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Share Dealing - UK - October 2015

Published By :

Mintel

Published Date : Oct 2015

Category :

Banking

No. of Pages : N/A

Share dealing appeals to a wider range of people than might be expected. This is the case both in the numbers of people who hold a share dealing account, as well as those who aspire to have an account in the future. At the same time, the execution-only channel is becoming increasingly important, as many retail investors are finding accessing financial advice prohibitively expensive. If providers are to take advantage of the growing interest in share dealing they will need to ensure their services and supplementary research tools are simple enough to translate to online and mobile platforms, and affordable to mainstream investors.

Table of Content

Overview

What you need to know
Products covered in this report

Executive Summary

The market
Solid revenue growth should prevail
Figure 1: Forecast of total revenues by stockbroking firms, at current prices – Fan chart, 2010-20
Sub-sector performance
Figure 2: Key sector data, 2014
Volume of active execution-only accounts up 10% in 2014
Low cash returns and new pension freedoms boost activity
Companies and brands
A heavily consolidated marketplace
Figure 3: Share of total revenues by the five largest firms in each sector, 2011-14
The consumer
17% of adult online users own a share dealing account
Figure 4: Ownership of share dealing or spread betting accounts, July 2015
59% of which trade at least once a month
Figure 5: Trading frequency, July 2015
85% access their accounts online
Figure 6: Method of accessing share dealing or spread betting account, July 2015
17% of adult internet users are interested in opening an account within the next year
Figure 7: Interest in opening an account within the coming year, July 2015
Many accountholders only have modest savings
Figure 8: Level of investible assets by those with a share dealing or spread betting account, July 2015
47% of accountholders are seeking income from their investments
Figure 9: Agreement with statements about investing by share dealing and spread betting accountholders, July 2015
30% of accountholders plan to increase their share/investment holdings over their coming year
Figure 10: Expected investment activity over the next 12 months, July 2015
What we think

Issues and Insights

Shift towards self-directed investing will continue, supported by new digital technology
The facts
The implications
Fairly good new business prospects over the immediate term
The facts
The implications
New opportunities linked to pension reform
The facts
The implications

The Market – What You Need to Know

Mixed performance indicators
Strong rise in the number of active execution-only accounts
Trading levels maintained in 2014, following large increase in 2013
Growth in trades via mobile apps
Ongoing market volatility and low returns on cash boosts appeal of self-directed trading
Pension reforms have potential to boost retail investment activity

Market Size and Forecast

Full service firms are performing better than their execution-only counterparts
Figure 11: Total revenues by execution-only stockbrokers and full service wealth managers, 2010-14
Revenue streams vary between firm types
Figure 12: Business revenue streams, by type of firm, 2013 and 2014
Margins under rising cost pressure
Figure 13: Costs as a proportion of revenues, by execution-only stockbrokers and full service wealth managers, 2011-14
Market forecast
Figure 14: Forecast of total revenues by stockbroking firms, at current prices – Fan chart, 2010-20
Figure 15: Forecast of total revenues by stockbroking firms, at current and constant prices, 2015-20

Number of Client Accounts and Value of Investment Assets

Single-digit asset growth in 2014
Figure 16: Value of assets, by type of firm, 2011-14
2014 saw a 10% growth in active execution-only accounts
Figure 17: Number of client accounts/portfolios, by type of firm, 2013 and 2014
Strong growth in ultra-affluent full service clients
Figure 18: Number of nominee accounts, by value band and type of firm, 2014
New execution-only account openings boosted by market volatility and IPOs
Figure 19: New execution-only accounts opened annually, 2008-14

Trading Activity

Volume of private-client trades up a fraction in 2014…
Figure 20: Number of stockbroker trades, by investment type, 2014
…although trading activity gets a boost from ongoing market volatility…
Figure 21: Number of execution-only trades, 2004-14
…and greater investor appetite

Channels to Market

There are three main ways to access share dealing services
Execution-only channel continues to grow, buoyed by a shift towards self-directed investing
Online trades account for majority of business…
…while a growing proportion is moving to mobile devices
Figure 22: Online versus offline trades as a percentage of total execution-only trades, 2011-14
Passive versus active acquisition

Market Drivers

Stock market experiencing renewed turbulence
Figure 23: FTSE 100 and FTSE All-Share – Daily index movements, January 2005-August 2015
Fall in inflation delays increase in interest rates

Regulatory and Legislative Changes

Increased pension freedoms create new opportunities
An end to new referral payments
Platforms introduce ‘clean’ fund pricing
Changes to CASS put additional pressure on brokers and asset managers
MiFID II aims to improve investor confidence

Key Players – What You Need to Know

The UK stockbroking market is highly concentrated
Recent execution-only activity has focused on developing new mobile apps and updating pricing models
Stockbrokers cut their investment in above-the-line media…
…but are making growing use of new forms of digital and social media

Market Share

Mixed performance between the main execution-only stockbrokers
Figure 24: Revenues for selected execution-only stockbrokers, 2011 -14
Top five in each sector claim over 70% of sector revenues
Figure 25: Share of total revenues by the five largest firms in each sector, 2011-14

Company Profiles – Top Five Execution-only Brokers

Hargreaves Lansdown
Description
Share dealing proposition
Key financial data
Figure 26: Hargreaves Lansdown – Key annual data, 2013-15
Recent activity
Corporate strategy
Barclays Stockbrokers
Description
Share dealing proposition
Key financial data
Figure 27: Barclays Stockbrokers Ltd – Key annual data, 2012-14
Recent activity
Corporate strategy
TD Direct Investing
Description
Share dealing proposition
Key financial data
Figure 28: TD Direct Investing Ltd – Key annual data, 2012-14
Recent activity and corporate strategy
Equiniti Financial Services
Description
Share dealing proposition
Key financial data
Figure 29: Equiniti Financial Services – Key annual data, 2012-14
Recent activity
Halifax Share Dealing
Description
Share dealing proposition
Key financial data
Figure 30: Halifax Share Dealing Limited – Key annual data, 2012-14
Significant others

Advertising and Marketing Activity

Sharp fall in adspend by share dealing providers
Figure 31: Recorded above-the-line, direct mail and online display total advertising expenditure on investment products and services, by sub-category, 2011-15
Spread betting firm City Index is once again the highest-spending advertiser in its category
Figure 32: Top 10 above-the line, direct mail and online display advertisers of stockbroking/share dealing and financial spread betting services, 2013-15
Online advertising accounts for a large chunk of market adspend
Figure 33: Total above-the line, direct mail and online display advertising of stockbroking/share dealing and financial spread betting services, by media type, 2013-15
Nielsen Media Research coverage

The Consumer – What You Need to Know

17% of adult internet users have a share dealing account
85% of share dealing customers access their accounts online
17% of adult internet users are interested in opening a share dealing or spread betting account within the coming year
44% of share dealing accountholders have investible assets of £30,000+
64% of clients closely monitor investment performance
35% of active traders plan to buy shares while just 6% expect to sell them over the coming year

Share Dealing Account Ownership and Trading Frequency

One in six internet users have a share dealing account…
Figure 34: Ownership of share dealing or spread betting accounts, July 2015
…of which, 59% trade on a daily, weekly or monthly basis
Figure 35: Trading frequency, by management of account, July 2015

Account Access

Most clients access their accounts online
Figure 36: Method of accessing share dealing or spread betting account, by management of account, July 2015

New Account Opening Potential

Interest in share dealing bodes well for the future
Figure 37: Interest in opening an account within the coming year, by account ownership, July 2015

Level of Investible Assets and Investment Product Ownership

Many share dealing accountholders have a modest level of savings
A significant proportion of affluent clients are self-managing their account
Figure 38: Investment products owned, by total sample and those with a share dealing or spread betting account, July 2015
Adviser-managed clients are more likely to holds investments in a SIPP
Figure 39: Investment products owned, by total sample and those with a share dealing or spread betting account, July 2015

Investment Attitudes, Behaviour and Goals

70% of self-directed investors ‘keep a close eye on’ performance
Figure 40: Agreement with statements about investing, by share dealing and spread betting accountholders, July 2015
49% of share dealing accountholders enjoy the thrill of trading…
…while 47% are seeking an income
Figure 41: Agreement with statements about investing, by all investors, July 2015

Expected Future Investment Activity

More investors planning to acquire than dispose of assets over the coming year
Figure 42: Expected investment activity over the coming year, July 2015

Appendix – Data Sources, Abbreviations and Supporting Information

Market definitions
Data source
Consumer research methodology
Abbreviations

Appendix – Market Size and Forecast

Total market forecast – Best- and worst-case scenarios
Figure 43: Forecast of total revenues by UK stockbrokers – Best- and worst-case scenarios, at current prices, 2015-20
Execution-only stockbrokers
Figure 44: Forecast of total revenues by execution-only firms, at current prices – Fan chart, 2010-20
Figure 45: Forecast of total revenues by execution-only brokers – Best- and worst-case scenarios, at current prices, 2015-20
Full service wealth managers
Figure 46: Forecast of total revenues by full service firms, at current prices – Fan chart, 2010-20
Figure 47: Forecast of total revenues by full service wealth managers – Best- and worst-case scenarios, at current prices, 2015-20
Forecast methodology
Fan chart explanation

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