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The report has been coordinated by BME Consuting and an extensive summary will be published in the BOLSA magazine available at www.bolsasymercados.es
The report includes a poll carried out among 8,000 households in 8 European countries.
47% of European households' long term deposits is made up by life insurance policies and pension funds while the second most important category is term deposits, with a relative weighting of 21%. Investment Funds accounted for 13% of the total and lagging them were shares and bonds, with weightings of 9% and 10% respectively.
The figures are extracted from the report "The EU market for consumer long-term savings vehicles: Comparative analysis of products, market structure, costs, distribution systems and consumer saving patterns", which was made by consortium coordinated by BME Consulting, Bolsas y Mercados Españoles' consulting division, after winning the tender called by the European Commission.
The report focuses on 5 categories of savings products in which households invest for the long term:
- Long term deposits and other comparable deposit products.
- Listed shares and bonds
- Investment funds
- Life insurance with savings/investment component.
- Pension funds
The report states that the European long term retail savings market remains highly fragmented. The products are basically domestic and consumers are generally hesitant to buy foreign products and deal with foreign intermediaries. There are also marked differences across countries.
A significant proportion of the people that save money do not necessarily do so with a long term perspective. Saving is often based on the person's decision to create a reserve fund. Once the investment is made, revision of savings and saving-decisions are rare. This passive attitude results in considerable costs for clients. Many consumers give the present priority over the future and in doing so they fail to realize the importance of long term investing.
However, the importance of the integration that is taking place indirectly through collective investment instruments should not be ignored. The assets under custody at these firms are becoming more and more diversified internationally.
The report, which is based on a thorough analysis of available statistical data for 2005 and 8,000 polls carried out in 8 European Union countries, offers a holistic overview of savings and deepens into the key aspects of the European financial market, in this way providing deep insight into present and future prospects for long term retail products.
The report focuses on the trends followed by households' long term savings between 1999 and 2005, a sufficiently extensive period that offers the advantage that it spans two different cycles for the financial markets and the economy, which helps to reduce risks associated with overestimating cyclical factors. The period chosen for the analysis featured not only a marked trend of economic growth and innovation in the financial sector but also a significant impact on consumers' attitudes: the arrival of the euro, the IT bubble, terrorist attacks, corporate scandals, etc.
