Family, Parenthood and the Management of Finances

Family, Parenthood and the Management of Finances - UK

Product Type: Market Research Report
Published by: Mintel International Group Ltd.
Published: August 2006
Product Code: R560-2235

Description

Consumer research consistently shows that family members are a prime source of information and advice for consumers when they come to make important financial decisions. For the first time, therefore, Mintel exclusively examines the role of family, and in particular parents, in influencing people’s attitudes towards money and their purchasing behaviour, as well as how effectively they manage their finances.

This Horizons report presents the results of new consumer data, which will offer insight into the relationship between parents and their children in the context of financial needs, behaviour and decision-making. It examines the extent to which parents help their children to be financially competent and secure, through the provision of financial support, instruction and guidance.

The report also seeks to determine whether people tend to opt for the same providers and make similar product choices as their parents - and whether they inherit similar attitudes towards saving, borrowing and spending. Accordingly, the research tests the notion that an individual’s financial behaviour and choices are often directly linked to those of their parents.

Drawing conclusions from the consumer research analysis, the report goes on to consider the implications of the key findings for the financial services industry. It also identifies opportunities where financial providers can secure new family-related business and suggests examples of innovations that have already been made in this area.

Table of Contents

INTRODUCTION AND ABBREVIATIONS: ABBREVIATIONS
EXECUTIVE SUMMARY: Background; The changing family environment; Financial responsibilities; Preferred sources of financial information and advice; The influence of parents; is acknowledged by half of all adults aged 16-54; Parents’ perspective; Generational differences; In conclusion
FINANCIAL CONTEXT: From little acorns; The financial lifecycle; Shifting dynamics; Rising household debt: a sign of the times; Balancing the need to borrow with the need to save; Student debt; Children’s attitudes towards money; The majority of 15-19-year-olds dislike the idea of being in debt
HOUSEHOLD STRUCTURE: Demographic trends; A variety of family structures; The growth of lone-parent families; and its implications for building a savings ethic in the young; An increasing proportion of grown-up children are returning to the family nest; Young women leave their parental home earlier than men
FINANCIAL RESPONSIBILITY: Identifying the Household Accountants and Financial Decision-makers; Just one person in a household tends to be responsible for ensuring bills are paid; Financial Decision-makers and Household Accountants are not necessarily one and the same 40Figure 20: Cross-analysis - responsibility for making financial decisions, by responsibility for payinghousehold bills/other expenses, May 2006; Women are more likely to manage household expenses; In the majority of couple households, one person takes charge of household finances; Cohabiting men are more likely than married men to leave the bill paying to their partners; ABs are most likely to share financial responsibilities in the home; Young working couples also tend to share the burden; The tendency to share responsibilities increases with household income; Financial independence improves with age; Strong variances by lifestage; Slight regional differences; Female heads of household have lower product holdings than their male counterparts; Those who share financial responsibilities have the greatest product holdings; and therefore are the most financially active
FINANCIAL MENTORS: Learning from experience; Improving financial capability; The importance of parents; Sources of information and advice; The power of personal recommendation; Parents versus professionals; Over half of 16-24-year-olds would go to their parents for advice; while ABs strongly favour IFAs; Main target groups for top four sources; Pre-retirement age group most likely to need and seek out expert advice; Those who share responsibilities are keenest to draw on the services of a financial expert
PARENTAL INFLUENCES: Assessing parental influences on financial behaviour; Young adults receive much financial help and guidance from parents; Nearly half of all ABs received financial support from parents while at university; Repertoire analysis reveals the extent of parental help; Parents can lay the foundations; of financial stability for their children; One in two adults aged 16-54 say their parents influenced their attitude towards money; The parental influence is predominantly positive; Correlation analysis; Strong evidence to suggest parents sway offspring’s selection of products and providers; Definite link between parental influence and help received; Those with a wide product repertoire are most likely to say they expect to get an inheritance; ABs are most likely to have been influenced by parents
PARENT ATTITUDES AND BEHAVIOUR: Encouraging children to save is the most popular way of helping them financially, according toparents; Nearly half of all parents give money-management advice to grown-up children still living athome; Parents’ view versus child’s view; Financial needs change with age; Affluent parents can more easily afford to help their children; Half of parents who save for children also support them at university; Parents provide financial support in multiple ways; Around half of parents want to bequeath their home to their children; and this desire increases with the amount of help already given; Young parents are most eager to bequeath an inheritance; Half of those in the highest income band would rather help their children now or when theyneed it most
GENERATION GAP: Only three in five adults say they are good at managing their money; Young and impulsive; Older and wiser; ABs are more financially confident and capable than other socio-economic groups; Analysis summary; Parents can help their offspring become financially competent; The more help parents give, the better able their children will be to manage their finances; Cluster analysis; A quarter of those in the Foolhardy cluster have a personal loan; The Financially Competent have the widest repertoire of products; The propensity to have control over household finances is lowest among the Foolhardy and theFinancially Na�ve…; mainly because these clusters have a younger age profile; Marriage improves a person’s financial capability; as does owning a home; Broadsheet readers are the most Financially Competent; Developing a savings ethic in the young lays the foundation of financial competency; hence, parents’ influence is key to creating a financially adept consumer base
THE FUTURE: The female influence on the financial services industry is stronger than it seems; Family and friends are hugely influential; Sizeable target audience for IHT planning; Pushing pensions via parents; Encouraging children to get into the savings habit improves their chances of success
APPENDIX: RESEARCH METHODOLOGY

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