Savings & Investments

Savings & Investments

Savings and investments form the essential counterpart to the financial services industry's lending activity. The dynamics of the sector are volatile: savings fall as debts rise and vice versa. There are many conflicting pressures and wide swings in the value of savings, depending on the rate of interest and the state of the financial markets. Politically, savings are very important as an indicator of individual and household wealth.

In this Market Assessment report, Key Note examines the savings gap in the context of media concerns that the State will provide inadequate pensions for up to half the population, and that there is limited provision through company schemes. Key Note considers the current state of the economy and the changes in the savings ratio, interest rates and household wealth. Demographic pressures will place a greater burden on the shrinking working population if the elderly or early retired have to be supported from investment returns.

The wealthy invest large and increasing sums in bank deposit accounts and building society savings accounts. Banks compete for those deposits by cutting the cost of access to funds and making it easier to withdraw them. The increase in wealth caused by extra investment by depositors outweighs the growth in consumer debt so, in the aggregate, banks continue to increase the capital under management.

Key Note also considers the development of state-sector savings and investments designed to encourage saving, which have generally been less successful than hoped.

Unit trusts and investment trusts suffered from the stock market falls between 2000 and 2003. Although they are recovering in terms of performance, they have yet to regain their former popularity with households who had considered them much safer investments than they really turned out to be. Pension funds and insurance company funds are more cautiously managed than before the crash, but the expectations and regulatory demands have increased significantly.

1. Introduction

2. Strategic Overview
MARKET DYNAMICS AND SEGMENTATION
Current Status of the Market
Total Industry Value and Growth
Largest Sector and Market Share
Market With Highest Growth Rate
Market With Lowest Growth Rate
DISTRIBUTION
COMPETITIVE STRUCTURE
ADVERTISING
THE CONSUMER
Economic Trends
Inflation
Unemployment
Household Size
Population
Gross Domestic Product
Household Disposable Income
Consumer Trends
MARKET FORECASTS

3. Banks
INTRODUCTION
MARKET SIZE
MARKET SHARE
CONSUMER TRENDS
MARKETING ACTIVITY
Advertising
DISTRIBUTION

4. Building Societies
INTRODUCTION
MARKET SIZE
MARKET SHARE
CONSUMER TRENDS
MARKETING ACTIVITY
Advertising
DISTRIBUTION

5. National Savings & Investments
INTRODUCTION
MARKET SIZE
National Savings
MARKET SHARE
CONSUMER TRENDS
MARKETING ACTIVITY
Advertising
DISTRIBUTION

6. TESSAs, PEPs and ISAs
INTRODUCTION
TESSAs
PEPs
ISAs
Child Trust Fund
Saving Gateway
Stakeholder Savings
MARKET SIZE
CONSUMER TRENDS
Cash ISAs
Investment ISAs
Child Trust Fund
MARKETING ACTIVITY
Advertising
DISTRIBUTION

7. Unit Trusts and Investment Trusts
INTRODUCTION
Unit Trusts
Open-Ended Investment Companies
Investment Trusts
MARKET SIZE
Unit Trusts
Investment Trusts
MARKET SHARE
Unit Trusts
CONSUMER TRENDS
MARKETING ACTIVITY
Advertising
DISTRIBUTION

8. Stocks and Shares
INTRODUCTION
MARKET SIZE
MARKET SHARE
CONSUMER TRENDS
MARKETING ACTIVITY
Advertising
DISTRIBUTION

9. Life Insurance and Pension Products
INTRODUCTION
Life Insurance
Pensions
The Turner Commission
Self-Administered Pension Funds
MARKET SIZE
MARKET SHARE
CONSUMER TRENDS
Life Insurance
Private Pensions
MARKETING ACTIVITY
Advertising
DISTRIBUTION

10. An International Perspective
SAVINGS RATIOS
WEALTH
CANADA
FRANCE
GERMANY
ITALY
JAPAN
SPAIN
THE US

11. PEST Analysis
POLITICAL FACTORS
ECONOMIC FACTORS
SOCIAL FACTORS
TECHNOLOGICAL FACTORS

12. Consumer Dynamics
OVERVIEW
Summary of Results
Table 36: Summary of Results (% of respondents), 2006
BANKS
I Put Money in a Deposit Account With a Bank
BUILDING SOCIETIES
I Put Money in a Savings Account With a Building Society
NATIONAL SAVINGS & INVESTMENTS
I Invest in National Savings & Investments, Including Premium Bonds
TESSAS, PEPS AND ISAS
I Have Contributed to a Cash ISA
I Have Contributed to an Investment ISA
I Think the Child Trust Fund Will Help Instill the Saving Habit
UNIT TRUSTS AND INVESTMENT TRUSTS
I Have Invested in Unit Trusts, Investment Trusts or Other Collective Investment Schemes Directly
STOCKS AND SHARES
I Own Shares in a Company Directly
LIFE INSURANCE AND PENSION PRODUCTS
I Contribute to a Life Insurance Policy Linked to Investments or Profits
I Contribute to a Private, Personal Pension Separate From a Company Scheme
PROPERTY
I Believe Investing in Property Will Give Me Better Returns
SAVING HABITS
I Prefer to Spend My Money
I Save for My Old Age
I Save to Leave Something for the Children
MANAGING SAVINGS
I Am Happy to Manage My Savings and Investments Online
I Am Happy to Manage My Savings and Investments Over the Telephone
FINANCIAL ADVISERS
I Think That There Should Be Savings and Investments Where the Maximum Fee is Set by Law
I Prefer to Talk to a Financial Adviser Who Charges a Fee
I Prefer to Talk to a Financial Adviser Who Is Paid by Commission
Table 47: Attitudes Towards Financial Advisers (% of respondents), 2006
FINANCIAL EDUCATION
I Would Like to Learn How to Save and Invest Sensibly

13. Company/Supplier Profiles
INTRODUCTION
ALLIANCE & LEICESTER PLC
Corporate Strategy
New Product and Brand Developments
Distribution
Advertising
Profitability
Future Company Developments
F&C ASSET MANAGEMENT PLC
Corporate Strategy
New Product and Brand Development
Advertising
Distribution
Profitability
Future Company Developments
FIDELITY INVESTMENT MANAGEMENT lTD
Corporate Strategy
New Product and Brand Development
Advertising
Distribution
Profitability
Future Company Developments
HBOS PLC
Corporate Strategy
New Product and Brand Development
Advertising
Distribution
Profitability
Future Company Developments
LEGAL & GENERAL GROUP PLC
Corporate Strategy
New Product and Brand Development
Advertising
Distribution
Profitability
Future Company Developments
The ROYAL BANK OF SCOTLAND GROUP PLC
Corporate Strategy
New Product and Brand Development
Distribution
Advertising
Profitability
Future Company Developments

14. The Future
THE ECONOMY
Population
Gross Domestic Product
Inflation
Unemployment
Household Disposable Income
FORECASTS
Consumer Issues
Supplier Issues
Barriers to Entry
CONCLUSION

15. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Slips Slightly
Significantly More Adults Are Willing to Borrow
SPENDING FROM SAVINGS
Little Change in Spending from Savings
Saving Grows in Relative Importance

16. Further Sources
Associations
Publications
General Sources
Government Sources
Other Sources
Bisnode Sources