In practice, the mass affluent can be broadly defined as those with sufficient assets to justify the higher levels of service and advice offered by the more upmarket financial services providers, while falling short of the levels of wealth required by traditional private banks such as C Hoare & Co or Coutts. Target individuals range from comparatively young professionals - high-flying City traders or lawyers, say - to older consumers who have profited from astute investment and soaring property values.

In practice, the mass affluent can be broadly defined as those with sufficient assets to justify the higher levels of service and advice offered by the more upmarket financial services providers, while falling short of the levels of wealth required by traditional private banks such as C Hoare & Co or Coutts. Target individuals range from comparatively young professionals - high-flying City traders or lawyers, say - to older consumers who have profited from astute investment and soaring property values.

The Internet boom saw a new breed of customer for those targeting the mass affluent - those with relatively little financial experience, yet who through either luck or judgement had profited from the explosion of interest in all things online. However, many of these have seen what was effectively a paper fortune largely wiped out by the dramatic fall from grace of the technology sector that started in mid-2000 and is yet to resolve itself.

However, it was not only the Internet millionaires who suffered from the market falls precipitated by the collapse of the tech stocks. With the FTSE 100 having lost around one quarter of its value since its high point, the vast majority of those with any equity-based investments will be nursing what may well be considerable losses, and a new-found suspicion of share ownership.

The knock-on effects for those targeting the mass affluent will be considerable. The less affluent may have avoided shares altogether, and so will be more or less unaffected. At the same time, the high net worth (HNW) individuals are to some extent able to bear these losses, while also having the knowledge and experience to recognise that equities are highly likely to recover from these recent setbacks. Arguably, it is among the mass affluent that the long-term effects will be most noticeable, particularly as regards attitudes towards the stock market - a particular blow to the organisations targeting these individuals, with business models based on cross-selling equity investments and advisory services suddenly looking somewhat shaky.

Traditionally, anyone apart from the very rich had three main choices when seeking advice on savings and investment matters. They could turn to their bank manager, who would be able to offer a limited range of financial products, all chosen from his employer's portfolio of products, they could look for advice from an IFA, in theory free to choose from any investment on the market, or they could simply do their own research and make their own decisions.

The new breed of organisation targeting the mass affluent has added an alternative to this trio of options. Many of these providers now offer a service close to that provided by the traditional private banks, with current and savings accounts combining with financial advice and share-dealing facilities to provide 'the complete package'. They even offer their clients separate branches from those open to the general public, reinforcing the image of exclusivity that previously only the private banks could offer.

However, it is true that it is the IFA who remains the preferred source of financial advice for the sophisticated investor. Able to build up a long-term relationship with their clients and with the perceived impartiality that comes from being unaffiliated to any one product provider, investors turn to their IFA for advice on matters from pensions to school fees.

Focusing on choice

Mintel sees this as being the key battleground for this new breed of financial services providers - can specialist banking products ever replace the IFA, or will the separation of adviser and provider prove to be vital in attracting the affluent investor? It is a battle that is certainly worth winning - the number of investors who could be described as mass affluent is growing, and their investments are potentially worth millions of pounds in commission and charges. This report assesses the prospects of both sides, as well as the possibility that the question could become largely irrelevant - will the Internet create an army of affluent, self-directed investors who are able to make their own decisions, and who will simply look for a low-cost execution-only service?

The new investment climate is also assessed in an attempt to assess both the future size of the mass affluent market and to discover the effect that stockmarket volatility has had on investors' confidence and attitudes towards risk.

Mintel has recently entered into a distribution agreement with Tulip Financial Research, which produces a series of reports based on in-depth surveys among 500 affluent individuals. This report draws upon the responses of a sample of 100 individuals with liquid financial assets of £30,000 and above, who were questioned regarding their investment priorities, their preferred sources of financial advice, and the perceived advantages offered by these various sources.

In addition, exclusive consumer research was commissioned from NOP, allowing Mintel to also assess the investment priorities of those who may not yet fall into the mass affluent bracket, but who are likely to do so in the near future.

Other relevant reports published by Mintel include:

- Private Banking and Wealth Management, Finance Intelligence - UK Report, November 2001

- Shareholding and Consumer Activity, Finance Intelligence - UK Report, October 2001

- Collective Investments, Finance Intelligence, August 2001

- Targeting the Premium Pensions Consumer, Finance Intelligence, February 2001

and the forthcoming:

- IFA Distribution, Finance Intelligence, April 2002.