • Growth in guaranteed and with-profit bonds slows
                                              • Figure 12: Unit-linked, guaranteed and with-profit bonds, 2014-17
                                            • Two in five UK adults own an investment product
                                              • Figure 13: Investment product ownership, June 2018
                                            • Gross fund sales expected to grow in post-Brexit environment
                                              • Figure 14: Forecast of the value of gross retail sales, 2013-23
                                              • Figure 15: Forecast of the value of gross retail sales, at current prices, 2013-23
                                            • Forecast methodology
                                            • Market Segmentation

                                              • Net retail sales bounce back dramatically in 2017
                                                • Figure 16: Net retail sales of funds, by asset class, 2013-17
                                              • FCA new sales data reveals strong growth in with-profit bonds
                                                • Figure 17: New retail investment sales, by investment product type, 2012-17 H1
                                              • Value of stocks and shares ISAs recovered in 2016/17, while cash fell by a third
                                                • Figure 18: Number of ISAs and amounts subscribed to each component, 2008/09-2016/17*
                                                • Figure 19: Average subscription per account, 2012/13-2016/17*
                                            • Channels to Market

                                              • Intermediaries increase their share of distribution
                                                • Figure 20: Gross retail sales, by distribution channel, 2017
                                                • Figure 21: Gross retail sales, by distribution channel, 2013-17
                                              • FCA data shows new non-advised sales made progress in early 2017
                                                • Figure 22: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2013-17 H1
                                              • Seven in 10 usually use online channels to invest
                                                • Figure 23: Channels used to invest, June 2018
                                            • Market Drivers

                                              • Interest rates begin to rise
                                                • Figure 24: Effective interest rates on household deposit balances versus official bank base rate, January 2010-June 2018
                                              • A historic low savings ratio…
                                                • Figure 25: Household savings ratio, 2008-17
                                              • …means low levels of investable assets
                                                • Figure 26: Value of people’s savings and investments, June 2018
                                              • 79% of people have savings in cash
                                                • Figure 27: Ownership of cash saving products, February 2018
                                            • Regulatory and Legislative Changes

                                              • Firms continue to count the cost of implementing new legislation
                                                • EU MiFID II
                                                  • EU PRIIPs
                                                    • FCA SM&CR
                                                      • FCA reveals expectations for discretionary management platforms
                                                        • FCA publishes interim report on investment platforms
                                                        • Companies and Brands – What You Need to Know

                                                          • M&G remains top of unchanged company rankings
                                                            • Platforms lock horns while costs and charges form a key battleground
                                                              • Providers look to traditional media for awareness
                                                              • Market Share

                                                                • No change in ranking among top 10 asset managers
                                                                  • Figure 28: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
                                                              • Competitive Strategies

                                                                • Competition hots up among online investment platforms
                                                                  • Nutmeg
                                                                    • Moneyfarm
                                                                      • Wealthsimple
                                                                        • Scalable Capital
                                                                          • Wealthify
                                                                            • Costs and charges becoming a key strategic point of difference
                                                                            • Advertising and Marketing Activity

                                                                              • Providers look to traditional media for awareness
                                                                                • Figure 29: Total above-the-line, online display and direct mail advertising expenditure on investment products, by media type, 2015/16-2017/18*
                                                                              • Santander and Fidelity continue to dominate adspend
                                                                                • Figure 30: Total above-the-line, online display and direct mail advertising expenditure on investment products, by advertiser, 2015/16-2017/18*
                                                                              • Search Engine Optimisation terms have been saturated by competition
                                                                                • Nielsen Ad Intel coverage
                                                                                • The Consumer – What You Need to Know

                                                                                  • Almost half of people with savings or investments are uncomfortable with risk
                                                                                    • Stock-picking remains among most popular approaches
                                                                                      • Only 12% of non-investors intend to invest in the next year
                                                                                        • Online investing has become the firm favourite among investors
                                                                                          • Investors show impressive confidence in decision-making
                                                                                            • More than a third say they would be likely to consider micro-investing
                                                                                            • Risk Sensitivity and Investable Assets

                                                                                              • Almost half of people with savings or investments are uncomfortable with risk
                                                                                                • Figure 31: Level of comfort taking risks with savings, aggregated, June 2018
                                                                                                • Figure 32: Level of comfort taking risks with savings, June 2018
                                                                                              • Low investable assets means weak incentive to accept investment risk
                                                                                                • Figure 33: Level of investable assets, June 2018
                                                                                              • People more likely to amass investable assets as they age
                                                                                                • Figure 34: Level of investable assets, by generation, June 2018
                                                                                            • Investment Product Ownership

                                                                                              • Stock-picking remains among most popular approaches
                                                                                                • Figure 35: Investment product ownership, June 2018
                                                                                              • Most investors have only one investment product
                                                                                                • Figure 36: Number of investment products owned, June 2018
                                                                                                • Figure 37: Investment products owned, by number of investment products owned, June 2018
                                                                                              • Women significantly less likely to have an investment product
                                                                                                • Figure 38: Investment product ownership, by gender, June 2018
                                                                                            • Intentions to Invest

                                                                                              • Most non-investors don’t intend to start in the next year
                                                                                                • Figure 39: Intentions to invest, June 2018
                                                                                              • Under-25s have good intentions but may encounter barriers
                                                                                                • Figure 40: Intentions to invest, by age, June 2018
                                                                                            • Channels to Investing

                                                                                              • Online investing has become the firm favourite among investors
                                                                                                • Figure 41: Channels used to invest, June 2018
                                                                                              • Younger generations set to turn investing online into the new normal
                                                                                                • Figure 42: Channels used to invest, by generation, June 2018
                                                                                            • Attitudes towards Investing

                                                                                              • Investors show impressive confidence in decision-making
                                                                                                • Figure 43: Attitudes towards investing, June 2018
                                                                                              • Younger investors have greater interest in ethical investing
                                                                                                • Figure 44: Agreement with selected attitudes towards investing, by age, June 2018
                                                                                              • 84% of 25-34-year-olds feel confident making investment decisions
                                                                                                • Figure 45: Agreement with selected attitudes towards investing, by age, June 2018
                                                                                            • Attitudes towards Micro-investing

                                                                                              • More than a third say they would be likely to consider micro-investing…
                                                                                                • Figure 46: Consideration of micro-investing, June 2018
                                                                                              • …rising to more than half of Millennials
                                                                                                • Figure 47: Consideration of micro-investing, by generation, June 2018
                                                                                              • Micro-investing can bring new investors to the market
                                                                                                • Figure 48: Consideration of micro-investing, by likelihood to invest in the next 12 months, June 2018
                                                                                              • Low charges must match low contributions when micro-investing
                                                                                                • Figure 49: Important factors when choosing a micro-investing service, June 2018
                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                • Abbreviations
                                                                                                  • Consumer research methodology
                                                                                                  • Appendix – Market Size and Forecast

                                                                                                      • Figure 50: Forecast of the value of new gross sales, 2018-23
                                                                                                    • Forecast methodology

                                                                                                    Equity Investing - UK - September 2018

                                                                                                    US $2,693.85 (Excl.Tax)