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Published by: Mintel International Group Ltd.
Published: Sep. 1, 2006 - 101 Pages
Table of Contents
- ISSUES IN THE MARKET
- Interest in the mass affluent market has intensified
- ABBREVIATIONS
- DEFINING THE MASS AFFLUENT MARKET
- Increasing affluence has enabled wide segmentation
- Financial solutions grow more complex
- Figure 1: Definition of the mass affluent market, August 2006
- Industry figures broadly concur
- Figure 2: Levels of assets associated with the mass affluent, August 2006
- MARKET IN BRIEF
- A steady economy will encourage investment
- A positive outlook supports investment in traditional quarters
- Figure 3: FTSE 100 and FTSE All Share indices, January 1996-June 2006
- In bear market years investors take refuge in safer products
- Profit may be realised more quickly through stockmarket investment
- The market will expand aligned with stockmarket growth
- A disparate range of suppliers offer investment services
- Broadsheet newspapers offer a decent outlet for advertisers
- Channels to market
- Third agers are likely to be actively considering investment choices
- Younger people favoured BTL investment
- Aspirational/mass affluent more likely to favour cash ISAs
- BROADER MARKET ENVIRONMENT
- Consumers develop a penchant for saving
- Figure 4: PDI, consumer expenditure and savings, 2005-11
- Key economic activity indicators appear stable in the medium term
- Figure 5: GDP annual change, RPI rate and percentage of workforce unemployed, 2001-10
- Confidence to invest is relatively high for more affluent consumers
- Figure 6: Consumer confidence, by income band, July 2002-June 2006
- Identifiable needs steer investment goals
- Figure 7: Hierarchy of needs appropriate for investment goals, July 2006
- Higher-level needs are more complex
- Motivation to invest will grow stronger
- INTERNAL MARKET ENVIRONMENT
- The number of ABs is projected to increase steadily over the next few years
- Figure 8: Number of individuals in the AB socio-economic group, 2005-11
- The number of higher-rate taxpayers will grow significantly by 2006/07
- Figure 9: Forecast of income tax liabilities, by income range, 2005/06 and 2006/07
- Investment choices gradually become more complex
- Figure 10: Investment outlook maturity model, July 2006
- Investors have been prompted to consider property investment
- Figure 11: Average house prices, 1970-2006
- Investors track the market
- Figure 12: FTSE 100 and FTSE All Share indices, January 1996-June 2006
- Unit trust and OEIC net sales grew by 71
- % between 2004 and 2005
- Figure 13: Collective investments, unit trust and OEIC net sales, 2001-05
- Pensions reform and SIPPs
- Tax amendments
- Changes to inheritance tax
- Portability of supplementary occupational pension rights within the EU
- EU strategy for financial services
- MiFID 'the most significant EU legislation for investment intermediaries and financial markets since 1995' - FSA
- Traditional investments are most appealing
- COMPETITIVE CONTEXT
- Sales of low-risk investment products benefited from the bear market of 2000-03
- Figure 14: Total invested in NS&I products and amount invested in Premium Bonds, new sales, 2000-06
- Consumers drift towards low-risk products and steady saving
- Investment in buy-to-let has grown rapidly...
- Figure 15: BTL mortgages outstanding, by volume and value, 2001-05
- ...but investors might not wait for long-term profits
- STRENGTHS AND WEAKNESSES IN THE MARKET
- Increasing wealth and keen investors will drive this sector forward
- Figure 16: Summary chart of the mass affluent sector’s strengths and weaknesses, 2006
- Fluidity of this group can equally cause problems
- MARKET SIZE AND FORECAST
- Numerical analysis of the wealth management market
- Figure 17: Distribution of free (investible) assets among consumers, by investment group, June 2006
- Value of free assets among investor groups
- Figure 18: Estimated value of investible assets held by private individuals, by group, June 2006
- Average incomes are projected to increase
- Figure 19: Income distribution, by income bracket, 2006/07
- Private investors with accounts of £50,000-249,999 held an average £121,000 in investments
- Figure 20: Number of stockbroker accounts, by size and value, December 2005
- Premium banking
- Buoyant markets will encourage investment
- Forecast
- Scenario 1 - a steady market
- Figure 21: Forecast of selected investment groups, Scenario 1, 2006 and 2011
- Scenario 2 - a significant increase in number
- Figure 22: Forecast of selected investment groups, Scenario 2, 2006 and 2011
- MARKET SHARE
- A market of many dimensions
- Barclays is the largest premium bank account provider
- Figure 23: Estimated number of customers, premium banking services, 2005
- Affluent consumers will be encouraged to invest through premium banking services
- ISA/OEIC providers
- Figure 24: Leading ISA (unit trust)/OEIC providers, by funds under management, April 2006
- COMPANIES AND PRODUCTS
- Account features may be more influential
- Figure 25: Representative sample of premium bank account services and rates, July 2006
- PREMIUM BANKING SERVICES
- Barclays
- HSBC
- Lloyds TSB
- NatWest/RBS
- St James's Place
- Stockbrokers and fund managers
- Wealth managers and asset managers
- IFAs
- Plainly defined services will make choosing a provider easier
- BRAND COMMUNICATION AND PROMOTION
- Press advertising is the prime advertising outlet for asset managers
- Figure 26: Asset management advertising expenditure, by media outlet, June 2005-May 2006
- Portfolio management receives the most coverage
- Figure 27: Asset management advertising expenditure, by sector, June 2005-May 2006
- New Star was the largest advertiser
- Figure 28: Asset management advertising expenditure by selected providers, June 2005-May 2006
- 76% of unit trust advertising expenditure was allocated towards press advertising
- Figure 29: Unit trust advertising expenditure, by channel, June 2005-May 2006
- HSBC allocated around £378,000 to advertise its Premier account
- Figure 30: Premium bank account advertising expenditure, by product, June 2005-May 2006
- Brand positioning will enable best performers to stand out
- CHANNELS TO MARKET
- Specialists strive for superiority in this market
- Figure 31: Distribution model for higher-quality financial services and products, August 2006
- Basic banking services offer a firm foundation
- Figure 32: Banking model for mass affluent services, August 2006
- A penchant for control might lead to single-tie investment
- Figure 33: IFA distribution amongst the wealth management market, August 2006
- Investment coaching for the next generation
- THE CONSUMER - RELATIVE WEALTH AND PRODUCT OWNERSHIP
- Some 15% of consumers confirm investible assets in excess of £30,000
- Figure 34: Investible assets of the overall sample, June 2006
- Those refusing to reveal assets represent a broad spread
- Figure 35: Consumers refusing to provide answer to question on investible assets, by socio-economic group, June 2006
- The extended mass affluent group constitutes 3 million consumers
- Figure 36: Affluence triangle created from consumer results relating to investible assets, June 2006
- Mass affluent group peaks among those aged 55-64
- Figure 37: Investible assets of the overall sample, by gender, age and socio-economic group, June 2006
- Implications and opportunities
- Southern bias among the mass affluent, not so for the affluent
- Figure 38: Investible assets of the overall sample, by TV region and age/socio-economic groups, June 2006
- Implications and opportunities
- Third age is where the wealth is
- Figure 39: Investible assets of the overall sample, by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- Target the mass affluent via quality newspapers and Waitrose
- Figure 40: Investible assets of the overall sample, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, June 2006
- Implications and opportunities
- Pensions and ISAs are owned by the majority
- Figure 41: Financial product ownership among those with investible assets in excess of £30,000, June 2006
- Cash and pensions are important to the mass affluent
- Figure 42: Financial product ownership among those with investible assets in excess of £30,000, by investible asset band, June 2006
- Implications and opportunities
- Company pensions are still ‘in fashion’
- Figure 43: Product ownership of more affluent respondents (top five), by gender, age and socio-economic group, June 2006
- Implications and opportunities
- Third agers endorse equity ISAs
- Figure 44: Product ownership of more affluent respondents (top five), by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- Broadsheets are the answer
- Figure 45: Product ownership of more affluent respondents (top five), by new technology users, newspaper readership, commercial TV viewing and supermarket usage, June 2006
- Implications and opportunities
- Younger respondents favour BTL property investments
- Figure 46: Product ownership of more affluent respondents (next five), by gender, age and socio-economic group, June 2006
- Implications and opportunities
- Retirees revert to collective investments and investment bonds
- Figure 47: Product ownership of more affluent respondents (next five), by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- THE CONSUMER - NEW BUSINESS OPPORTUNITIES
- Buy-to-let remains ‘flavour of the month’
- Figure 48: Products that more affluent respondents are intending to arrange in the next year, 2004 and 2006
- Investor sentiment improves, for now
- Younger respondents are looking to bolster their ISA holdings
- Figure 49: Products that more affluent respondents are intending to arrange in the next year (top five), by gender, age and socio-economic group, June 2006
- Implications and opportunities
- Families migrate towards the stock market
- Figure 50: Products that more affluent respondents are intending to arrange in the next year (top five), by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- Pensions for younger respondents, bonds for the over-55s
- Figure 51: Products that more affluent respondents are intending to arrange in the next year (next five), by gender, age and socio-economic group, June 2006
- Implications and opportunities
- Pre-/no family sub-groups are to assess their pension arrangements
- Figure 52: Products that more affluent respondents are intending to arrange in the next year (next five), by lifestage and Mintel’s Special Groups, June 2006
- The ‘affluent’ head the list for BTL properties
- Figure 53: Products that more affluent respondents are intending to arrange in the next year, by investible asset band, June 2006
- APPENDIX: RESEARCH METHODOLOGY
AbstractThe main objectives of this report are to identify investment priorities of the mass affluent and to identify how investor sentiment has changed since the last report.
In order to carry out these objectives, Mintel looks at mass affluent sentiment towards investment and trend data regarding selected asset classes is analysed. Amongst other subjects consumer confidence, growing affluence among the population, new concepts in this market and the impact of legislation are examined. Consumer research gathered especially for this report looks at which investment products are held by more affluent consumers. Consumer research also details where more affluent individuals seek advice about their investment choices.
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