Table of Contents
Issues in the Market
-
- Key issues explored
- Abbreviations
Future Opportunities
-
- IFAs can capitalise on consumers’ lack of confidence in the banks
- It’ll be tough, but the banks can win back trust
- Unorthodox venues can provide a relaxed and open setting
- More and more people are turning to online forums to share experiences and advice
Market in Brief
-
- Key findings of Mintel’s consumer research
-
- Figure 1: Sources of financial advice used, January 2009
- Strong demand for professional advice
- Adapting to a harsh business climate
- Yet more regulation
- A contracting market
- General insurance is the largest sector, by number of DA firms
- Top performers achieved healthy turnover in 2007/08
- Industry adspend cut back
Advice Landscape
-
- Key points
- Historical context: from a polarised to a depolarised marketplace
-
- Figure 2: The advice landscape pre- and post, June 2005
- Only a handful of banks switched to a multi-tie approach…
- …most kept existing arrangements
The Impact of the Retail Distribution Review
-
- Key points
- There’s more change on the way with RDR implementation
- Redefining ‘sales’ versus ‘advice’…
-
- Figure 3: Proposed regulatory landscape, 2012
- …but does it muddy the water?
- Moving away from commission-based remuneration
- Separating advice from products
- An increase in capital requirements
- Wider implications
- Mixed industry reaction
- Going forward
Trade Perspective
-
- About the respondents
- Firms are generally positive about the RDR proposals…
- …but not all are convinced the changes will create new opportunities
- Clients are becoming more risk-averse in the current climate
- The secret to success is a strong capital base and providing consistently good service
- Respondents expect further market consolidation
- Advisers have a role to play in winning back consumer trust
Market Environment
-
- Key points
- Economic downturn: Implications for the advice market
- The crunch effect on investor behaviour
- Products in and out of favour
-
- Figure 4: General trends in consumer demand for financial products, 2009
- Market turmoil…
-
- Figure 5: FTSE 100 and FTSE All Share – daily index movements, January 2000-January 2009
- …could increase demand for advice among some
- Income and spending growth slows
- Housing slump hits mortgage advice market
-
- Figure 6: Number of loans for house purchase, by type of borrower, 2002-08
- Protection advisers shift focus away from mortgage-linked business
-
- Figure 7: Number of new regular-premium protection product sales, by type, 2004-08
Competitive Context
-
- Key points
- A variety of consumer advice sources
-
- Figure 8: Sources of financial information and advice
- Price-comparison sites have altered the general insurance landscape…
- …and moved into the advice arena
Cost, Access and Trust
-
- Key points
- Time to take stock
- CAT barriers
- Confidence had been hit
-
- Figure 9: Agreement with statements about financial advisers, by gender, December 2008
- Consumers perceive commission bias, whether true or not
Strengths and Weaknesses
-
-
- Figure 10: Financial advice market – summary of strengths, weaknesses, opportunities and threats, 2009
-
Size and Structure of the Intermediary Market
-
- Key points
- Current regulatory structure of the advice market
-
- Figure 11: Overview of the UK advice market, 2009
- Contraction in the number of DA intermediary firms set to continue
-
- Figure 12: Total number of directly authoritised retail intermediary firms, 2006-08
- Mortgage sector hit hard by the property slump
-
- Figure 13: Number of directly authoritised retail intermediary firms, by sector (primary category), 2006-08
- Strong growth in the number of general insurance ARs
-
- Figure 14: Number of general insurance ARs and DA intermediary firms, by type, 2006-08
- More IFAs make the switch to AR status too
-
- Figure 15: Number of financial advice ARs and DA intermediary firms, by type, 2006-08
- The number of primary-category mortgage firms fell by 14% in 2008
-
- Figure 16: Number of mortgage ARs and DA intermediary firms, by type, 2006-08
Main Advice Sectors
-
- Key points
- Intermediaries work across the full range of financial sectors
-
- Figure 17: Summary of the sectors written by retail intermediaries, 2009
- The top reason people seek advice is mortgage-related
-
- Figure 18: Intermediaries’ share of new mortgage business, by type of loan, 2006-08
- Intermediaries generate the lion’s share of protection business
-
- Figure 19: New individual protection business, by distribution channel, 2005-08
- Sub-sector performance
- IFAs dominate the sale of individual pensions…
-
- Figure 20: New individual pensions business, by distribution channel, 2005-08
- …but in the retirement income market, IFAs’ share continues to erode
-
- Figure 21: Distribution of new retirement income products business, by channel, 2005-08
- Intermediaries sell the majority of new insurance-linked investments…
-
- Figure 22: New insurance-related investment business, by distribution channel, 2005-08
- …and collective investments
-
- Figure 23: Gross retail sales of UK-domiciled unit trusts and OEICs, by distribution channel, 2005-08
- Implication and opportunity
- General insurance intermediaries fight back
-
- Figure 24: General insurance business (personal lines only), by distribution channel, 2003-07
- Sector outlook
Adviser Firm Rankings
-
- Key points
- Sesame and Openwork are the largest IFA firms by turnover
-
- Figure 25: Top 15 financial advisers in the UK, based on relevant turnover, 2007/08
- About the top three
Brand Communication and Promotion
-
- Key points
- Mortgage intermediary adspend dramatically cut in 2008
-
- Figure 26: Advertising expenditure by financial intermediaries, by sector, 2006-08
- Press advertising accounts for three quarters of industry expenditure
-
- Figure 27: Proportional distribution of intermediary advertising expenditure, by media type, 2008
- Top IFA firms are conspicuous by their absence
-
- Figure 28: Advertising expenditure by financial intermediaries, by top 25 advisers, 2006-08
The Consumer – Wealth Distribution
-
- Key points
- About Mintel’s consumer research
- Online focus group
- Over a third of UK adults have little or no savings
-
- Figure 29: Value of savings and other investible assets, January 2009
- Wealth increases with age
-
- Figure 30: Value of savings and other investible assets, by gender, age and socio-economic group, January 2009
The Consumer – Advice Sources Used
-
- Key points
- People are most likely to consult family and friends on financial matters
-
- Figure 31: Sources of financial advice used, January 2009
- Credit crisis has undermined trust in the banks
- Most people have only used one advice source
-
- Figure 32: Number of financial advice sources used, January 2009
-
- Figure 33: Sources of financial advice used, by number of sources used, January 2009
- ABs make the greatest use of IFAs
-
- Figure 34: Sources of financial advice used, by gender and socio-economic group, January 2009
- Lifestage events increase the need for expert advice
-
- Figure 35: Sources of financial advice used, by age, January 2009
- The more people earn, the more advice sources they have used
-
- Figure 36: Sources of financial advice used, by gross annual household income, January 2009
- Summary analysis
-
- Figure 37: Key demographic groups and typical advice needs, by source category, January 2009
- The affluent prefer to put their faith in an IFA
-
- Figure 38: Sources of financial advice used, by value of investible assets, January 2009
The Consumer – Advice Needs
-
- Key points
- Getting a mortgage is a key driver for seeking expert advice
-
- Figure 39: Financial matters previously sought advice on and interested in seeking advice on in the future, January 2009
- Many pension holders fail to take professional advice
- Significant latent demand for advice
- Advice needs change with age
-
- Figure 40: Financial matters previously sought advice on, by gender and age, January 2009
- Wealth also dictates advice needs
-
- Figure 41: Financial matters previously sought advice on, by value of investible assets, January 2009
- IFAs generally cater for more complex advice needs
-
- Figure 42: Financial matters previously sought advice on, by source of advice used, January 2009
- Around one in ten people aged 35-44 are interested in seeking advice on property investment
-
- Figure 43: Financial matters interested in seeking advice on in the future, by gender and age group, January 2009
The Consumer – Attitudes Towards Professional Advice
-
- Key points
- Most people take charge of their own finances and fail to seek expert help
-
- Figure 44: Attitudes towards professional financial advice, by gender, January 2009
- 45-54-year-olds are the most financially independent
-
- Figure 45: Attitudes towards professional financial advice, by age, January 2009
- Half of those in need of debt advice want to get financially fit
-
- Figure 46: Attitudes towards professional financial advice, by financial matters interested in getting advice on in the future, January 2009
- Segmenting the population according to their attitudes towards advice
-
- Figure 47: Financial advice clusters, January 2009
-
- Figure 48: Composition of financial advice clusters, January 2009
- Basic Advice Targets
- Price Sensitive
- Self-searchers
- Apathetic
- Nearly half all of Basic Advice Targets have little or no savings
-
- Figure 49: Value of savings and other investible assets, by advice cluster, January 2009
- Self-searchers are most likely to draw on a range of advice sources
-
- Figure 50: Type and number of advice sources used, by advice cluster, January 2009
- The Price Sensitive are keenest on investment advice
-
- Figure 51: Financial matters interested in seeking advice on in the future, by advice cluster, January 2009
- Further analysis
Appendix – Advice Sources by Demographics
-
-
- Figure 52: Sources of financial advice used, by demographic sub-group – part 1, January 2009
- Figure 53: Sources of financial advice used, by demographic sub-group – part 2, January 2009
-
Appendix – Advice Clusters by Demographics
-
-
- Figure 54: Demographic profile of advice clusters – part 1, January 2009
- Figure 55: Demographic profile of advice clusters, by demographic sub-group – part 2, January 2009
-
Back to top