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ISAs - UK - November 2018

"This Report looks at the size of the cash, and stocks and shares ISA markets, and identifies the key market drivers and trends in the market. Mintel’s research also looks at the methods people use when researching ISAs, as well as ownership and important factors when choosing providers. Investment decision-making preferences are explored, as well as attitudes towards automated advice. Finally, the Report looks into interest in and attitudes toward lifetime ISAs."
- Douglas Kitchen, Financial Services Analyst

This Report looks at the following areas:

  • Developments are required for the lifetime ISA to be a success
  • New technology will drive growth in stocks and shares ISAs

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Table of contents

  1. Overview

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

          • The market
            • Value of ISA subscriptions grew by 13% in 2017/18
              • Figure 1: Number of ISAs and amount subscribed, 2011/12-2017/18
            • The cash ISA market is set for a gradual recovery
              • Figure 2: Forecast of total cash ISA subscriptions, 2012/13-2022/23
            • Stocks and shares ISA subscriptions to reach £50 billion in 2022/23
              • Figure 3: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
            • ISA holders are most likely to get information from their main bank
              • Figure 4: Sources of information for most recent ISA product, August 2018
            • Companies and brands
              • 21% of cash ISA holders have a Nationwide ISA
                • Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
              • Fidelity remains the largest stocks and shares ISA provider
                • Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
              • Total adspend increases by one fifth
                • Figure 7: Total above-the-line, online display and direct mail advertising on ISAs. 2013/14-2017/18
              • The consumer
                • 64% own an ISA product
                  • Figure 8: Savings product ownership, August 2018
                • Brand recognition is influential in product choice
                  • Figure 9: important factors when choosing an ISA provider, August 2018
                • 48% would like to make their own investment decisions
                  • Figure 10: Stocks and shares ISA investment preferences, August 2018
                • 48% of those considering a stocks and share ISA are willing to use automated advice
                  • Figure 11: Interest in automated advice services, August 2018
                • Over half of eligible consumers would consider the lifetime ISA
                  • Figure 12: Interest in the lifetime ISA, August 2018
                • Half actively favour cash lifetime ISAs over stocks and shares ones
                  • Figure 13: Attitudes towards lifetime ISAs, August 2018
                • 62% would use a lifetime ISA for a deposit for their first home
                  • Figure 14: Reason for saving in a Lifetime ISA, August 2018
                • What we think
                • Issues and Insights

                  • Developments are required for the lifetime ISA to be a success
                    • The facts
                      • The implications
                        • New technology will drive growth in stocks and shares ISAs
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Value of ISA subscriptions grew by 13% in 2017/18
                                • Cash ISAs set for modest growth compared to stocks and shares
                                  • ISA holders are most likely to get information from their main bank
                                    • UK households spending more than they save
                                      • Government commits to the lifetime ISA
                                      • Market Size

                                        • ISA subscriptions grew by 13% in 2017/18
                                          • Figure 15: Number of ISAs and amount subscribed, 2011/12-2017/18
                                        • Stocks and shares ISAs grow by 29%
                                          • Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2011/12-2017/18
                                        • Lifetime ISA subscriptions surpass the innovative finance ISA
                                          • Figure 17: Value of lifetime and innovative finance ISAs subscriptions, 2017/18
                                        • Average stocks and shares ISA subscriptions top £10,000
                                          • Figure 18: Average subscription per account, 2011/12-2017/18
                                        • OEICs the most popular stocks and shares investment
                                          • Figure 19: Value of funds held in adult ISAs, by type of investment, 2013/14-2017/18
                                      • Market Forecast

                                        • Cash ISA subscriptions forecast for steady growth
                                          • Figure 20: Forecast of total cash ISA subscriptions, 2012/13-2022/23
                                          • Figure 21: Forecast of total cash ISA subscriptions, 2012/13-2022/23
                                        • Stocks and shares ISA subscriptions to reach £50 billion in 2022/23
                                          • Figure 22: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
                                          • Figure 23: Forecast of total stocks and shares ISA subscriptions, 2012/13-2022-23
                                        • Forecast methodology
                                        • Channels to Market

                                          • ISA holders are most likely to get information from their main bank
                                            • A quarter have used a price comparison website
                                              • Figure 24: Sources of information for most recent ISA product, August 2018
                                            • Stocks and shares savers prefer to research online
                                              • Figure 25: Sources of information for most recent ISA product, by product ownership, August 2018
                                            • Help to Buy, lifetime and innovative finance ISA owners use the most sources
                                              • Figure 26: Number of information sources used, by product ownership, August 2018
                                          • Market Drivers

                                            • UK households spending more than they save
                                              • Figure 27: UK households’ cash basis saving ratio and national accounts saving ratio, seasonally adjusted and at current prices, Q1 2014-Q2 2018
                                            • ISA rates on the rise, but remain low
                                              • Figure 28: Average monthly quoted cash ISA variable and fixed rate, January 2012-September 2018
                                          • Market Environment

                                            • Largest cash ISA providers fail to reflect recent rate rises
                                              • Rates to remain low despite recent increase
                                                • Government rejects call to scrap the lifetime ISA
                                                  • Innovative finance ISAs struggling to meet demand
                                                    • Government considers ‘Care ISA’
                                                      • Contrasting success for robo-advisers
                                                      • Companies and Brands – What You Need to Know

                                                        • 21% of cash ISA holders have a Nationwide ISA
                                                          • Fidelity accounts for over 10% of the stocks and shares ISA market
                                                            • Building societies support the cash lifetime ISA market
                                                              • Providers seek to widen appeal of innovative ISAs
                                                                • Total adspend increases by one fifth
                                                                • Market Share

                                                                  • Nationwide accounts for one fifth of cash ISAs
                                                                      • Figure 29: Ranking of cash ISA providers, by proportion of ISA holders, March 2018
                                                                    • Fidelity remains the largest stocks and shares provider
                                                                      • Figure 30: Top 10 investment ISA providers, by ISA funds under management, May 2017 and May 2018
                                                                  • Launch Activity and Innovation

                                                                    • New products and initiatives could reinvigorate the lifetime ISA
                                                                      • Newcastle Building Society opens the third cash lifetime ISA
                                                                        • Skipton expands exclusive mortgage products available to lifetime ISA customers
                                                                          • Unity Mutual launches new stocks and shares lifetime ISA
                                                                            • Providers battle to offer easy access ISAs at the best rate
                                                                              • Paragon launches limited edition easy-access account
                                                                                • Leeds Building Society introduces online only instant access ISA
                                                                                  • Goldman Sachs cash ISA on the horizon
                                                                                    • Providers look to increase the appeal of the innovative Finance ISA
                                                                                      • EasyJet founder forms EasyMoney
                                                                                        • The House Crowd lowers minimum investment for ISA transfers
                                                                                          • Zopa improves the ease of ISA contributions
                                                                                            • ApplesforOranges.co.uk launches innovative finance ISA price comparison website
                                                                                              • Hargreaves Lansdown Active Savings increases access to ISAs
                                                                                                • Neyber launches employee workplace ISA platform
                                                                                                • Advertising and Marketing Activity

                                                                                                  • Total adspend increases by 20%
                                                                                                    • Figure 31: Total above-the-line, online display and direct mail advertising on ISAs. 2013/14-2017/18
                                                                                                  • Skipton and Nationwide account for over 50% of adspend on cash ISAs
                                                                                                    • Figure 32: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2013/14-2017/18
                                                                                                  • Fidelity leads stocks and shares ISA adspend
                                                                                                    • Figure 33: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2013/14-2017/18
                                                                                                  • Press remains the dominant advertising method
                                                                                                    • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2017/18
                                                                                                  • Nielsen Ad Intel coverage
                                                                                                  • The Consumer – What You Need to Know

                                                                                                    • 64% own an ISA product
                                                                                                      • Brand recognition is influential in product choice
                                                                                                        • 48% would like to make their own investment decisions
                                                                                                          • 48% of those considering a stocks and share ISA are willing to use automated advice
                                                                                                            • Over half of eligible consumers would consider the lifetime ISA
                                                                                                              • Half actively favour cash lifetime ISAs over stocks and shares
                                                                                                                • 62% would use a lifetime ISA for a deposit for their first home
                                                                                                                • Savings Product Ownership

                                                                                                                  • Over 60% own an ISA product…
                                                                                                                    • …but only 18% have a stocks and shares ISA
                                                                                                                      • Figure 35: Savings product ownership, August 2018
                                                                                                                    • City-dwellers significantly more likely to own a Help to Buy or lifetime ISA
                                                                                                                      • Figure 36: Savings product ownership, by area, August 2018
                                                                                                                  • Important Factors when choosing an ISA Provider

                                                                                                                    • Brand recognition is influential in product choice
                                                                                                                      • 23% prioritise low penalties for transferring funds
                                                                                                                        • Figure 37: Important factors when choosing an ISA provider, August 2018
                                                                                                                      • Investors more likely to value adviser recommendations and online features
                                                                                                                        • Figure 38: Important factors when choosing an ISA provider, by product ownership, August 2018
                                                                                                                    • Investment Decision-making Preferences

                                                                                                                      • 48% would like to make their own investment decisions
                                                                                                                        • Figure 39: Stocks and shares ISA investment preferences, August 2018
                                                                                                                      • Wealthier savers more likely to consider a stocks and shares ISA
                                                                                                                        • Figure 40: Stocks and shares ISA investment preferences, by household income, August 2018
                                                                                                                    • Attitudes towards Automated Advice Services

                                                                                                                      • 48% would be willing to use automated advice services
                                                                                                                        • Figure 41: Interest in automated advice services, August 2018
                                                                                                                      • Under-35s most open to automated advice
                                                                                                                        • Figure 42: Interest in automated services, by age, August 2018
                                                                                                                    • Interest in Lifetime ISAs

                                                                                                                      • Over 50% would consider a lifetime ISA
                                                                                                                        • Figure 43: Interest in the lifetime ISA, August 2018
                                                                                                                      • Potential lifetime ISA customers more open to adviser interactions…
                                                                                                                        • …and keen to use well-known providers
                                                                                                                          • Figure 44: Important factors when choosing an ISA provider, by interest in the lifetime ISA, August 2018
                                                                                                                      • Attitudes towards Lifetime ISAs

                                                                                                                        • Half actively favour cash lifetime ISAs over stocks and shares ones
                                                                                                                          • Savers could be put off by the withdrawal penalty
                                                                                                                            • Figure 45: Attitudes towards lifetime ISAs, August 2018
                                                                                                                          • Clarity is required to improve understanding
                                                                                                                            • Figure 46: Agreement with the statement ‘Lifetime ISAs are difficult to understand’, by age, August 2018
                                                                                                                        • Reason for Saving in a Lifetime ISA

                                                                                                                          • Buying a first home is the biggest reason for lifetime ISA ownership …
                                                                                                                            • Figure 47: Reason for saving in a lifetime ISA, August 2018
                                                                                                                          • …which contributes to a preference for cash ISAs
                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                                  • Best-and worst-case forecasts for cash ISA subscription value
                                                                                                                                    • Figure 48: Best-and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2017/18-2022/23
                                                                                                                                  • Best-and worst-case forecasts for stocks and shares ISA subscription value
                                                                                                                                    • Figure 49: Best-and worst-case forecasts for total stocks and shares ISA subscriptions, at current prices, 2017/18-2022/23
                                                                                                                                  • Cash ISA volume forecast
                                                                                                                                    • Figure 50: Market forecast for number of adult cash ISA subscriptions, 2012/13-2022/23
                                                                                                                                    • Figure 51: Best-and worst-case forecasts for total number of adult cash ISA subscriptions, 2017/18-2022/23
                                                                                                                                  • Stocks and shares ISA volume forecast
                                                                                                                                    • Figure 52: Market forecast for number of stocks and shares ISA subscriptions, 2012/13-2022/23
                                                                                                                                    • Figure 53: Best-and worst-case forecasts for number of stocks and shares ISA subscriptions, 2017/18-2022/23
                                                                                                                                  • Forecast methodology

                                                                                                                                  ISAs - UK - November 2018

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