2022
9
UK Attracting New to Market Investors Market Report 2022
2021-12-23T03:06:22+00:00
OX1050535
2195
146467
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Report
en_GB
“COVID-19 has had a largely positive impact on the retail investment industry, with many providers experiencing strong growth in new account openings in 2020 and into 2021. Although interest in…

UK Attracting New to Market Investors Market Report 2022

£ 2,195 (Excl.Tax)

Report Summary

The UK Attracting New to Market Investors report identifies consumer attitudes towards investment activity, product ownership, and the retail investment market in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Attracting New to Market Investors market in the UK. 

Current Market Landscape

Investing is now more accessible than ever before. However, cost remains a considerable barrier. For some, this is undoubtedly true, but the scale of the finding suggests that providers must work harder to fight the misconception that investing requires significant sums of money. This can be achieved by further spreading awareness about innovations like fractional shares, micro-investing and zero-commission trading, while at the same demonstrating how even investing small sums can make a big difference.

  • 20% of all internet users aged 18+ own at least one type of investment product.
  • 71% of all UK adults who own at least one type of investment have an investment ISA (stocks and shares or Lifetime ISA), making it by far the most common retail investment product.
  • 19% of investors in September 2021 took out their first investment no more than a year ago, rising to 46% of under-35s.

COVID-19 has had a positive impact on expanding the market as extra free time and a rise in unplanned savings helped spark new interest in investing, especially among young people. However, once the pandemic becomes a thing of the past, the recent growth in new investment account numbers is unlikely to be sustained.

Future Market Trends in New to Market Investors

The recent increased interest in investing has partly been driven by a rise in trading in high-risk asset classes, such as cryptocurrency, among young people. Many are likely to have taken on more risk than they can realistically handle, and there is a threat many young people will be permanently turned off from investing if they have a negative experience during a market crash.

The surge in household deposits during the pandemic has created a major opportunity for retail investment providers. To take advantage of this situation providers must develop compelling products and services that are aligned with the main reasons people invest, such as better returns and building longterm wealth.

Read on to discover more details or take a look at all of our UK Finance market research.

Quickly understand

  • The impact of COVID-19 on the retail investment market.
  • Key drivers of investment activity.
  • Competitive strategies and the impact of new product innovation.
  • Investment product ownership.
  • Level of interest in starting to invest within the next year.
  • Main reasons people choose to invest and main reasons why they choose not to.

Covered in this report

Brands: eToro, Freetrade, Revolut, Trading 121, Moneybox, Plum, AJ Bell, Charles Stanley, Barclays, Fidelity, Nutmeg, Freetrade, Hargreaves Lansdown.

Expert analysis from a specialist in the field

This report, written by George Zaborowski, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

COVID-19 has had a largely positive impact on the retail investment industry, with many providers experiencing strong growth in new account openings in 2020 and into 2021. Although interest in investing may wane as the pandemic comes to an end, the strong rise in household deposits during the pandemic indicates there is still further room for growth. To encourage more people to start investing, providers need to further improve awareness and understanding of new innovations like robo-investing and fractional shares to fight against the ongoing widespread perception that one needs significant sums of money to get started. Additionally, more needs to be done to make investing more appealing to women, who represent a major source of potential growth.
George Zaborowski
Senior Analyst – Financial Services

Table of Contents

  1. Overview

      • Key issues covered in this Report
        • COVID-19: market context
          • Economic and other assumptions
          • Executive Summary

              • Impact of COVID-19 on savings and investments
                • Figure 1: Short-, medium- and long-term impact of COVID-19 on savings and investments, 2020-25
              • The market
                • Household deposits skyrocket during lockdown
                  • Figure 2: Total outstanding deposits from households, 2016-21
                • Lockdowns trigger rise in new investors
                  • FCA begins a three-year plan to prevent incidence of investor harm
                    • Companies and brands
                      • Zero-commission trading and fractional shares have expanded access to investing
                        • Traditional platforms adapting to attract younger investors
                          • Many providers using cash incentives or free shares to win new business
                            • The consumer
                              • A fifth of UK adults hold an investment product
                                • Figure 3: Any investment product ownership, by gender, age and annual household income, 2021
                              • Stocks and shares ISA the most widely held investment product
                                • Figure 4: Investment product ownership, 2021
                              • One in five investors are new-to-market investors
                                • Figure 5: Length of investment product ownership segmentation, 2021
                              • More than two fifths of investors have their savings fully invested
                                • Figure 6: Savings allocation between cash savings and investments, 2021
                              • A fifth of investors say a 50% drop would impact them significantly
                                • Figure 7: Level of impact a 50% fall in the value of investments held would have on lifestyle, 2021
                              • Investment websites and platforms the leading sources of information
                                • Figure 8: Sources of information used to get information about investing, 2021
                              • One in four plan to start investing within a year
                                • Figure 9: Likelihood of starting to invest in the next 12 months, 2021
                              • Better returns on savings and wealth creation the main reasons for investing
                                • Figure 10: Reasons for investing, 2021
                              • Lack of available funds the top reason for not investing
                                • Figure 11: Reasons for not investing, 2021
                            • Issues and Insights

                              • Outdated perceptions preventing many from investing
                                • Composure a key trait for providers to nurture in new investors
                                • Market Drivers

                                  • Household deposits rise strongly during lockdowns
                                    • Figure 12: Total outstanding deposits from households, 2016-21
                                  • Savings ratio falls as COVID-19 restrictions are removed
                                    • Figure 13: Household savings ratio, Q1 2015-Q2 2021
                                  • Interest rates remain near record lows
                                    • Figure 14: Monthly interest rates of UK monetary institutions, 2017-21
                                  • Recent innovations have radically expanded access to investing
                                    • Pandemic triggers surge in young novice investors
                                      • Focus on spending set to intensify once crisis is finally over
                                        • Figure 15: Financial priorities when COVID-19 is no longer a concern, 2021
                                    • Regulatory and Legislative Activity

                                      • FCA outlines three-year plan to combat investment harm
                                        • FCA targets inexperienced investors with new InvestSmart campaign
                                        • Competitive Strategies and Innovation

                                          • New trading platforms offer commission-free trading
                                            • Figure 16: Comparison of costs and features of traditional platforms vs. new entrants, 2021
                                          • Robo-investing allows beginners to invest with minimal effort
                                            • Free educational resources and demo accounts used to attract novices
                                              • Established platforms adapting to attract younger investors
                                                • Many providers leveraging cash incentives to entice new business
                                                • Investment Product Ownership/Investor Profile

                                                  • One in five UK adults hold an investment product
                                                    • Figure 17: Any investment product ownership, by gender, age and annual household income, 2021
                                                  • Women represent a key market of potential new investors
                                                    • Stocks and shares ISA is by far the most held investment product
                                                      • Figure 18: Investment product ownership, 2021
                                                    • High-risk investment ownership skewed towards younger adults and men
                                                      • Figure 19: Lower-risk vs high-risk investment product ownership, by gender and age, 2021
                                                  • Length of Ownership

                                                    • One in five investors can be categorised as new to market
                                                      • Figure 20: Length of investment product ownership segmentation, 2021
                                                    • New-to-market investors are most likely to be under 35
                                                      • Figure 21: Length of investment product ownership segmentation, by age, 2021
                                                  • Investor Asset Allocation

                                                    • Over two fifths of investors have their savings fully invested
                                                      • Figure 22: Savings allocation between cash savings and investments, 2021
                                                    • Men and over-35s the most likely to have all savings invested
                                                      • Figure 23: Savings allocation between cash savings and investments, by gender and age, 2021
                                                  • Impact of a 50% drop in the Value of Investments

                                                    • A fifth of investors say a 50% drop would impact them significantly
                                                      • Figure 24: Level of impact a 50% fall in the value of investments held would have on lifestyle, 2021
                                                    • Men and younger investors most likely to be taking on too much risk
                                                      • Figure 25: Level of impact a 50% fall in the value of investments held would have on lifestyle, by gender and age, 2021
                                                  • Sources of Information about Investing

                                                    • Investment websites and platforms the top sources of information
                                                      • Figure 26: Sources of information used to get information about investing, 2021
                                                    • Younger investors the most susceptible to social media hype
                                                      • Figure 27: Sources of information used to get information about investing, by gender and age, 2021
                                                  • Interest in Starting to Invest in the Next Year

                                                    • A quarter plan to start investing within a year
                                                      • Figure 28: Likelihood of starting to invest in the next 12 months, 2021
                                                    • Nearly half of under-25s plan to start investing
                                                      • Figure 29: Likelihood of starting to invest in the next 12 months, by gender, age and annual household income, 2021
                                                  • Reasons for Investing

                                                    • Better returns on savings and wealth creation the main motivations…
                                                      • …however, many are also tempted by the prospect of quick returns
                                                        • Figure 30: Reasons for investing, 2021
                                                      • COVID-19 most likely to have been a factor for under-35s
                                                        • Figure 31: Sources of information used to get information about investing, by gender and age, 2021
                                                    • Confidence in Making Investment Decisions

                                                      • Most new and prospective investors are confident in their abilities…
                                                        • Figure 32: Level of confidence about making investment decisions, 2021
                                                      • …but how much of this confidence is misguided?
                                                        • Men are the most prone to overconfidence
                                                          • Investors must be encouraged to keep things in check
                                                            • Figure 33: Any confident about making investment decisions, by gender, 2021
                                                        • Barriers to Investing

                                                          • Lack of available funds the top reason for not investing
                                                            • Figure 34: Reasons for not investing, 2021
                                                          • Robo-investing offers solutions to many long-held concerns
                                                            • Lack of knowledge most likely to be an issue for young people
                                                              • Figure 35: Reasons for not investing, by age, 2021
                                                            • Just over a quarter of non-investors have held investments previously
                                                              • Figure 36: Previous investment product ownership, 2021
                                                          • Types of Retail Investors – Customer Segmentation

                                                                • Figure 37: Cluster analysis of consumer attitudes towards investing, 2021
                                                              • Key demographics
                                                                • Figure 38: Cluster analysis of consumer attitudes towards investing, by gender, age and annual household income, 2021
                                                              • Motivations for investing
                                                                • Figure 39: Reasons for investing, by cluster analysis, 2021
                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                • Abbreviations
                                                                  • Consumer research methodology

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