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Share Dealing - UK - October 2014

Published By :

Mintel

Published Date : Oct 2014

Category :

Banking

No. of Pages : 95 Pages

Consumers can find share dealing daunting at first. This presents a barrier, preventing some would-be investors from entering the market. Providers need to make the application process as clear, simple and jargon free as possible, and should use technology to make this happen.
Table of Content

Introduction

Market definitions
Abbreviations

Executive Summary

The market
Stock broker revenues expected to continue to increase to 2019
Figure 1: Forecast for total revenues by stockbroking firms, 2009-19
Royal mail IPO lead to an increase in the number of new account openings
Figure 2: X-O account openings, 2007-13
Portfolio segmentation
Figure 3: Total percentage change in the number of accounts/portfolios, by value band – nominee accounts only, 2013
The value of X-O assets managed has doubled since 2009
Figure 4: Value of assets managed, by execution-only and full-service stockbrokers, 2009-13
Trade volumes increase for the first time in three years
Figure 5: Historical trade volumes for X-O stockbrokers (millions)
Market factors
Wage stagnation eroding consumers’ disposable income
Global stocks markets exceed pre-recession levels
Low cash interest rates continue to make equity investment more attractive
Increase in number of IPOs is boosting awareness of share dealing
NISAs expected to help encourage more consumers to dabble in equities
Companies, brands and innovation
Hargreaves Lansdown increases its share of the X-O share dealing market
Figure 6: Total revenues for selected stockbrokers, 2013 (Year ending 31 December – unless otherwise stated)
Brand promotion
Who’s innovating?
The consumer
Ownership of share dealing accounts
Figure 7: Ownership of share dealing accounts, June 2014
Reasons for not owning a share dealing account
Figure 8: Reasons for not owning a share dealing account, June 2014
Reasons for choosing a share dealing provider
Figure 9: Reasons for choosing share dealing provider, June 2014
Attitudes towards share dealing
Figure 10: Attitudes towards share dealing, June 2014
Interest in investing in stock market flotations
Figure 11: Interest in investing in stock market flotations, June 2014
What we think

Issues and Insights

Banks can leverage their strong brands to compete in offering share dealing services
The facts
The implications
Direct discretionary could emerge as a competitor to share dealing
The facts
The implications
The proliferation of IPOs can drive growth in the share dealing market
The facts
The implications
Making share dealing less daunting to new investors
The facts
The implications

Trend Application

Share dealing providers can capitalise on the social value of financial education
Providers can leverage the influence of their advocates
Mintel Futures: Access Anything Anywhere

Market Drivers

Key points
Higher earners are avoiding the worst of the income squeeze
Figure 12: Annual % change in average weekly earnings, CPI and RPI, March 2009 – July 2014
Figure 13: “How have your finances changed over the last 12 months?”, by household income, September 2014
Global stocks markets exceed pre-recession levels
Figure 14: Performance of Nikkei 225, FTSE 100 and S&P 100, January 2003-July 2014
Low cash interest rates continue to make equity investment more attractive
Increase in number of IPOs is boosting awareness of share dealing
Figure 15: Number of IPOs on the UK Main Market, 2006-14
The RDR has pushed smaller investors to X-O share dealing platforms
FCA’s thematic review finds uncertainty around definitions of advice
The 2014 Budget changes
ISAs
Annuities
End of the distinction between cash and equity ISAs will benefit share dealing providers
Figure 16: Number of ISAs and amounts subscribed, segmented by type, 2005/06-2013/14
Increased investment in ISAs will mainly go to OEICs and Unit Trusts
Figure 17: Market value of funds held in stocks and shares ISAs, 2012-14
Housing is a popular investment for consumers
Figure 18: New buy-to-let mortgage business, 2007-13

SWOT Analysis

Figure 19: UK share dealing market – SWOT Analysis 2014

Who’s Innovating?

Key points
Charles Stanley launches January sale
Interactive Investor to partner with companies wanting to offer share dealing services
Hargreaves Lansdown set to launch direct-to-consumer discretionary service
IG Group launches international share dealing platform
Firms from the US are looking to disrupt the self-directed investing market
True Potential launches ImpulseSave to help customers to save and invest more

Market Size and Forecast

Key points
X-O stockbroking firms continue to grow steadily in 2014
Figure 20: Total revenues by stockbroking firms, 2009-14
Inactivity and regular fees account for an increasing proportion of X-O revenues
Figure 21: Stockbroking revenue streams, by firm type, 2013 and 2014
Assets under management continue to increase, buoyed by strong stock market performance
Figure 22: Value of assets managed, by execution-only and full-service stockbrokers, 2009-13
Figure 23: Amount of savings and investments, by share dealing ownership, June 2013
The number of new accounts increased dramatically in 2013
Figure 24: X-O account openings, 2007-13
Share dealing revenue expected to grow over the next five years
Figure 25: Forecast for total revenues by stockbroking firms, 2009-19
Figure 26: Forecast for total revenues by stockbroking firms, 2009-19
Forecast methodology
Fan chart explanation

Portfolio Segmentation

Key points
Investors with less than £50,000 pushed towards X-O channels
Figure 27: Number of accounts/portfolios, by value band – nominee accounts only, 2013
Over half of X-O assets are held in tax wrappers
Figure 28: Assets by ownership as a proportion of total investment assets for X-O accounts, 2012 and 2013

Trading Activity

Key points
Trade volumes increase for the first time in three years
Figure 29: Historical trade volumes for X-O stockbrokers (millions)
Trading activity is bullish as purchases outpaced sales in 2013
Figure 30: Historical bargain volumes* Q1 1998 – Q4 2013
Investors have become more cautious about overseas equities
Figure 31: Bargain volumes, by asset class, 2012 and 2013

Market Share

Key points
Hargreaves Lansdown increases its share of the X-O share dealing market
Figure 32: Total revenues for selected stockbrokers, 2011-13
Figure 33: Total revenues for Hargreaves Lansdown, 2011-14
Top five firms continue to dominate the X-O market
Figure 34: Share of total revenue, by the largest firms in each sector, 2010-13

Companies and Products

X-O stock broking charges
Figure 35: Charges of the eight largest stockbrokers*, September 2014
Barclays Stockbrokers
Description
Product range
Financial performance
Figure 36: Key financial for Barclays Stockbrokers Limited, 2012 and 2013
Recent activity
Halifax Share Dealing
Description
Product range
Financial performance
Figure 37: Key financials for Halifax Share Dealing Limited, 2012 and 2013
Recent activity
Hargreaves Lansdown
Description
Product range
Financial performance
Figure 38: Key financials for Hargreaves Lansdown, 2012-14
Recent activity
Selftrade
Description
Product range
Financial performance
Figure 39: Key financials for Talos Securities Ltd, 2012 and 2013
Recent activity
The Share Centre
Description
Product range
Financial performance
Figure 40: Key financials for The Share Centre Limited, 2012 and 2013
TD Direct Investing
Description
Product range
Financial performance
Figure 41: Key financials for TD Direct Investing, 2012 and 2013
Recent activity

Brand Communication and Promotion

Key points
Advertising expenditure decreases in 2013/14 due to lower market volatility
Figure 42: Total value of share dealing advertising, 2009/10-2013/14
Share dealing companies focus on advertising to wealthier, over-45s
Figure 43: Top 10 advertisers – stockbrokers and share dealing only, 2009/10-2013/14
Press becomes the most popular advertising channel for share dealing providers
Figure 44: Total advertising by stockbrokers, share dealers and stocks and shares ISA providers, by media type, 2009/10-2013/14
A note about adspend
Channels to Market

Key points
The value of non-managed assets overtook advisory assets in 2013
Figure 45: Full-service stockbroker assets, by management channel, 2009-13
The proportion of online trades fall due to stock market stability
Figure 46: Online trades as a percentage of X-O trades, 2008-2013

Ownership of Share Dealing Accounts

Key points
X-O share dealing accounts remain a niche product
Figure 47: Ownership of share dealing accounts, June 2014
Broadening the appeal of share dealing will come with challenges
Targeting long-term investors will help to make share dealing appeal to a broader audience
Figure 48: Ownership of Share dealing accounts, by gender, June 2014
Under-35s are more likely to be interested in opening a share dealing account in future
Figure 49: Ownership of Share dealing accounts, by age, June 2014
Many consumers prefer to invest in property than the stock market
X-O share dealing has not democratised ownership of investments
Figure 50: Ownership of Share dealing accounts, by gross annual income and current financial situation, June 2014

Reasons for Not Owning a Share Dealing Account

Key points
Affordability is the biggest barrier to share dealing ownership
Figure 51: Reasons for not owning a share dealing account, June 2014
Education can help to improve the appeal of share dealing
Providers could benefit from making the account opening process more straightforward
Figure 52: Reasons for not owning a share dealing account, by Ownership of Share dealing accounts, June 2014
Younger consumers expect share dealing to be time consuming
Figure 53: Reasons for not owning a share dealing account, by age, June 2014

Reasons for Choosing a Share Dealing Provider

Key points
Low charges are the key to attracting new consumers
Figure 54: Reasons for choosing share dealing provider, June 2014
Share dealing providers can benefit from offering simple charging structures
A quarter of share dealers want their provider to be a well-known brand
A customised online approach can make share dealing seem less daunting
Sometimes it’s better to have less choice, not more
Trading apps will become increasingly important
Attitudes towards Share Dealing

Key points
Share dealers are aware of the impact of low interest rates
Figure 55: Attitudes towards share dealing, June 2014
61% of X-O share dealers enjoy trading
Investors show appetite for AIM-listed shares, but must be advised of the risk
Half of share dealing customers express interest in international shares
Advised share dealers are more likely to want to be long-term investors
Figure 56: Attitudes towards share dealing, by Ownership of Share dealing accounts, June 2014
Falling stock markets may be problematic for providers if they don’t take the time to educate their customers

Interest in Investing in Stock Market Flotations

Key points
IPOs can help to get non-hobbyist investors into share dealing
Figure 57: Interest in investing in stock market flotations, June 2014
16% were tempted to purchase shares, but decided not to
Three fifths of existing customers have invested in a company flotation
Figure 58: Interest in investing in stock market flotations, by Ownership of Share dealing accounts, June 2014
For the hard-pressed, share dealing is a luxury they can’t afford
Figure 59: Interest in investing in stock market flotations, by demographics, June 2014

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