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Savings and Investing-Intermediary Focus-UK-November 2013

Published By :

Mintel

Published Date : Nov 2013

Category :

Banking

No. of Pages : 79 Pages

Financial advisers are burdened by increased costs due to the RDR, however, they are yet to embrace the power of online tools to engage with larger numbers of consumers and make efficiency savings.
Table of Content

Introduction

Abbreviations

Executive Summary

The market
The number of financial advisers increased in 2012
Figure 1: Size of IFA and tied advice market, by firm size, 2010-12
Intermediated sales account for over 90% of the unit trust and OEIC market
Figure 2: Estimated share of gross retail unit trust and OEIC sales, by distribution channel, 2012
Market factors
Impact of the RDR
Almost all advisers have gained full qualifications post-RDR
Face-to-face is the preferred way to receive financial advice
Figure 3: Preferred channels for financial advice, June 2013
An increasing number of consumers manage their own investments
Figure 4: Attitudes towards financial advice, by amount of savings and investments, June 2013
Companies, products and innovations
Financial advice firms diversifying their client offering
Direct discretionary fund managers present a new challenge
The adviser
The majority of advisers remain independent, as the idea of restricted advice fails to catch on
Figure 5: Adviser business models, August 2013
Financial advisers fight over a small pool of mass affluent and affluent clients
Figure 6: Wealth of advised clients, August 2013
Advisers are doing very little marketing to attract new business
Figure 7: Adviser strategies for attracting new business, August 2013
Online channels are often underused by advisers for attracting new clients
Advisers weigh up three key factors when choosing an investment platform
Figure 8: Features that advisers consider important in an investment platform, August 2013
The main challenge to advisers is the increased cost of regulation
Figure 9: Challenges that advisers are facing, August 2013
What we think

Issues in the Market

Where next for unprofitable saving and investment clients?
Should intermediaries improve online presence to better serve their local market?
Will advisers cling onto the badge of ‘independence’?

Trend Application

Intermediaries could embrace online forms of communication to save time and money
Educating consumers is key in making them realise the importance of saving and investing
Intermediaries will have to change the way they market to and manage senior investors

Regulation and Legislation

Key points
Impacts of the RDR
Summary of the RDR changes
Figure 10: Summary of the key requirements for the retail investment market, pre- and post- RDR, 2013
The FCA’s thematic review outlines how firms are implementing the RDR changes
Some financial advisers are unclear on the distinction between independent and restricted advice
Platforms pulled into the independent/restricted debate
Almost all advisers have gained full qualifications post-RDR
Figure 11: Number of advisers as of 31 July, 2013
There still remains some confusion around adviser charging
Capital adequacy rules have been delayed for two years
FSCS levies continue to place a regulatory burden on advisory firms
Auto-enrolment could have knock-on effect for the savings and investment intermediaries market

Market Drivers

Key points
Intended investment activity is out of sync with the rising stock market
Figure 12: Intended investment activity, Q3/Q4 2002-Q3/Q4 2013
Inflation has remained stubbornly high
Only 14% of consumers have over £50,000 in savings and investments
Figure 13: Amount of savings and investments, June 2013
Face-to-face is still the preferred way to receive financial advice
Figure 14: Preferred channels for financial advice, June 2013
Direct-to-consumer DIY methods gain in popularity

Who’s Innovating?

Key points
OpenWork offers advisers support to build their brand identity
Hargreaves Lansdown looks to appeal to consumers trapped in the advice gap
Asset Match will allow IFAs to secure funding
Informed Choice and Best Price Advice launch direct to consumer offerings
SWOT Analysis

Figure 15: Swot analysis for the saving and investment intermediary market, 2013

Competitor Channels

Key points
A note on Product Sales Data
Most banks and building societies have withdrawn from the investment advice market
Figure 16: Volume of regulated retail sales of investment products, year-to-March 2013
An increasing number of consumers manage their own investments
Figure 17: Attitudes towards financial advice, by amount of savings and investments, June 2013
Financial advice firms diversifying their client offering
Discretionary services increase in popularity, particularly amongst intermediaries
Figure 18: Full-service stockbroker assets, by management channel, 2009-12
The direct discretionary model offers a new challenge
Figure 19: Attitudes towards the concept of discretionary fund management, June 2013*

Adviser Share of the Investment Market

Key points
Intermediated sales of unit trusts and OEICS increase in 2012
Figure 20: Gross retail sales of unit trusts and OEICs, by distribution channel, 2008-13
Platforms are popular amongst advisers
Figure 21: Share of gross retail unit trust and OEIC sales, by distribution channel, 2012
Intermediaries dominate distribution of investment bonds
Figure 22: New investment bond premiums*, by sales channel, 2008-12

Adviser Market Size and Firm Rankings

Key points
The number of directly authorised advisers stabilised in 2012
Figure 23: Size of IFA and tied advice market, by firm size, 2010-12
Total population of the advice market has continued to decrease overall
Figure 24: Size of the registered investment advisers (RIA) population, by firm type, 2010-12
Number of advisers has increased post-RDR
Figure 25: Adviser numbers (estimated 2012 and actual end 2012 and 2013)
Large advice networks generate the majority of sales
Figure 26: Top 20 financial advisers in the UK, based on gross sales, Q3 2012-Q2 2013
Note on Matrix Solutions data

Companies and Products

Brewin Dolphin
Ranking
Company description
Product range
Financial performance indicators
Recent activity
Hargreaves Lansdown
Ranking
Company description
Product range
Financial performance indicators
Recent activity
St. James’ Place
Ranking
Company description
Product range
Financial performance indicators
Recent activity
Sesame Bankhall Group (SBG)
Ranking
Company description
Product range
Financial performance indicators
Recent activity

Advertising and Promotion

Key points
Fund managers cut back on advertising to investment intermediaries in the run up to RDR
Figure 27: Advertising expenditure relating to financial advice and intermediaries, by sub-category, three years to 31 August 2013
Fund managers turn to broadsheet newspapers to target intermediaries
Figure 28: Top ten advertisers in the intermediary savings and investments income sub-categories, 2010-13
Fund managers continue to advertise to savings and investment intermediaries through print
Figure 29: Proportional distribution of advertising expenditure on intermediary savings and investments advice, by media type, 2010-13
Figure 30: Proportional distribution of advertising expenditure on intermediary pensions and investments income advice, by media, 2010-13
A note on adspend

Adviser Business Models

Key points
About Mintel’s financial advice research
The majority of advisers remain independent, as the idea of restricted advice fails to catch on
Figure 31: Adviser business models, August 2013
Advisers are confused about restriction and independence
The number of restricted advisers has increased post-RDR
Figure 32: Adviser business models, August 2012 and 2013

Wealth of Advised Clients

Key points
Mass-market consumers find it more difficult to access financial advice
Figure 33: Wealth of advised clients, August 2013
Financial advisers mainly fight over a small pool of affluent clients

Adviser Strategies for Attracting New Business

Key points
Advisers are doing very little marketing to attract new business
Figure 34: Adviser strategies for attracting new business, August 2013
Online channels are often underused by advisers for attracting new clients
Only 4% of advisers have looked into advertising through employers to attract new business
Only 8% of advisers have lowered their charges to attract new business

Features that Advisers Value in an Investment Platform

Key points
Advisers consider usability as the most important feature in an investment platform
Figure 35: Features that advisers consider important in an investment platform, August 2013
Platform cost is important to half of advisers
Advisers can diversify their clients’ assets by having access to a wide range of investments
Customer service-related features are less important for financial advisers when choosing a platform

Adviser Challenges

Key points
Increased compliance costs present a challenge to half of advisers
Figure 36: Challenges that are facing saving and investment intermediaries, August 2013
Further price pressure coming from consumers
Few advisers see direct-to-consumer competitors as a significant challenge
Only 13% of advisers a facing cash flow challenges
Capital adequacy requirements are not a major concern
Around a fifth of advisers aren’t facing any significant challenges

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