Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Embracing the media evolution
- Creating a new relationship between advisers and consumers
Market in Brief
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- Most popular sources of financial advice
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- Figure 1: Trends for main sources of financial advice used, 2009 and 2010
- Attitudes towards financial advice varies between different groups
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- Figure 2: Attitudes towards financial advice, February 2010
- Online advice is growing in importance
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- Figure 3: Attitudes towards online sources of financial advice, June 2009
- Regulatory upheaval – the Retail Distribution Review
- There is little appetite for fee-based advice
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- Figure 4: Amount people are prepared to pay upfront for independent financial advice, February 2010
- Number of directly authorised financial advice firms falls
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- Figure 5: Total number of directly authorised firms, 2006-09
- Mortgage advice
- General insurance advice
- Financial advice (investments and pensions)
Impact of the Retail Distribution Review
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- Key points
- Outline of the RDR
- Potential opportunities and implications
- New categories for advice services
- Simplified and Basic Advice
- The new landscape for financial advice
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- Figure 6: Proposed regulatory landscape, 2013
- Charging structures
- Improving professional standards
- Costs and timeline for implementation
- The IFA population set to decline
- The IFA perspective
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- Figure 7: IFA views on the impact of the RDR, November 2009
- Increase in capital requirements
Demographic and Macroeconomic Context
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- Key points
- Ageing population drives demand for long-term saving products
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- Figure 8: Cohort life expectancy at age 60, by gender, 1981-2056
- Auto-enrolment/NEST should boost market for pension advice
- Low interest rates and rising inflation limit returns for savers
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- Figure 9: Monthly changes in the annual rate of inflation* and changes in the bank of england base rate, January 2005-10
- FTSE rallies but investor confidence remains low
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- Figure 10: FTSE 100 and FTSE All Share – daily index movements, January 2004-January 2010
- Demand for mortgage advice remains weak
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- Figure 11: Number of monthly mortgage approvals (seasonally adjusted), by type, December 2007-December 2009
Consumer Sentiment
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- Key points
- Consumer confidence drives demand for advice
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- Figure 12: GfK Consumer Confidence Barometer – UK, January 1988-January 2010
- Debt repayment and savings are financial priorities
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- Figure 13: Savings, investment, borrowing and debt repayment – consumers’ expected activity, quarterly indices, June 2002-December 2009
- Intentions suggest a shift from spending to saving mentality
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- Figure 14: Consumer financial priorities over the previous year and coming year, November 2009
- But 2010 is expected to be a year of uncertainty
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- Figure 15: Consumer expectations of macroeconomic changes, November 2009
SWOT Analysis
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- Figure 16: Financial advice market – summary of strengths, weaknesses, opprtunities and threats, 2010
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Size and Structure of the Intermediary Market
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- Key points
- Number of directly authorised firms continues to decline
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- Figure 17: Total number of directly authorised firms, 2006-09
- The number of DA mortgage firms fell by 25% in 2009
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- Figure 18: Number of directly authorised retail intermediary firms, by sector (primary category), 2006-09
- The number of IFAs is expected to fall over next few years
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- Figure 19: Number of financial advice ARs and DA intermediary firms, by type 2006-09
- Mortgage intermediary sector in flux
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- Figure 20: Number of mortgage and other home finance ARs and DA intermediary firms, by type 2006-09
- General insurance intermediary market dominated by ARs
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- Figure 21: Number of general insurance ARs and DA intermediary firms, by type 2006-09
Adviser Firm Rankings
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- Sesame are the leading financial advice firm
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- Figure 22: Top 15 financial advisers in the UK based on relevant turnover, 2009
- About the top three
- Sesame
- Openwork
- Honister Capital
Brand Communication and Promotion
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- Key points
- Financial advice adspend falls in 2009
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- Figure 23: Advertising expenditure for financial advice services, 2007-09
- Independent and non-independent sectors use different media
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- Figure 24: Advertising expenditure of financial advice, by media types, 2009
- A range of providers advertise in the independent advice market
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- Figure 25: Top ten advertisers of independent financial advice, 2009
- Banks dominate the non-independent sector
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- Figure 26: Top ten advertisers of non-independent financial advice, 2009
Online Sources of Advice
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- Key points
- The growing role of online advice
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- Figure 27: Most popular sources of advice for a range of financial products, (includes banking, general insurance and long-term products) June 2009
- Consumer opinions regarding the internet as source of advice
- The internet provides a good starting point
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- Figure 28: Attitudes towards online sources of financial advice, June 2009
- Finance website usage is dominated by banking providers
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- Figure 29: Top 20 financial websites, by unique visitor numebrs, February 2010
- But information sites have gained a significant presence
- Finance information site usage increases during 2009
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- Figure 30: Unique visitors to selected finanical advice/information websites, February 2009-February 2010
The Consumer – Product Ownership and Wealth Distribution
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- Key points
- Note on consumer research
- Non-advised products dominates financial product ownership
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- Figure 31: Financial products ownership, February 2010
- Demographic profile varies between product sectors
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- Figure 32: Demographic profile for product ownership in key markets for financial advice, February 2010
- Wealth distribution remains largely unchanged over the last 12 months
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- Figure 33: Trends in total value of investible assets, 2009-10
- An overview of wealth distribution
- Wealth increases with age
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- Figure 34: Demographic profile of consumers with different levels of investible assets, February 2010
- The correlation between investible assets and product ownership
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- Figure 35: Financial products owned by total value of savings, investments, February 2010
The Consumer – Sources of Financial Advice
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- Key points
- Friends and family are the most popular source of advice
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- Figure 36: Trends for main sources of financial advice used, 2009 and 2010
- Banks still lead the way
- Demographic influences on advice sources used
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- Figure 37: Key demographics for main sources of advice, February 2010
- Most people are reliant on one source of advice
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- Figure 38: Number of sources of advice used, February 2010
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- Figure 39: Sources of advice used, by the number of sources of advice used, February 2010
- Many mass-market consumers use multiple sources of advice
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- Figure 40: Total value of savings and investible assets, by the number of sources advice used, February 2010
- Sources of advice are greatly influenced by product complexity…
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- Figure 41: Sources of advice used, by ownership of selected financial products, February 2010
- … and by the level of wealth
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- Figure 42: Sought advice or guidance for financial matter, by total value of savings and investments, February 2010
- 50% of IFA customers could be described as mass market
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- Figure 43: IFA usgae by level of savings and investible assets, February 2010
The Consumer – Paying for Financial Advice
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- Key points
- There is little appetite for paying upfront fees for investment advice
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- Figure 44: Amount people are prepared to pay upfront for independent financial advice, February 2010
- Mixed opinion to paying fees over commission
- People who have used IFAs are more willing than average to pay fees…
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- Figure 45: Amount people are prepared to pay for independent financial advice, by selected sources of advice used, February 2010
- … but the majority will still need convincing to pay a fee for advice
- Almost 50% of key IFA targets would not pay an upfront fee for advice
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- Figure 46: Amount people are prepared to pay for independent financial advice, by total value of savings, investments, February 2010
- Affordability determines the likelihood to pay for financial advice…
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- Figure 47: Amount people are prepared to pay for independent financial advice, by household income, February 2010
- ... and lifestage also influences the appetite to pay a fee for advice
- Regional variations could also impact charging structures
The Consumer – Attitudes towards Financial Advice
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- Key points
- A third of people prefer to conduct their own research
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- Figure 48: Attitudes towards financial advice, February 2010
- Only 27% of adults agree that IFAs offer a valuable service
- Raising standards should help to increase perception of value
- Most IFA customers believe that IFAs provide a valuable service
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- Figure 49: Attitudes towards financial advice, by selected sources of advice used, February 2010
- The influence of the internet as a source of advice
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- Figure 50: Attitudes towards financial advice, by total value of savings, investments, February 2010
- Some self-reliant consumers could benefit from financial advice
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- Figure 51: Cross-analysis of most popular attitudes towards financial advice, February 2010
- The link between commission and poor advice
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- Figure 52: Cross-analysis of next most popular attitudes towards financial advice, February 2010
The Consumer – Targeting Opportunities
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- Key points
- Target group analysis
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- Figure 53: Target groups for attitudes towards financial advice, February 2010
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- Figure 54: Attitudes towards financial advice, by target groups, February 2010
- Financial adviser advocates
- Financial adviser cynics
- Straightforward Finances
- Uninterested
Appendix – The Changing Landscape for Financial Advice
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- Key points
- A complex and fragmented market
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- Figure 55: Overview of the market for financial advice, 2010
- Improving financial capability – Money Guidance
- The development of investment platforms
- Platform providers
Appendix – Regulatory Changes
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- Key points
- A changing regulatory backdrop
- Depolarisation
- TCF
- MiFID
- RDR
- Forthcoming regulatory changes – beyond the RDR
- PRIPs
- Mortgage Market Review
- Political change could see further regulatory change
- Intermediary firms face FSA fee structure changes
Appendix – The Consumer – Product Ownership and Wealth Distribution
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- Figure 56: Demographic breakdown for product ownership in key markets for financial advice, February 2010
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- Figure 57: Demographic breakdown of consumers with different levels of investible assets, February 2010
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Appendix – The Consumer – Paying for Financial Advice
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- Figure 58: Amount prepared to pay to independent financial advisor for advice about investing or pensions, by demographics, February 2010
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Appendix – The Consumer – Attitudes to Financial Advice
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- Figure 59: Attitudes towards financial advice, by demographics, February 2010
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- Figure 60: Attitudes towards financial advice, by demographics, February 2010
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Appendix – The Consumer – Targeting Opportunities
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- Figure 61: Target groups, by demographics, February 2010
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- Figure 62: Ownership of financial products, by target groups, February 2010
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- Figure 63: Value of investible assets, by target groups, February 2010
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- Figure 64: Sources of financial advice used, by target groups, February 2010
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- Figure 65: Amount people are prepared to pay for independent financial advice, by target groups, February 2010
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