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Mass Affluent and Affluent Financial Advice - UK - November 2017

Published By :

Mintel

Published Date : Nov 2017

Category :

Banking

No. of Pages : N/A

The financial advice market for mass affluent and affluent consumers is in a healthy position. This is a segment of consumers with above-average need for advice and greater capacity to pay for it. However, it is not without its challenges, with new regulations on the horizon and the ongoing challenge of convincing mass affluent consumers of the positives of robo-advice.
Table of contents

OVERVIEW
What you need to know
Definitions
EXECUTIVE SUMMARY
The market
The number of advice firms fell slightly in 2016
Figure 1: Number of financial advice firms, 2008-16
MiFID II and a new definition of advice on the horizon
The consumer
69% have used professional advice in the last three years
Figure 2: Sources of financial advice used in the last three years, August 2017
Investments are the most common reason to seek advice
Figure 3: Products and services for which advice has been used in the last three years, August 2017
Meeting face-to-face is the preferred channel
Figure 4: Willingness to pay for different financial advice channels, by type of product, August 2017
and is the most influential factor in choosing an adviser
Figure 5: Important factors when choosing a financial adviser, August 2017
Consumers need help to understand the cost and quality of advice
Figure 6: Concerns about using financial advice, August 2017
Independent advisers are preferred over product providers
Figure 7: Attitudes towards financial advice, August 2017
Automated advice has a lot of convincing to do
Figure 8: Attitudes towards automated advice services, August 2017
What we think
ISSUES AND INSIGHTS
Room for improvement in consumer perceptions
The facts
The implications
Automated advisers need to allay security concerns
The facts
The implications
Does a focus on individual events raise the value of specialist advice?
The facts
The implications
THE MARKET WHAT YOU NEED TO KNOW
The number of advice firms fell slightly in 2016
MiFID II and a new definition of advice on the horizon
THE FINANCIAL ADVICE MARKET
The number of advice firms fell slightly in 2016
Figure 9: Number of financial advice firms, 2008-16
Complaints continued to fall last year
Figure 10: Number of complaints made to financial services firms associated with advising, selling and arranging, 2013-16
Figure 11: Number of complaints made to financial services firms associated with advising, selling and arranging, by product type, H2 2016
REGULATORY AND LEGISLATIVE CHANGES
Changing the definition of advice
MiFID II due to come into effect
FCA delays review of RDR until 2019
APFA and WMA merge to form new adviser trade body
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Firms look to expand automated services in the mass affluent sector
Fee structures could be set for an overhaul
COMPETITIVE STRATEGIES
High street banks
Barclays
HSBC
Lloyds
RBS Group
Santander
Automated options for the mass affluent sector
MiFID II to prompt a price war?
THE CONSUMER WHAT YOU NEED TO KNOW
69% have used professional advice in the last three years
Investments are the most common reason to seek advice
Meeting face-to-face is the preferred channel
and is the most influential factor in choosing an adviser
Consumers need help to understand the cost and quality of advice
Independent advisers are preferred over product providers
Automated advice has a lot of convincing to do
SOURCES OF FINANCIAL ADVICE
A greater need for advice
Figure 12: Sources of financial advice used in the last three years, August 2017
40% have consulted an IFA in the last three years
Under-45s are significantly more likely to use professional advice
Figure 13: Sources of financial advice used in the last three years, by age, August 2017
REASONS FOR USING ADVICE
Savings, investments and pensions dominate advice needs
Figure 14: Products and services for which advice has been used in the last three years, August 2017
Consumers need for advice is shaped by their stage of life
Figure 15: Products and services for which advice has been used in the last three years, by age, August 2017
INTEREST IN FINANCIAL ADVICE CHANNELS
Face-to-face is the preferred channel
Figure 16: Willingness to pay for different financial advice channels, by type of product, August 2017
Insurance brokers have fallen from favour
Younger consumers are the most willing to pay
Figure 17: Unwillingness to pay for financial advice via any channel, by type of product, by age, August 2017
Around one in ten is willing to pay for automated advice
Figure 18: Willingness to pay for financial advice using an automated online service, by type of product, by gender, August 2017
FACTORS AFFECTING CHOICE OF ADVISER
Sector specialists are favoured over independent advisers
Figure 19: Important factors when choosing a financial adviser, August 2017
Cost is key
Online channels have a long way to go
but appeal to a fifth of under-45s
Figure 20: Important channel-based factors when choosing a financial adviser, by age, August 2017
CONCERNS ABOUT USING FINANCIAL ADVICE
Consumers struggle to judge the quality of advice
Figure 21: Concerns about using financial advice, August 2017
Providers need to do more to justify the cost of advice
and to improve their perceived trustworthiness
Figure 22: Response to the statement Financial advisers cant be trusted to offer impartial advice, by age, August 2017
IFAs provide a more convincing case about the benefits of advice
Figure 23: Agreement with concerns about using financial advice, by source of financial advice used in the last three years, August 2017
ATTITUDES TOWARDS FINANCIAL ADVICE
Partiality is a major concern
Figure 24: Attitudes towards financial advice, August 2017
More could be done to improve the perception of the benefits of advice
Tailoring services around life events could expand the market
ATTITUDES TOWARDS AUTOMATED ADVICE
Human advisers are overwhelmingly preferable to automated platforms
Figure 25: Attitudes towards automated advice services, August 2017
Convincing people of security credentials is essential for growth
Nearly half of wealthy consumers consider their needs too complex for robo-advice
but 62% of younger consumers would be willing to give it a try
Figure 26: Agreement with the statement I would feel comfortable following automated advice based on my financial information, by age, August 2017
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

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