The Future of Savings and Investments for the Self-Directed

Published by	Datamonitor
Published	February, 2005	Product code	26791
Content info	32 pages
Price	Not Available

Introduction
Related Reports

This publication has been discontinued on July 19, 2011.

Introduction

Overview

Introduction

This thought leadership piece of analysis assesses the key drivers behind self-directed behaviour and the emerging customer propositions geared towards meeting the needs of this investor group. It finishes with Datamonitors independent opinion as to the winning business model for these self directed customers in the future.

Scope

Provides a full analysis of the current scope of self-direction including primary research data from Datamonitors New Consumer Insight Survey
Outlines the components of the ultimate solution for customers taking a self-directed approach to their savings and investment needs
Covers the non-life savings and investment sectors including deposits, investment funds, equities, bonds, structured products and portfolio management
European in focus, but contains ideas and analytical frameworks that are applicable at a global level

Report Highlights

Datamonitors 2004 survey of European consumers reveals that at an overall level the inherent desire to seek the aid of a broker or adviser in managing finances is quite weak. Only 17.2% of European consumers for example agreed with the statement "I prefer to use a broker/adviser to manager my finances".

Providers should empower customers with the information, support, and full range of product choices to allow them to manage the majority of their savings and investment needs independently. Encouraging rather than insisting upon self-direction through product design, financial education and the necessary support, including, where needed, advice.

Datamonitor is convinced that a comprehensive self-directed savings and investment proposition is a robust and viable long-term alternative to strategies based around either narrower product specialisms or an advice-lead "wealth management" approach.

Reasons to Purchase

Assess the market opportunity presented by the self-directed segment and its relative weight in the wider savings and investments sector
Better understand what governs a self-directed approach to savings and investments to support marketing efforts towards existing and potential clients
Benchmark your value proposition against Datamonitors expert opinion of the ideal offering to see where refinements and improvements can be made

THE LONG-TERM POTENTIAL FOR SELF-DIRECTION

Introduction
The current scope of self-direction

European consumers are not overly keen to seek advice about finances
Insufficent expertise is more important than time pressures in encouraging the use of advisers
Advisers are heavily relied upon by 30% in choosing a savings and investment product
Different products are subject to different levels of self-directed behaviour

Drivers and barriers behind self-direction

Customer considerations and perceptions play a key role in the short-term
The impact of the prevailing investment environment on self-directed behavior is complex in nature
Investment firms fuelled mistrust of their own advice
A series of longer-term factors are also set to boost self-direction

Supply side considerations

DESIGNING A SOLUTION FOR THE SELF-DIRECTED

Emerging customer propositions

There are at least four service offerings that attract self-directed investors

Online banking and direct savings

Online banking and direct savings are a proven success story
Online banks are potentially in a strong position, but must go further

Online stockbroking

Online stockbroking operations are experiencing a come-back...
...and have incorporated a wide range of improvements to benefir clients

Fund supermarkets

Many fund supermarkets have followed a similar path to stockbrokers...
...but also have the option to turn more towards financial adviser channels
The fund supermarket concept raises some important considerations

Wrap account platforms

Wrap accounts allow investors to see all their investments in one place
The UK is tipped to be the next big market for wrap accounts
But wrap accounts are not currently been geared towards the self-directed

Strategic considerations

A step change for providers
Key Failings to be addressed
Positioning and objectives

Components of the ultimate solution

(1) Online account management platform with a full complement of valuation, reporting and informational tools.
(2) Access to a full range of asset classes and providers through a well-designed series of product and service vehicles.
(3) Offline and online customer support.
(4) Access to relevant research, practical information to support decision making including and, where needed, advice.

CONCLUSION

APPENDIX

Data tables
Further reading

Datamonitor Savings & Investments SPP Reports

Asset Management and Funds
Offshore Savings and Investments
Retail Savings and Investments

Related Global Wealth Service SPP Reports

Datamonitor Financial Services Consulting
SPP writing team
List of Tables

Table 1: Statement: I prefer to use a broker/advisor to help manage my finances
Table 2: Statement: I would consider using a broker/advisor as I do not have enough time to manage my finances myself
Table 3: Statements: I would consider using a broker/advisor as I do not have enough knowledge to manage my finances myself
Table 4: Which source of information would you most rely on if you were considering which savings or investment policy to open?
Table 5: Europe: retail savings and investments balances, segmented by broad product line, 2003
Table 6: European Internet banking customer numbers and forecasts, 2000-2006f

List of Figures

Figure 1: European consumers have no strong desire to seek the help of an adviser to help manage their finances
Figure 2: A quarter of European consumers agree that time pressures make advice a logical option in managing their finances
Figure 3: A third of Europeans would consider using an adviser to help manager their finances due to lack of knowledge
Figure 4: Advisers are far from the only trusted source of information in researching a savings and investment decision
Figure 5: The propensity for retail investors to act in a self-directed manner varies substantially by asset class
Figure 6: The advice wave: market turbulence has generated a significant flight to safety among investors
Figure 7: Forces for and against increased self-direction in savings and investments
Figure 8: Internet Banking has grown substantially across Europe
Figure 9: The key features of several product and technological developments needs to be combined and enhanced
Figure 10: Product and service vehicles that from part of the ultimate self-directed customer proposition
Figure 11: A comprehensive self-directed solution: one of four long-term strategic options in the savings and investment sector