Investments
1. Market Context:
- The economic landscape is mixed, with the base rate at 5.25%. More than half of the population anticipates further economic challenges, and a sluggish UK stock market has resulted in less than 1% growth in investment holdings, compared to modest increases in savings. Fewer people are making regular deposits into their investment accounts, and the number of new investors or those expanding their portfolios is declining.
- Hargreaves Lansdown continues to dominate the investment account market, while HSBC and Barclays lead in new account openings and are gaining traction.
2. Investing for the Over 50s:
- The UK’s aging population, coupled with an increasing number of over-50s working part-time, presents new investment opportunities. These include helping those over 50 invest their earnings and advising on how to reinvest pension withdrawals.
- The semi-retired over-50 demographic, which tends to have a higher financial knowledge and risk tolerance, frequently holds savings and investment products. This group often reviews investments through both online sources and Independent Financial Advisors, showing a greater engagement in managing their financial portfolios.
3. The Use of Direct Investment Channels:
- Preference for direct investment channels is growing, especially among those aged 25-44 who seek advice, with a rising minority favoring robo-advice. Across all age groups, the majority of investments are done directly, without seeking advice.
- Major banking brands like Halifax, Nationwide, and Lloyds have gained a larger share in direct investment, reducing the advantage platform brands once had. For direct investors, an existing relationship with a bank is a significant advantage, and reputation plays an important role. Platform brands still offer benefits such as low fees and diverse investment options, but banks, particularly Halifax, have had success converting current account customers to investors.
4. Alternative Investments and the Appeal of Cryptocurrency:
- Around 1 in 10 people exclusively invest in alternative assets, a trend that has been increasing over time. Cryptocurrencies lead the alternative investment market, though adoption varies widely by age. Despite a slight decline among younger investors, cryptocurrency remains the second most popular choice for those aged 18-45.
- The median investment in crypto has increased, indicating greater confidence in the market, especially among younger investors focused on rapid growth and long-term financial goals. The FCA has introduced new rules on promoting cryptocurrencies, pointing to the need for better oversight. Approval of Bitcoin ETFs by the SEC adds credibility to the market, potentially influencing wider adoption and positive investor sentiment.