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Consumers and Financial Advice - UK - April 2012

Published By :

Mintel

Published Date : Sep 2012

Category :

Banking

No. of Pages : 147 Pages


When looking for an IFA only a minority of British adults say they take into consideration two of the key elements of the advice market that the RDR is striving to improve – adviser qualification standards and how advisers are compensated. Instead, most of the emphasis tends to be placed on adviser reputation and cost.”
TABLE OF CONTENT

Introduction
Abbreviations

Executive Summary
The financial advice market
Friends and family the first port of call
Figure 1: Sources of financial advice or guidance, February 2012
More than two fifths use two or more sources of advice
Figure 2: Number of sources of financial advice or guidance used, February 2012
Market factors
Economic context
Figure 3: Monthly change in RPI and average weekly earnings, January 2008-February 2012
Consumer sentiment
Financial priorities
Regulatory environment
Savings levels and product ownership
Figure 4: Value of investible assets, February 2012
Mortgage and life insurance top advised products owned
Figure 5: Product ownership in key markets for financial advice, February 2012
The consumer
Attitudes and behaviour towards advice
Important factors when choosing an IFA
What we think

Issues in the Market
Why aren’t some of the well-off saving, and what can be done about it?
How is the internet influencing consumer attitudes toward advice?
Do consumers understand the issues the RDR is trying to address?
For what will consumers be seeking out financial advice for in 2012?

Future Opportunities
Face-to-face advice time
On campus financial advice

Internal Market Environment
Key points
RDR due to come into force on 1 January 2013
Number of directly authorised intermediary firms continues to diminish
Figure 6: Total number of directly authorised retail intermediary firms, September 2006-September 2011
In-branch investment advice may also become harder to come by
FSA attempts to ease concern over possible resistance to upfront fees
RDR consumer checklist aims to help clients understand changes to advice
Money Advice Service receiving frequent criticism since its launch

Economic Context
Key points
The slow growth environment
Figure 7: Quarterly changes in GDP and the savings ratio, 1998-2011
Income squeeze still in effect but easing
Figure 8: Monthly change in RPI and average weekly earnings, January 2008-January 2012
Low interest rates make equity-based investments attractive
Figure 9: FTSE 100 and FTSE All Share – closing values, January 2005-December 2011
Figure 10: Agreement with statements about savings behaviour and attitudes, February 2012
Little prospect for a significant rise in mortgage lending
Figure 11: Gross and net secured lending, seasonally adjusted, December 2001-December 2011

Consumer Sentiment
Key points
Consumer confidence set to remain shaky throughout 2012...
Figure 12: UK consumer confidence, March 1997-March 2012
but could be moving upwards by year’s end
2012 personal finance expectations subdued
Figure 13: Personal financial expectations for the coming year, December 2011

Financial Priorities
Key points
Financial priorities for 2012 reflect the cautious mood of consumers
Figure 14: Financial priorities over the coming year, December 2011
Saving will be a luxury for a decent proportion
Figure 15: ‘Any important’ personal financial priorities over the next 12 months, by demographics, December 2011

Value of Investible Assets
Key points
Most British adults have savings worth less than £10K
Figure 16: Value of investible assets, February 2012
Age and the capacity to save
Figure 17: Value of investible assets, by age, February 2012
Savings directly linked to earning power…
Figure 18: Value of investible assets, by socio-economic group, February 2012
Figure 19: Value of investible assets, by gross annual household income, February 2012
but many not taking full advantage of their ability to save

Product Ownership
Key points
Mortgage and life insurance top advised products owned
Figure 20: Product ownership in key markets for financial advice, February 2012
Investment product ownership strongly linked to wealth
Figure 21: Product ownership in key markets for financial advice, by level of investible assets, February 2012
Product ownership by demographics
Figure 22: Demographic profile of product ownership in key markets for financial advice, February 2012

Sources of Financial Advice
Key points
Friends and family the first port of call
Figure 23: Sources of financial advice or guidance, February 2012
Lifestage a key indicator of source of advice used…
Figure 24: Sources of financial advice or guidance, by gender and age, February 2012
…as is level of wealth
Figure 25: Sources of financial advice or guidance, by level of investible assets, February 2012
Those least confident about their finances also less likely to seek advice
Figure 26: Sources of financial advice or guidance, by financial confidence, February 2012
Over two fifths rely on more than one source of advice
Figure 27: Number of sources of financial advice or guidance used, February 2012
Use of multiple sources a good thing for professional advisers
Figure 28: Sources of financial advice by number of sources of financial advice or guidance used, February 2012

Attitudes and Behaviour towards Advice
Key points
Consumers are generally sceptical of financial advisers
Figure 29: Attitudes and behaviour towards financial advice, February 2012
Most are in favour of the move to fees
Figure 30: Agreement with the statement ‘I would rather pay a set fee for financial advice than pay for it through commission’, by source of financial advice, February 2012
Over a quarter doing their own research before seeking advice
IFA clients the least suspicious of the advice industry…
Figure 31: Agreement with the statement ‘Financial advisers are more interested in the commission they’ll earn than what is in their client’s best interest’, by source of financial advice, February 2012
…and also the most willing to pay for advice
Figure 32: Agreement with the statement ‘I would not pay for financial advice’, by source of financial advice, February 2012
Attitudes and behaviour by demographics
Figure 33: Demographic profile of those who were most likely to agree with the statement ‘Before I seek financial advice I do my own research first’, February 2012
Figure 34: Demographic profile of those who were most likely to agree with the statements \'Financial advisers are more interested in the commission they’ll earn than what is in their client’s best interest’ and ‘I would not pay for financial advice’, February 2012
Figure 35: Demographic profile of those who were most likely to agree with the statements ’When it comes to financial advice you tend to get what you pay for’ and ‘I would rather pay a set fee for financial advice than pay for it through commission’, February 2012
Just a minority are confident about arranging products without advice
Figure 36: Confidence in arranging select financial products without advice, February 2012

Important Factors when Choosing an IFA
Key points
Recommendations and track record most influential
Figure 37: Important factors when choosing an IFA, February 2012
Those with previous experience look beyond reputation and price
Figure 38: Important factors when choosing an IFA, by select sources of financial advice or guidance, February 2012
What’s important varies according to age group
Figure 39: Important factors when choosing an IFA, by gender and age, February 2012
Adviser independence a significant factor for those with higher savings
Figure 40: Important factors when choosing an IFA, by level of investible assets, February 2012
Higher earners expect the most
Figure 41: Important factors when choosing an IFA, by socio-economic group, February 2012
Figure 42: Important factors when choosing an IFA, by gross annual household income, February 2012

Financial Advice Target Groups
Key points
Target groups
Figure 43: Financial advice target groups, February 2012
Free Riders
Necessary Evil
Up for Debate
Disengaged
Advised financial product ownership
Figure 44: Financial product ownership, by financial advice target groups, February 2012
Sources of financial advice
Figure 45: Sources of financial advice or guidance, by financial advice target groups, February 2012
What’s important when choosing an IFA
Figure 46: Important factors when choosing an IFA, by financial advice target groups, February 2012
Arranging products without advice
Figure 47: Confidence in arranging select financial products without advice, by financial advice target groups, February 2012

Appendix – Value of Investible Assets
Figure 48: Trends in total value of investible assets, February 2012
Figure 49: Most popular value of investible assets, by demographics, February 2012
Figure 50: Next most popular value of investible assets, by demographics, February 2012

Appendix – Product Ownership
Figure 51: Most popular financial product ownership, by demographics, February 2012
Figure 52: Next most popular financial product ownership, by demographics, February 2012

Appendix – Sources of Financial Advice
Figure 53: Sources of financial advice or guidance, by ownership of select financial products, February 2012
Figure 54: Ownership of financial products, by select sources of financial advice or guidance, February 2012
Figure 55: Most popular sources of financial advice or guidance, by demographics, February 2012
Figure 56: Next most popular sources of financial advice or guidance, by demographics, February 2012
Figure 57: Number of sources of advice used, by demographics, February 2012

Appendix – Attitudes towards Advice
Figure 58: Attitudes and behaviour towards financial advice, by ownership of select financial products, February 2012
Figure 59: Attitudes and behaviour towards financial advice, by level of investible assets, February 2012
Figure 60: Agreement with the statements ‘Before I seek financial advice I do my own research first’ and ‘When it comes to financial advice you tend to get what you pay for’, by demographics, February 2012
Figure 61: Agreement with the statements ‘I would rather pay a set fee for financial advice than pay for it through commission’ and ‘I would not pay for financial advice’, by demographics, February 2012
Figure 62: Agreement with the statement ‘Financial advisers are more interested in the commission they’ll earn than what is in their client’s best interest’, by demographics, February 2012
Figure 63: Confidence in arranging mortgage products without advice, by demographics, February 2012
Figure 64: Confidence in arranging buy-to-let mortgage products without advice, by demographics, February 2012
Figure 65: Confidence in arranging life insurance products without advice, by demographics, February 2012
Figure 66: Confidence in arranging private medical insurance products without advice, by demographics, February 2012
Figure 67: Confidence in arranging pension products without advice, by demographics, February 2012
Figure 68: Confidence in arranging stock market-based investments products without advice, by demographics, February 2012
Figure 69: Confidence in arranging critical illness/income protection products without advice, by demographics, February 2012
Figure 70: Confidence in arranging tax/inheritance planning products without advice, by demographics, February 2012

Appendix – Important Factors when Choosing an IFA
Figure 71: Most popular important factors when choosing an IFA, by demographics, February 2012
Figure 72: Next most popular important factors when choosing an IFA, by demographics, February 2012
Figure 73: Other important factors when choosing an IFA, by demographics, February 2012

Appendix – Financial Advice Target Groups

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