866-997-4948(US-Canada Toll Free)

Saving and Investing for Children - UK - April 2016

Published By :

Mintel

Published Date : Apr 2016

Category :

Banking

No. of Pages : N/A

Although 61% of parents in the UK are putting money away for their children’s futures, a third of these are not doing so on a regular basis. Moreover, there are a significant minority who are not managing to save anything at all. For many parents, having other more pressing demands on their money – such as paying bills and repaying debt – will take priority over saving for their children. However, there will be some parents who could manage to save – even a very small amount each month – given a prompt or the right incentive.

Table of Content

Overview

Products covered in this Report

Executive Summary

The market
Around 10 million parents are saving for their children
Figure 1: Estimated number of parents who are saving on behalf of their children, February 2016
CTFs are still the most widely-held children’s savings product
Strong growth in Junior ISA subscriptions and balances
Figure 2: Number of Junior ISAs subscribed, by component, 2011/12-2014/15
Lone parents account for around a quarter of the family market
Parent’s own financial situation will affect their ability to save
Not much of a choice: Low returns on cash or a volatile stock market
Companies and brands
The children’s savings market is dominated by banks and building societies…
…while children’s investment products are mostly provided by investment companies and friendly societies
Banks and building societies still tend to favour in-branch applications
The consumer
Parents and grandparents are the main savers for children
Figure 3: Proportion of parents with others saving for their children, February 2016
A large minority of parents are not saving on behalf of their children
Despite prevailing low savings rates, parents tend to favour cash over equity investment
Figure 4: Products used by parents to save for their children (ranked in order of popularity), February 2016
In choosing where to save, around one in four parents was swayed by a recommendation
Figure 5: Factors influencing choice of product (ranked in order of significance), February 2016
Many parents draw on multiple sources to save for their children
Figure 6: Sources of money put towards children’s savings (ranked in order of significance), February 2016
55% of parents are keen for their children to get into a good saving habit
Figure 7: Agreement with statements about general attitudes and behaviours related to saving for children (ranked in order of significance), February 2016
Expected activity by parent-savers over the coming year
Figure 8: Agreement with statements about saving intentions and switching experience (ranked in order of significance), February 2016
What we think

Issues and Insights

Capturing parents early is key to success
The facts
The implications
Reach non-product holders and busy parents through ‘save the change’ initiatives
The facts
The implications
More needs to be done to jolt parents out of their apathy towards saving and investment returns
The facts
The implications

The Market – What You Need to Know

Around 10 million parents are saving for their children
Cash-based accounts are the preferred home for children’s savings
Junior ISAs grow in popularity, while NS&I Children’s Bonds fall out of favour
There are nearly 8 million households with dependent children in the UK
Growth in child population forecast
Not much of a choice: Low returns on cash or a volatile stock market

Market Size

Size of the adult population saving for children
Figure 9: Proportion of parents who are saving for their children, February 2016
Products used by parents to save for children
Figure 10: Proportion of parents who own various saving and investment products for the purposes of saving for children, February 2016
A note about Mintel’s estimates

Market Segmentation

Children’s cash savings market estimated to be worth upwards of £8 billion
The past decade has seen a fall in the number subscribing to NS&I’s Children Bonds
Steady flow of CTF money into Junior ISAs
Strong growth in Junior ISA subscriptions
Figure 11: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2014/15

The Family Environment

There are nearly 8 million households with dependent children in the UK
Changing social trends have altered the family landscape
Figure 12: UK households and family types, 1996, 2001, 2005 and 2015
Trend towards having fewer children is being maintained
Figure 13: Percentage of families with dependent children: by number of dependent children in the family, 2005 and 2015

Market Drivers

Child population set to grow over the next five years
Figure 14: Projected size of UK child population, 2015, 2020, 2025 and 2030
Only 17% of households with children would describe their financial situation as “healthy”
Figure 15: Current financial situation – Parents versus non-parents, February 2016
Parents are less confident about their financial prospects
Figure 16: Confidence in financial situation over the coming year – Parents versus non-parents, February 2016
Motivational drivers behind saving for children
Figure 17: Reasons for saving for children, October 2011, December 2012 and February 2015

The Saving and Investment Environment

Key factors
Low returns on cash provide a disincentive to save…
Figure 18: Average monthly quoted cash deposit and ISA interest rates, January 2008-January 2016
while stockmarket volatility may also be deterring potential investors

Companies and Brands – What You Need to Know

The top five banking groups and the largest building society control 60-70% of the children’s savings market
The investment sector is less concentrated
Scope to develop online channel in the children’s savings market
Halifax invests in TV advertising to reinforce its brand in the children’s savings market

Competitive Strategies

Market composition
Various provider types
Children’s cash savings – A stable market with low switching levels
Children’s investments – A fairly fragmented market
Customer acquisition strategies
Limited use of bonus and loyalty rates
Many children’s accounts can still only be opened via traditional channels, such as the branch
Technology-driven innovation
New app teaches children how to save money

Advertising and Marketing Activity

Limited above-the-line adspend
Figure 19: Total above-the line, online display and direct mail advertising expenditure on savings products and selected investment products, 2011-15
Halifax was the dominant advertiser in 2015
Figure 20: Total above-the line, online display and direct mail advertising expenditure on identified children’s savings products, 2011-2015
Providers make use of online and digital media to reach target audience
Nielsen Media Research coverage

The Consumer – What You Need to Know

Market penetration
Parents tend to favour cash over equity investment
A personal recommendation can be very persuasive
Many parents draw on more than one source to save for their children
Many parents want to their children to get into a good saving habit
Expected activity by parent-savers over the coming year

Who Saves for Children

40% of parents are saving regularly for their children…
but around the same proportion are not saving at all
Figure 21: Proportion of adults with children and whether or not they are saving on their behalf, February 2016
The propensity to save on a regular basis decreases as children age and the cost of parenthood rises
Grandparents are significant contributors to the children’s savings market
Figure 22: Others saving for own children, February 2016
16% of non-saving parents say others are saving for their children
Figure 23: Others saving for own children, by whether or not parents are saving and how frequently February 2016

Products Used to Save for Children

Low take-up of Junior investment ISAs
Figure 24: Products used by parents to save for their children (ranked in order of popularity), February 2016
Regular savings accounts are a popular choice with parents
Parents who save regularly are more likely to have a Child Trust Fund
Figure 25: Products used by parents to save for their children, by frequency of saving, February 2016

Factors Influencing Choice of Product

Around a quarter of parents made their product selection based on a recommendation
Figure 26: Factors influencing choice of product (ranked in order of significance), by type of product, February 2016
Just 15% of parents who are investing for children say their choice of product was determined by an adviser’s recommendation
Social media is not currently an influential channel in the children’s savings market, but it has the potential to be
Just over a third of parents who chose an investment product were existing customers of the provider
Having access to a local branch can also influence choice

Sources of Money Saved or Invested for Children

Many parents draw on more than one source to save for their children
Figure 27: Sources of money put towards children’s savings (ranked in order of significance), February 2016
Parents with older children are more likely to use their earnings
15% of parents are saving some or all of their child benefit
Figure 28: Sources of money put towards children’s savings (ranked in order of significance), by frequency of saving, February 2016

Parent Attitudes and Behaviours Regarding Saving for Children

55% of parent-savers want to encourage their children to get into a good saving habit
Just 35% of parent-savers say that saving for their children is a financial priority
Figure 29: Agreement with statements about general attitudes and behaviours related to saving for children (ranked in order of significance), February 2016
24% like to have easy access to their child’s savings
Most parents fail to monitor the return they receive on their child’s savings
Only 6% of parent-savers want to know about children’s saving and investment products

Parent Saving Intentions and Switching Experience

A fifth of parents saving for children plan to increase the amount they are putting away
Figure 30: Agreement with statements about saving intentions and switching experience (ranked in order of significance), February 2016

Appendix – Data Sources, Abbreviations and Supporting Information

More about CTFs and Junior ISAs
Tax on savings
Changes to the way savings are taxed from 6 April 2016
£100 cap on parent contributions still applies
Abbreviations
Consumer research methodology

List of Table

NA

Make an enquiry before buying this Report

Please fill the enquiry form below.

  • Full Name *
  • Your Email *
  • Job Title
  • Company *
  • Phone No. * (Pls. Affix Country Code)
  • Message
  • Security Code *

Upcoming Reports

  • Sugar and Gum Confectionery - UK - January 2015

    Rising dental health concerns can create an opportunity for chewing gum brands. Currently much of the marketing for sugar-free gums centres around fresh breath, however, the dental health benefits, particularly for children, could warrant more focus. Though explored internationally, tooth-friendly gums tailored for children remain rare in the UK market....