Market Research Logo

Share Dealing - UK - October 2015

Share Dealing - UK - October 2015

“Share dealing appeals to a wider range of people than expected. This is the case in the numbers of people who hold a share dealing account, as well as those who aspire to have an account. The execution-only channel is becoming increasingly important, as many retail investors are finding accessing financial advice prohibitively expensive.” – Sarah Hitchcock, Senior Financial Services Analyst

This report looks at the following areas:

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

UK stockbroking firms experienced a challenging 2014, characterised by increased regulatory pressures and market turbulence. The markets have continued to behave erratically during 2015, and some of the main themes remain the same: margins under rising cost pressure, global economic uncertainty and a stricter regulatory framework. So how are all these affecting retail investment activity?

Mintel’s report investigates this issue, by considering current market conditions, investor attitudes and company developments. To provide context, the report presents an overview of the size and composition of the UK share dealing market, analyses trends in trading activity, and explores individual company propositions and strategy. The overview analysis is complemented by the results of Mintel’s independent online survey. This provides insight into the attitudes, behaviours and intentions of share dealing account customers, along with investors in general.


OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Figure 1: Forecast of total revenues by stockbroking firms, at current prices – Fan chart, 2010-20
Figure 2: Key sector data, 2014
Companies and brands
Figure 3: Share of total revenues by the five largest firms in each sector, 2011-14
The consumer
Figure 4: Ownership of share dealing or spread betting accounts, July 2015
Figure 5: Trading frequency, July 2015
Figure 6: Method of accessing share dealing or spread betting account, July 2015
Figure 7: Interest in opening an account within the coming year, July 2015
Figure 8: Level of investible assets by those with a share dealing or spread betting account, July 2015
Figure 9: Agreement with statements about investing by share dealing and spread betting accountholders, July 2015
Figure 10: Expected investment activity over the next 12 months, July 2015
What we think
ISSUES & INSIGHTS
Shift towards self-directed investing will continue, supported by new digital technology
Fairly good new business prospects over the immediate term
New opportunities linked to pension reform
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
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 stockbrokers
Figure 23: REVENUES FOR SELECTED STOCKBROKERS, 2011 -14
Top five in each sector claim over 70% of sector revenues
Figure 24: Share of total revenues by the five largest firms in each sector, 2011-14
Company profiles – Top five execution-only brokers
Hargreaves Lansdown
Figure 25: Hargreaves Lansdown – Key annual data, 2013-15
Barclays Stockbrokers
Figure 26: Barclays Stockbrokers Ltd – Key annual data, 2012-14
TD Direct Investing
Figure 27: TD Direct Investing Ltd – Key annual data, 2012-14
Equiniti Financial Services
Figure 28: Equiniti Financial Services – Key annual data, 2012-14
Halifax Share Dealing
Figure 29: Halifax Share Dealing Limited – Key annual data, 2012-14
Significant others
Advertising and marketing activity
Sharp fall in adspend by share dealing providers
Figure 30: 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 31: 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 32: 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 33: Ownership of share dealing or spread betting accounts, July 2015
…of which, 59% trade on a daily, weekly or monthly basis
Figure 34: Trading frequency, by management of account, July 2015
Account access
Most clients access their accounts online
Figure 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: Expected investment activity over the coming year, July 2015
APPENDIX
Data sources, abbreviations and supporting information
Market definitions
Data source
Consumer research methodology
Abbreviations
Market size and forecast
Total market forecast – Best- and worst-case scenarios
Figure 42: Forecast of total revenues by UK stockbrokers – Best- and worst-case scenarios, at current prices, 2015-20
Execution-only stockbrokers
Figure 43: Forecast of total revenues by execution-only firms, at current prices – Fan chart, 2010-20
Figure 44: Forecast of total revenues by execution-only brokers – Best- and worst-case scenarios, at current prices, 2015-20
Full service wealth managers
Figure 45: Forecast of total revenues by full service firms, at current prices – Fan chart, 2010-20
Figure 46: Forecast of total revenues by full service wealth managers – Best- and worst-case scenarios, at current prices, 2015-20
Forecast methodology
Fan chart explanation
RESEARCH METHODOLOGY
UK Research Methodology
Sampling and weighting
Face to Face Surveys
Definitions
Brand & Social Media Research
Trade research
Desk research
Statistical Forecasting
The Mintel fan chart

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report