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Share Dealing - UK - October 2013

Published By :

Mintel

Published Date : Oct 2013

Category :

Banking

No. of Pages : 141 Pages


A lack of financial education has caused many consumers to lack the confidence to make financial decisions. Many see shares as high-risk financial products that are beyond their understanding. With interest rates expected to remain low for the foreseeable future, these consumers are losing money due to the impact of inflation. Online developments have helped to make share ownership easier for consumers, providers now need to harness these developments to teach consumers about how to manage their finances better, improve their savings habits and learn about share dealing.
TABLE OF CONTENT

Introduction
Market definitions
Abbreviations

Executive Summary
The market
Market forecast
Figure 1: Forecast for total revenues by stockbroking firms, 2008-18
Decrease in the number of portfolios under £50,000
Figure 2: Total percentage change in the number of accounts/portfolios, by value band – nominee accounts only, 2012
The value of X-O assets closes the gap between full-service assets
Figure 3: Value of assets managed, by execution-only and full service stockbrokers, 2009-12
Total number of X-O trades decreased in 2012
Figure 4: Number of stockbroker trades, by investment type, 2011 and 2012
Market factors
Strong financial markets and low interest rates have failed to push consumers towards equities
The RDR focuses attention on investment charges
FCA shifts focus to X-O platforms
X-O providers will need to be careful not to be deemed to be offering advice
Companies, brands and innovation
Competition continues to decrease
Figure 5: Share of total revenues, by the five largest firms in each sector, 2009-12
The consumer
Share ownership remains low despite a strong stock market performance
Figure 6: Ownership and intentions to buy, June 2013
Only 12% of consumers own an X-O account, but this is likely to grow
Figure 7: Share dealing ownership, June 2013
Nearly two thirds of investors have a clear investment plan
Figure 8: Saving and investing strategies, June 2013
Half of share dealers don’t see themselves as making risky investments
Figure 9: Attitudes towards risk and financial management, June 2013
Charges are top of consumers’ minds when choosing a share dealing provider
Figure 10: Features that consumers look for in share dealing services and online brokers, June 2013
There is little consensus amongst consumers on how to choose shares
Figure 11: Features consumers look for in share dealing services and online brokers, June 2013
What we think

Issues in the Market
How has the RDR affected advised share dealing providers?
Should X-O providers stop producing research articles?
What will change consumer attitudes towards risk?
How should share dealing providers look to attract new customers?

Trend Application
Trend: Survival Skills
Trend: Life Hacking
Mintel Futures: Generation Next

Market Drivers
Key points
Global shares approaching pre-financial crisis levels
Figure 12: Performance of Nikkei 225, FTSE 100, S&P 100 and Eurofirst 300, January 2003-July 2013
Consumers’ disposable incomes are being squeezed
Figure 13: Monthly change in RPI and average weekly earnings, January 2003-July 2013
Planned investor activity decreases as the FTSE rises
Figure 14: Intended purchases of shares and equity-based unit trusts, government and corporate bonds and bond-based unit trusts*, sales of equities and unit trusts and FTSE 100, Q3/Q4 2002-Q1/Q2 2013
Low interest rates making shares more attractive
Assets held in stocks and shares ISAs
Figure 15: Value of investments held in stocks and shares ISAs, 2012 (provisional figures)
Increasing numbers of investors want to manage their own investments
Figure 16: Attitudes towards financial advice in the investment market, June 2013
RDR will be extended to X-O platforms in 2014

Market SWOT Analysis
Figure 17: UK Share dealing market – SWOT, 2013

Who’s Innovating?
Key points
eToro gets FCA approval to offer financial services to its users
Sanlam Private Investments launches execution-only platform including CFDs

Market Size and Forecast
Key points
Stockbroking revenues continue to rise
Figure 18: Total revenues by stockbroking firms, 2009-13
Commission and brokerage earnings continue to decrease
Figure 19: Stockbroking revenue streams, by firm type, 2011 and 2012
Value of assets buoyed by stock market performance
Figure 20: Value of assets managed, by execution-only and full service stockbrokers, 2009-12
X-O and full service brokers keep costs under control
Figure 21: Total costs as a proportion of total revenues, 2009-12
Market forecast
Stockbroking revenue expected to increase over five years
Figure 22: Forecast for total revenues by stockbroking firms, 2008-18
Figure 23: Forecast for total revenues by stockbroking firms, 2008-18
Forecast methodology
Fan chart explanation

Portfolio Segmentation
Key points
Decrease in the number of investors with investments under £50,000
Figure 24: Number of accounts/portfolios, by value band – nominee accounts only, 2012
The number of share certificates decreasing, as investors migrate online
Figure 25: Number of X-O accounts, by type, 2012
Stable markets are making spread-betting less appealing
Figure 26: Number of active spread bet and CFD accounts held by execution-only stockbrokers, Q1 2006-Q4 2012

Trading Activity
Key points
Number of trade transactions fell by 15.7%
Figure 27: Number of stockbroker trades, by investment type, 2012
Spreadbetting/CFDs saw the largest decrease in trading activity in 2012
Purchases outstrip sales, as stock markets grow
Figure 28: Historical bargain volumes, Q1 1998-Q4 2012*
Overseas equities gain popularity
Figure 29: Bargain volumes*, by asset class, 2011 and 2012

Market Share
Key points
Revenues for selected stockbrokers
Figure 30: Total revenues for selected stockbrokers, 2011 and 2012
Full service and X-O brokers increasingly dominated by top five firms
Figure 31: Share of total revenues, by the five largest firms in each sector, 2009-12

Companies and Products
X-O stockbroking charges
Figure 32: Charges of eight largest stockbrokers*, October, 2013
Key execution only firms
Barclays Stockbrokers
Figure 33: Key financials for Barclays Stockbrokers Limited, 2011 and 2012
Halifax Share Dealing
Figure 34: Key financials for Halifax Share Dealing Limited, 2011 and 2012
Hargreaves Lansdown
Figure 35: Key financials for Hargreaves Lansdown, 2011 and 2012
Selftrade
Figure 36: Key financials for Talos Securities Ltd, 2010 and 2011
The Share Centre
Figure 37: Key financials for The Share Centre Limited, 2011 and 2012
TD Direct Investing
Figure 38: Key financials for TD Direct Investing (Europe) ltd, 2011 and 2012

Brand Communication and Promotion
Key points
Online continues to become the dominant advertising channel
Figure 39: Total advertising by stockbrokers and share dealers only, by media type, 2009/10-2012/13
Online stockbroker advertising expenditure increases to £7.3 million in 2012/13
Figure 40: Total advertising expenditure on investment products and services, by product category, 2008/09-2012/13
Top 10 advertisers still dominated by spreadbetting firms
Figure 41: Top 10 advertisers – stockbrokers and share dealing only, 2008/09-2012/13
A note about adspend

Channels to Market
Key points
Discretionary and non-managed channels grow in popularity
Figure 42: Full-service stockbroker assets, by management channel, 2009-12
Online accounts for seven out of 10 trades
Figure 43: Online trades as a percentage of X-O trades, 2008-12
Half of consumers who would buy or sell shares prefer to do it online
Figure 44: Preferred methods of buying and selling shares, June 2013

Product Ownership
Key points
Only a fifth of consumers own individual company shares
Figure 45: Ownership and intentions to buy, June 2013
Only 2% of investors own an ETF
Spreadbetting far from entering the mainstream
Young consumers have share ownership aspirations
Figure 46: Ownership and intentions to buy, by age, June 2013

Ownership of Share Dealing Accounts
Key points
Share dealing accounts are still a niche product
Figure 47: Share dealing ownership, June 2013
Women are less likely to own a share dealing account
Figure 48: Share dealing ownership, by gender, June 2013
X-O accounts appeal across wealth groups
Figure 49: Amount of savings and investments, by share dealing ownership, June 2013

Investment Strategies among Share Dealers
Key points
Eight out of 10 share dealers prefer to save for the long term
Figure 50: Saving and investing strategies, June 2013
Low interest rates are increasing investors’ interest in share dealing
Figure 51: Agreement with the statement ‘Low interest rates have made me more interested in investment products, such as collectives and shares’, by gross annual household income, June 2013
Younger investors are less likely to have the money to make investing worthwhile
Figure 52: Agreement with the statement ‘I don’t have enough money to make investing worthwhile’, by age, June 2013

Attitudes towards Risk among Share Dealers
Key points
Investors are confident in their ability to make financial decisions
Figure 53: Attitudes towards risk, June 2013
The majority of share dealers do not want risky financial products
Six out of 10 investors want a financial safety net
X-O investors are more willing to take on investment risk
Figure 54: Attitudes towards risk, by share dealing ownership, June 2013

Features Sought in a Share Dealing Service
Key points
Over half of investors look to pay a low fee per trade
Figure 55: Features consumers look for in share dealing services and online brokers, by account ownership, June 2013
DIY investors are more price-sensitive than advised investors
Charges are important to prospective consumers
Only 14% of X-O investors are interested in a wide range of investments
Half of consumers look for a share dealing service that is easy to use
Prospective investors are inexperienced and may need greater guidance
Sensitivity to risk will affect the features that investors look for
Figure 56: Features consumers look for in share dealing services and online brokers, by agreement with the statement ‘’I think that I’m more willing than most people to take financial risks’, June 2013

How Consumers Make Share Dealing Choices
Key points
Investors take shortcuts in picking shares
Figure 57: How consumers choose shares, by account ownership June 2013
Prospective customers need support and encouragement to start investing
Consumers’ methods of choosing shares vary little with level of savings
Figure 58: How consumers choose shares, by amount of savings and investments, June 2013
Attitude towards risk affects what measures investors use to choose shares
Figure 59: How consumers choose shares, by agreement with the statement ‘I think that I’m more willing than most people to take financial risk’, June 2013

Appendix – Product Ownership
Figure 60: Ownership and intentions to buy – Savings account/cash ISA, by demographics, June 2013
Figure 61: Ownership and intentions to buy – NS&I product, by demographics, June 2013
Figure 62: Ownership and intentions to buy – Company pension, by demographics, June 2013
Figure 63: Ownership and intentions to buy – Personal pension, by demographics, June 2013
Figure 64: Ownership and intentions to buy – Individual company shares, by demographics, June 2013
Figure 65: Ownership and intentions to buy – Investment trust, by demographics, June 2013
Figure 66: Ownership and intentions to buy – Unit trust/OEIC, by demographics, June 2013
Figure 67: Ownership and intentions to buy – ETF, by demographics, June 2013
Figure 68: Ownership and intentions to buy – SIPP, by demographics, June 2013
Figure 69: Ownership and intentions to buy – Financial spread-betting account, by demographics, June 2013
Figure 70: Ownership and intentions to buy – With-profits, unit-linked, money market, distribution or guaranteed investment bond, by demographics, June 2013
Figure 71: Ownership and intentions to buy – Investment property, by demographics, June 2013
Figure 72: Ownership and intentions to buy – Other savings or investments, by demographics, June 2013

Appendix – Ownership of Share Dealing Accounts
Figure 73: Most popular share dealing ownership, by demographics, June 2013
Figure 74: Next most popular share dealing ownership, by demographics, June 2013

Appendix – Investment Strategies among Share Dealers
Figure 75: Saving and investing strategies – I prefer to save/invest for the long term, by demographics, June 2013
Figure 76: Saving and investing strategies – I have a clear investment plan, by demographics, June 2013
Figure 77: Saving and investing strategies – I can’t afford to take any risks with my money, by demographics, June 2013
Figure 78: Saving and investing strategies – I can’t afford the costs and charges involved with stock market investments, by demographics, June 2013
Figure 79: Saving and investing strategies – I do not have enough money to make investing worthwhile, by demographics, June 2013
Figure 80: Saving and investing strategies – Low interest rates have made me more interested in investment products, such as collectives and shares, by demographics, June 2013
Figure 81: Saving and investing strategies – I prefer to make my own investment decisions, than use a fund manager to invest on my behalf, by demographics, June 2013
Figure 82: Saving and investing strategies – I would look for a fund manager with a proven track record when choosing an investment product, by demographics, June 2013
Figure 83: Saving and investing strategies – I do not have time to choose my own investments, by demographics, June 2013

Appendix – Attitudes towards Risk among Share Dealers
Figure 84: Agreement with the statement ‘I think that I’m more willing than most people to take financial risks’, by demographics, June 2013
Figure 85: Agreement with the statement ‘I would feel nervous if I don’t have at least three months’ living expenses in the bank’, by demographics, June 2013
Figure 86: Agreement with the statement ‘Even if a risky investment offered higher returns, it wouldn’t compensate for the amount of worry it’d cause me’, by demographics, June 2013
Figure 87: Agreement with the statement ‘I try to make the most of my money’, by demographics, June 2013
Figure 88: Agreement with the statement ‘My friends would probably describe me as being a risk taker’, by demographics, June 2013
Figure 89: Agreement with the statement ‘I’m happy to make a lower return on my savings if it means I don’t have to lie awake at night worrying about investment risk’, by demographics, June 2013
Figure 90: Agreement with the statement ‘I’m confident in my ability to make good financial decisions’, by demographics, June 2013

Appendix – Features Sought in a Share Dealing Service
Figure 91: Most popular features consumers look for in share dealing services and online brokers, by demographics, June 2013
Figure 92: Next most popular features consumers look for in share dealing services and online brokers, by demographics, June 2013
Figure 93: Other features consumers look for in share dealing services and online brokers, by demographics, June 2013

Appendix – How Consumers Make Share Choices
Figure 94: Most popular how consumers choose shares, by demographics, June 2013
Figure 95: Next most popular how consumers choose shares, by demographics, June 2013

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