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Financial Services Marketing to C1C2DEs - Market Assessment


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Financial Services Marketing to C1C2DEs - Market Assessment
[author:Bharat Book Bureau Public time:Apr 14, 2007]

Financial Services Marketing to C1C2DEs - Market Assessment

Middle and low earners, the CDEs, are losing out to the affluent ABs, who are increasing their shares of national income and wealth. Although there was a rise in average household income between 1991 and 2001, this was mainly a result of more people working and from steep rises in the mega-incomes received by a few thousand people. Furthermore, households' financial assets fell by 11.5% in 2002, which was more than the 8.3% fall in 2001. However, the roaring property market more than compensated for the fall in financial assets and overall net wealth edged up by 1.2%. The consequent confidence felt by the home-buying and home-owning majority led to the remortgaging boom that released billions of pounds into the economy in 2003.

Debt levels are growing fast. Much of the borrowing has been for property mortgages and remortgages, and to consolidate existing debts. Mortgage-equity withdrawal in 2003 was equivalent to almost 7% of post-tax household income.

The other side of the UK's credit boom is a savings slump. Saving and investing was minimal in 2002/2003 for the majority of households. The latest consumer survey conducted for Key Note suggests a society that is living for today, yet expects financial security in the future - without wanting to pay for it. Independent financial advisers (IFAs) claim, with justification, that much of the current consumer spending is unnecessary and that individuals should instead save for their own futures.

The survey also suggested a marked decline in the number of people wanting to leave assets to children or other relatives, as well as a fall in the numbers prepared to go without luxuries in order to save. Most CDEs have little potential to amass assets, including investments, apart from an owner-occupied home - and almost one person in four believes that property is a better pension investment than a commercial pension plan. Even if rising interest rates cause a property market downturn, property will retain some devotees because it is a tangible asset, and unlike a pension it does not have to be exchanged for an annuity. A cooling property market would lead to displacement investment in pensions and long-term insurance products by the affluent ABs, but to a much smaller extent by the CDEs.

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Source:Free Press Release