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Saving and Investing for Children - UK - May 2014

Published By :

Mintel

Published Date : May 2014

Category :

Banking

No. of Pages : 114 Pages

Despite a continued squeeze on household finances felt by parents in particular, the majority continue to save for their children. Simultaneously, children exhibit a strong desire to save, revealing an opportunity for providers to support parents in offering the necessary guidance to the new generation of young savers.
Table of Content

Introduction

Report scope and product definitions
Abbreviations

Executive Summary

The market
Children’s savings accounts and CTFs are the most popular products
Figure 1: Children\'s savings products, March 2014
Market factors
Family finances remain squeezed
Growing childbirth rates
Regulatory changes in the children savings and investment market
Companies, brands and innovation
Main retail banks dominate cash savings market
24% decline in adspend on children’s savings and investment products
NatWest and RBS bring back children’s piggy banks and launch fun app
Nationwide simplifies its children’s savings product range
Family Investments making children financially fit for the future
The consumer
More than three in five parents save for their children
Figure 2: Saving on behalf of children, March 2014
Majority of parents contribute regularly to their children’s savings
Figure 3: Frequency of parents’ contributions to children\'s savings, March 2014
More than one in four non-parents save on behalf of children on special occasions
Figure 4: Frequency of non-parents’ contributions to children\'s savings, March 2014
Less than two fifths of children receive pocket money regularly
Figure 5: Pocket money for children, March 2014
Two in five CTF holders would consider switching to Junior ISAs
Figure 6: Switching to junior ISAs, March 2014
Parental attitudes towards saving for children
Figure 7: Agreement with the following statements relating to saving for children, March 2014
What we think

Issues and Insights

Lack of parental awareness begs for increased promotion of Junior ISAs
The facts
The implications
Today’s children are becoming a generation of savvy savers
The facts
The implications
Branch closures present a challenge for the children’s savings market
The facts
The implications

Trend Application

Birthday presents centred around children’s savings
Grandparents’ role is strengthened in households’ financial mix
Targeting the next generation of savers

Market Drivers

Key points
Family finances remain squeezed
Figure 8: Monthly change in RPI and average weekly earnings, January 2009 – February 2014
Figure 9: How respondents describe their financial situation, by presence of children, March 2014
Consumer sentiment for the coming year still low for parents
Figure 10: Consumer sentiment for the coming year, by presence of children, March 2014
Inflationary pressures are subsiding
Figure 11: Average annual changes in the RPI, CPI and Bank of England base rate, UK, 2005-13
Increase in childbirth rate
Figure 12: Number of live births and Total Fertility Rate (TFR), England and Wales, 2006-2012
Personal finance education in schools
Regulatory changes in the children savings and investment market
Budget 2014: Junior ISAs
Figure 13: Junior ISA subscription limits, 2001-14
Switching from CTF to Junior ISAs allowed from April 2015

Who’s Innovating?

Key points
NatWest and RBS bring back children’s piggy banks
Nationwide simplifies its children’s savings product range
Technology assists with promoting children’s savings
Fun apps for children
Online tools for parents
Family Investments making children financially fit for the future
Greater focus on current accounts in recent years…
… but potential for rising competition with switching CTFs to Junior ISA

Market Size

Key points
Children’s savings accounts and CTFs are the most popular products
Figure 14: Ownership of children\'s savings products, March 2014
Junior ISAs slowly gaining momentum
Figure 15: Number of Junior ISAs, amounts subscribed and average subscription, 2011/12-2012/13
Nearly £5 billion held in CTF accounts
Figure 16: Total number of accounts and market value, by CTF account type – all accounts opened by 5 April 2012

Market Share

Key points
Main retail banks dominate cash savings market
Figure 17: Ranking of the largest providers of savings accounts, by proportion of customers, January 2014
Investment providers are also notable players in the market

Companies and Products

Barclays
Company description
Children’s savings product range
Distribution mix
Recent activity
Family Investments
Company description
Children’s savings product range
Distribution mix
Recent activity
HSBC
Company description
Children’s savings product range
Distribution mix
Recent activity
Lloyds Banking Group
Company description
Children’s savings product range
Distribution mix
Recent activity
Nationwide
Company description
Children’s savings product range
Distribution mix
Recent activity
NS&I (National Savings and Investments)
Company description
Savings product range
Distribution mix
Recent activity
RBS Group
Company description
Children’s savings product range
Distribution mix
Recent activity
Santander
Company description
Children’s savings product range
Distribution mix
Recent activity
The Children’s Mutual
Company description
Savings product range
Distribution mix
Recent activity

Brand Communication and Promotion

Key points
24% decline in adspend on children’s savings and investment products
Figure 18: Total advertising expenditure on children’s savings and investment products (including junior ISAs), 2011/12-2013/14
Top three advertisers account for 80% of market adspend
Figure 19: Top advertisers of children’s saving and investment products (including junior ISAs), 2011/12-2013/14
Junior ISA advertising shrinking drastically
Figure 20: Total advertising expenditure on junior ISA products, 2011/12-2013/14
A note about adspend

Channels to Market

Key points
Majority of children’s products still offered in-branch only
Figure 21: Children’s savings product availability, by distribution channel for opening accounts, April 2014
Decline in the UK branch network
Availability of online applications is picking up, but only slowly

Saving on Behalf of Children

Key points
Survey background
More than three in five parents save for their children
Figure 22: Saving on behalf of children, March 2014
Grandparents make up the majority of non-parents saving for children
Affluence strongly determines ability to save
Figure 23: Saving on behalf of children, by household income, March 2014
Figure 24: Saving on behalf of children, by socio-economic status, March 2014

Children\'s Savings Products

Key points
Children’s savings accounts are the most widely owned product
Figure 25: Children\'s savings products, March 2014
Only 16% of parents hold Junior ISAs for their children
Few products are used for children’s savings
Figure 26: Number of children’s savings products held, March 2014
Figure 27: Children\'s savings products, by number of products held, March 2014
Bonds are more popular among grandparents who save for children
Figure 28: Children\'s savings products, by individuals saving on behalf of children, March 2014
Cash-based savings products lead in popularity

Frequency of Contributions to Children\'s Savings

Key points
Majority of parents contribute regularly to their children’s savings
Figure 29: Frequency of parents’ contributions to children\'s savings, March 2014
Figure 30: Frequency of parents’ contributions to children\'s savings, by working status and household income, March 2014
More than one in four non-parents save on behalf of children on special occasions
Figure 31: Frequency of non-parents’ contributions to children\'s savings, March 2014
Children show desire for gift money
Figure 32: What children and teens want for their birthday, March 2014
Figure 33: Demographics of children who selected ‘money’ as they choice of present, by gender and age, March 2014

Pocket Money for Children

Key points
Less than two fifths of children receive pocket money regularly
Figure 34: Pocket money for children, March 2014
Older children are more likely to receive pocket money on a regular basis
Figure 35: Pocket money for children, by age of children, March 2014
Figure 36: Monthly pocket money, by age of children, March 2014

Switching to Junior ISAs

Key points
40% of CTF holders would consider switching to Junior ISAs
Figure 37: Switching to junior ISAs, March 2014
Parents with older children are less likely to switch
Figure 38: Switching to junior ISAs, by age of children, March 2014

Parental Attitudes towards Children\'s Savings

Key points
29% of parents prefer to save in low-risk products despite the low returns
Figure 39: Agreement with the following statements relating to saving for children, March 2014
Only a minority of parents are interested in less traditional children’s savings products
Junior ISA awareness is still low
More than two in five parents encourage their children to save
Online access important to less than a quarter of parents
Figure 40: Frequency of contributions to children’s savings, by agreement with statement regarding accessing children’s savings account online, March 2014

Appendix – Market Drivers

Figure 41: GfK Consumer confidence barometer – UK, January 1994 – February 2014
Figure 42: Total number of live births and Total Fertility Rate (TFR), England and Wales, 2006-2012

Appendix – Channels to Market

Figure 43: UK bank and building society branch networks, 2002-12

Appendix – Saving on Behalf of Children

Figure 44: Saving on behalf of children, by demographics, March 2014
Figure 45: Saving on behalf of children, by demographics (continued), March 2014

Appendix – Children\'s Savings Products

Figure 46: Children\'s savings products, by demographics, March 2014
Figure 47: Children\'s savings products, by demographics (continued), March 2014
Figure 48: Children\'s savings products, by demographics (continued), March 2014
Figure 49: Children\'s savings products, by demographics (continued), March 2014
Figure 50: Number of children\'s savings products, by demographics, March 2014

Appendix – Frequency of Contributions to Children\'s Savings

Figure 51: Frequency of parents’ contributions to children\'s savings, by demographics, March 2014

Appendix – Pocket Money for Children

Figure 52: Pocket money for children, by demographics, March 2014
Figure 53: Pocket money for children, by frequency of parents’ contributions to children’s savings, March 2014

Appendix – Switching to Junior ISAs

Figure 54: Switching to junior ISAs, by demographics, March 2014
Figure 55: Frequency of parents’ contributions to children’s savings, by switching to Junior ISAs, March 2014

Appendix – Parental Attitudes towards Children\'s Savings

Figure 56: Parental attitudes towards children\'s savings, by demographics, March 2014
Figure 57: Parental attitudes towards children\'s savings, by demographics (continued), March 2014

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