Table of Contents
Executive Summary
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- The market
- The number of financial advice firms has recovered
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- Figure 1: Number of financial advice firms, 2008-15
- Increasing complexity represents an opportunity for advisers
- Companies and brands
- Firms initiate reshuffle to bring advice services to the fore
- The consumer
- More than half have not used financial advice in the past three years
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- Figure 2: Sources of financial advice in the last three years, February 2016
- Friends and family are in a position of ascendancy
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- Figure 3: Source of financial advice used most recently, February 2016
- Independent advisers have the highest satisfaction rates
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- Figure 4: Satisfaction with most recent financial advice, by most recent source of financial advice, February 2016
- Online sources rival professional product-based advice
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- Figure 5: Potential sources of financial advice by topic, February 2016
- Pay-as-you-go fixed fees prove most popular among potential customers
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- Figure 6: Preferred payment method, February 2016
- Robo-advice has strong potential among older Millennials
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- Figure 7: Awareness of robo-advice services, February 2016
- Free trials and clear security guarantees are key to robo-advice success
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- Figure 8: Attitudes towards robo-advice services, February 2016
- What we think
Issues and Insights
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- Lifetime ISA can help advisers reach a younger audience
- The facts
- The implications
- Is robo-advice enough to give financial confidence to the masses?
- The facts
- The implications
- Employers are in a strong position to improve access to financial advice
- The facts
- The implications
The Market – What You Need to Know
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- The financial advice market is adapting to growing demand
- Increasing complexity represents an opportunity for advisers
The Financial Advice Market
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- The number of financial advice firms has recovered
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- Figure 9: Number of financial advice firms, 2008-15
- Banking and credit card complaints have increased dramatically
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- Figure 10: Number of complaints made to financial services firms associated with advising, selling and arranging financial products, by product type, 2013-15
- Figure 11: Number of complaints made to financial services firms associated with advising, selling and arranging financial products, by product type, 2015
Regulatory Context
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- FCA’s Financial Advice Market Review (FAMR) produces recommendations for a healthier market
- The Pensions Advisory Service, Pension Wise and Money Advice services to be realigned
- EU MIFID II regulations delayed until January 2018
- Lifetime ISA adds to complexity for savers
Key Players – What You Need to Know
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- Firms initiate reshuffle to bring advice services to the fore
Competitive Strategies
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- Firms lay out robo-advice strategies to capture early market share
- High street banks
- Independent providers
- Advice firms merge to meet the future shape of the market
- Skipton Building Society
- Easby Gale & Phillipson and jonathanfry Plc
- Standard Life’s financial planning arm 1825 has made a series of advice acquisitions
The Consumer – What You Need to Know
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- More than half have not used financial advice in the last three years
- Friends and family are in a position of ascendancy
- Online sources rival professional product-based advice
- Pay-as-you-go fixed fees prove most popular among potential customers
- The majority of people have not heard of robo-advice services
- Free trials and clear security guarantees are key to robo-advice success
Sources of Financial Advice
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- More than half have not used financial advice in the past three years
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- Figure 12: Sources of financial advice in the last three years, February 2016
- Most advice users relied on one source
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- Figure 13: Number of different sources of financial advice used in the last three years, February 2016
- Figure 14: Number of different sources of financial advice used in the last 3 years, by sources of financial advice used the last three years, February 2016
Most Recent Source of Financial Advice
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- Friends and family are in a position of ascendancy
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- Figure 15: Source of financial advice used most recently, February 2016
- Retirees turn to professional advice to understand retirement options
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- Figure 16: Source of financial advice used most recently, February 2016
Satisfaction with Most Recent Financial Advice
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- Independent advisers have the highest satisfaction rates
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- Figure 17: Satisfaction with most recent financial advice, by most recent source of financial advice, February 2016
- People with tight finances were the least satisfied with most recent financial advice
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- Figure 18: Proportion of people that were happy with their most recent financial advice, by financial situation, February 2016
Potential Sources of Financial Advice by Topic
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- Online sources rival professional product-based advice
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- Figure 19: Potential sources of financial advice by topic, February 2016
- Young people are cut adrift from formal advice
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- Figure 20: Potential users of family and/or friends as sources of advice, by age, February 2016
Preferred Payment Method
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- Pay-as-you-go fixed fees prove most popular among potential customers
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- Figure 21: Preferred payment method, February 2016
- Half of people aged 55+ would not pay for advice
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- Figure 22: Preferred payment method, by age, February 2016
Awareness and Interest in Robo-advice Services
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- The majority of people have not heard of robo-advice services
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- Figure 23: Awareness of robo-advice services, February 2016
- Robo-advice has strong potential among older millennials
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- Figure 24: Awareness and attitudes towards robo-advice, by generation, February 2016
- Former Money Advice Service users are a strong target market for automated advice
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- Figure 25: Sources of financial advice used in the last 3 years, by interest in using robo-advice services, February 2016
- Almost half of likely robo-advice users would prefer to pay a fixed fee for advice
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- Figure 26: Interest in using robo-advice services, by preferred payment method, February 2016
Attitudes towards Robo-advice Services
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- Free trials and clear security guarantees are key to success
- Blending real-world and robo-advice could reduce barriers
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- Figure 27: Attitudes towards robo-advice services, February 2016
- Millennials are the most likely to be receptive to high street banks
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- Figure 28: Attitudes towards robo-advice services, by age, February 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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