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Consumers, Saving and Investing - UK - January 2015

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Published Date : Jan 2015

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No. of Pages : 98 Pages

Once consumers start saving, the benefits of having money set aside become more tangible. This increases their commitment to saving, and makes the habit self-perpetuating. The challenge for providers, therefore, is to find a way of encouraging consumers to take the first step.



Executive Summary

Economic background
Strong economic growth throughout 2014
Low levels of unemployment but slow wage growth
Saving and investing environment
Interest rates remain at historic low levels
Figure 1: Rate of change for consumer deposits, January 2008-October 2014
2014 FTSE 100 close did not match that of 2013
Below target inflation easing pressure on consumers
Consumer confidence
Consumer confidence falls after post-recession high
Figure 2: Financial confidence index, 2009-14
Higher earners are also feeling the squeeze
Major concerns about consumers’ long-term financial security
Figure 3: Consumer confidence in their future financial wellbeing, October 2014
The consumer
Value of savings and investments
Figure 4: Value of savings and investments, October 2014 and November 2013
Saving and investment portfolio
Figure 5: Saving and investment product ownership, November 2013
Most people are saving for precautionary reasons
Figure 6: Reasons for saving, October 2014
Some say that they cannot afford to save at the moment
Figure 7: Attitudes towards saving and investing, October 2014
Attitudes towards savings products and providers
Figure 8: Attitudes towards savings products and providers
Some 65% feel that they “cannot afford to take risks with my savings”
Figure 9: Attitudes towards investing, October 2014
What we think

Issues and Insights

Cultivating the long-term savings habit
The facts
The implications
Low interest rates matter, but there are other influencers
The facts
The implications
The disconnect between enthusiasm for investing and appetite for risk
The facts
The implications

Trend Application

Without a care
Guiding Choice
Mintel Futures: Old Gold

Economic Background

Key points
Economic growth continues apace
Figure 10: UK quarterly changes in GDP, Q1 2006-Q3 2014
Figure 11: Quarterly values of GDP (£bn), Q1 2004-Q3 2014
The savings ratio has fallen as the recovery has gathered pace
Figure 12: Quarterly variations in savings ratio, Q1 2004-Q2 2014
Figure 13: 12 month percentage change for house prices, October 2004-October 2014
Unemployment falls to lowest level in six years
Figure 14: Average unemployment rate, 2004-2014

Saving and Investing Environment

Key points
Savers continue to lose out to low interest rates
Figure 15: Effective household interest rates for various savings products, January 2011-October 2014
Falling energy prices putting pressure on the FTSE 100
Figure 16: FTSE 100 daily index movements, January 2008-December 2014
Below target inflation limits the scope for the BoE to raise rates
Figure 17: Consumer Price Index values, 12 month inflation rates, January 2007-October 2014

Retail Savings and Investment Overview

Key points
Slow growth in retail savings balances
Figure 18: Rate of change for consumer deposits and consumer personal loans and overdrafts, January 2008-October 2014
Growth in ISA subscriptions predominantly driven by stocks and shares
Figure 19: Volume and value of ISA subscriptions, by type of ISA, 2009/09-2013/14
Net and gross investment fund sales
Figure 20: Retail sales of unit trusts and OEICs – UK domiciled, 2008-13

Consumer Confidence

Key points
Decrease in confidence in short-term financial wellbeing
Figure 21: Financial confidence index, 2009-14
Figure 22: Consumer sentiment about financial situation for next 12 months, December 2013 vs December 2014
Figure 23: Financial situation compared to 12 months ago, December 2013 vs. December 2014
Considerable difference in outlook for high earners
Figure 24: Consumer sentiment about financial situation for next 12 months, by annual income, December 2014
Figure 25: Proportion of consumers confident that they will be OK over the next 12 months, by income, March 2014-December 2014
Only 6% feel “very secure” about their long-term financial security
Figure 26: Consumers’ confidence in their future financial well-being
The cost of retirement weighs heavily on people’s long-term sense of security
Figure 27: Confidence in future financial wellbeing by gross annual income, October 2014

Value of Savings and Investments

Key points
Saving is a widespread practice
Figure 28: Value of savings and investments, October 2014
Slight increase in value of savings
Figure 29: Values of saving and Investment, November 2013 and October 2014
Some 22% of higher earners have at least £100,000 in savings and investments
Figure 30: Value of savings by household income, October 2014

Type of Saving and Investment Products Owned

Key points
Simplicity rules
Figure 31: Penetration of savings and investments products, October 2014
The investment opportunity
Peer-to-peer lending, or peer-to-peer guidance?
Older consumers with greater amounts of savings are more likely to invest
Figure 32: Age profile of savers and investors, October 2014
Consumers are ill-prepared for the long-term future

Motivation for Saving

Key points
Protection from the unexpected is the main motivation for saving
Figure 33: Consumer motivations for saving, October 2014
Reliance on the state
Retirement is a process, not an event
“Long-term” planning only covers one generation
Shifting priorities
Half of under-25s are saving for education costs
Figure 34: Reasons to save by age, October 2014
Motivation matters

Long-term Financial Confidence

Key points
Changing responsibilities lead to changes in confidence
Figure 35: Consumer assessment of future financial well-being by age, October 2014
The influence of product ownership on confidence
Figure 36: Consumers’ rating of long-term financial security by ownership of savings and investment products, October 2014
Figure 37: Ownership of equity type investment products by confidence in future financial wellbeing, October 2014
The property wealth effect
The influence of value of savings and investments on confidence
Figure 38: Consumer assessment of future financial well-being by value of savings, October 2014
Planning for retirement
Figure 39: Ownership of savings and investment products by age, October 2014

Attitude towards saving and investing

Key points
Saving for peace of mind
Figure 40: Consumer attitude towards saving, October 2014
Affordability is the biggest barrier to saving
Saving is more ad-hoc than habitual for many consumers
Figure 41: Attitude towards savings and investing by trends in adding to savings and spending extra money, October 2014
Figure 42: Attitude towards saving and investing by current financial situation and confidence in financial situation over the next 12 months, October 2014
Variations in savings habits highlight the need for specifically targeted products
Figure 43: Attitude towards saving by gender and age, October 2014
The vital role of the housing market
Figure 44: Attitude towards saving and investing by current housing situation, October 2014

Attitudes towards Savings Products and Providers

Key points
For many consumers, instant access is essential
Figure 45: Consumer attitude towards saving products and providers
Consumers split over interest rates
Too many complicated products prevent consumers from getting the best deal
Figure 46: Attitudes towards saving, by agreement with other attitudinal statements about saving, October 2014
Figure 47: Agreement with various statements about savings by value of savings/investments, October 2014
The role of the web
Figure 48: Agreement/disagreement with the statement “purchasing savings products is complicated” by age, October 2014

Consumers and Investing

Key points
Overwhelming majority of consumers believe investments should be made easier
Figure 49: Consumers attitude towards investing, October 2014
Figure 50: Agreement with the statement “Making investments should be made easier” by annual household income and use of extra money, October 2014
Investing is not perceived to be worth the risk
The mental scars of the financial crisis are still evident
Confident investors make for confident consumers
Figure 51: Security in future financial wellbeing, by agreement with attitudes towards investing, October 2014
Lack of alignment between interest in investment and appetite for risk
Figure 52: Agreement with various statements about investments by age, October 2014

Women, Saving and Investing

Key points
Women are less likely to have savings and/or investments and for these to be of a high value
Figure 53: Value of savings/investments by gender, October 2014
Figure 54: Key financial indicators by gender, October 2014
Savings and investment products perceived to be too complex among women
Figure 55: Ownership profile of savings and investment products, by gender October 2014
Figure 56: Agreement with various attitudes about investment by Gender, October 2014
More reason to link life goals to saving and investment
The need for a confidence boost
Figure 57: Attitude towards saving and investing by gender, October 2014

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