Table of Contents
Issues in the Market
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- Key issues in the market
- Abbreviations
Insights and Opportunities
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- Forward thinking
- Looking beyond HNW
- Harnessing the Internet
- Targeting a new demographic
- Friends and family have major influence
- Changing and maximising reputations
Market in Brief
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- Key consumer findings – Sources of financial advice
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- Figure 1: Sources of savings and investment advice, January 2008
- Internet is creating a more independent approach to financial advice
- IFAs are viewed as expert, but branch staff seen as most reliable
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- Figure 2: Best and worst performers for word associations for each channel of advice, January 2008
- The changing landscape of advice
- Intermediary market size
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- Figure 3: Number of FSA directly authorised retail intermediary firms, by primary category, January 2006-December 2007
- Main markets for financial advice
- Market developments and innovations
Fast Forward Trends
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- Trend: Trust in Me
- Financial advisers face an uphill struggle
- Winning the battle for trust
- Trend: Life Coaching
- Advice or sales
- Financial therapy
- Demand for financial coaching
- Hand-holding
Market Background
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- Key points
- Overview of sources of financial advice
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- Figure 4: Different sources of financial advice
- Depolarisation – providing more choice
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- Figure 5: Overview of depolarisation
- High street banks since depolarisation
- HSBC and Barclays commit to multi-tie model
- Others focus on their own bancassurance operations
The Changing Landscape of Advice
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- Key points
- An ever-changing market
- RDR signals wholesale changes for advice market
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- Figure 6: Overview of future market for advice, under current FSA proposals, June 2007
- RDR has provoked widespread reaction
- Industry reaction
- Mixed feelings over CAR
- The RDR and the mortgage and protection markets
- RDR – potential impact on the market for financial advice
- Generic advice – A national money guidance service
- Money guidance service – impact on market for financial advice
Broader Market Environment
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- Key points
- Current economic context
- A more cautious approach
- Concerns over the housing market
- Increased stockmarket volatility
- Household debt continues to rise
- FSA warns over economic conditions…
- …however uncertainty can increase demand for advice
- Making ends meet is number one priority…
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- Figure 7: Financial priorities over the next 12 months, by order of significance, January 2008
- …although saving is still on the radar for many
- Expected financial activity falls to a new low
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- Figure 8: Quarterly indices of expected consumer financial activity, by savings/investment, borrowing and debt repayment activity, 2002-07
- More people will be managing more wealth
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- Figure 9: Socio-demographic composition of United Kingdom, adults aged 15+, 2006-12
- Growth in ABs will lead to increased demand for advice
- Increased life expectancy driving need for advice
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- Figure 10: Life expectancy projrections for people aged 65, by gender, 1987-2052
- Greater need for self-sufficiency
- Lifestyle changes increase need for advice
- Increasingly complex products
Internal Market Environment
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- Key points
- The ongoing remuneration debate
- Move towards CAR
- Costs of regulation
- The impact of Mifid
- RDR reopens the qualifications debate
- The PR battle
- Only 12% of FOS complaints are IFA-related
- Consumer apathy is a major barrier
- Poor financial capability increases inertia
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- Figure 11: Ability to describe specific financial products, by gender, September 2006
- Growth in Internet usage
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- Figure 12: British Internet penetration at home/work/study or elsewhere, 2001-07
- Two thirds browse the Internet for information
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- Figure 13: Types of activity undertaken on the Internet in the last three months, October 2007
- The rise of price-comparison sites
Strengths and Weaknesses in the Market
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- Figure 14: Strengths and weaknesses of the consumer market for financial advice
- Strengths of market for financial advice
- Weaknesses of market for financial advice
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Trade Perspective
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- Participating companies
- RDR prompts a mixed response
- Potential implications of RDR
- Fees v commission
- Potential implications of money guidance service
- High street will remain pivotal in providing mass-market advice
- The Internet and financial advice
- Looking to the future
Market Size – Intermediaries
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- Key points
- Number of directly authorised firms continues to decline
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- Figure 15: Number of FSA directly authorised retail intermediary firms, by primary category, January 2006-December 2007
- Steady growth in financial advice firms
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- Figure 16: Number of directly authorised financial advice firms, January 2006-December 2007
- Strong growth in number of mortgage ARs
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- Figure 17: Number of directly authorised mortgage and other home finance intermediaries, January 2006-December 2007
- Number of GI intermediaries falls by 12%
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- Figure 18: Number of directly authorised general insurance intermediaries, January 2006-December 2007
- Consolidation and acquisitions to continue
Main Markets for Financial Advice
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- Key points
- Greatest demand for mortgage and pension advice
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- Figure 19: Estimated ‘potential market size’ for selected financial products and advice, May 2007
- Mortgage lending exceeds £360 billion in 2007
- Intermediaries are a common source of advice
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- Figure 20: Sources of mortgage advice, December 2006
- IFAs account for more than 80% of individual pension market
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- Figure 21: Proportional distribution of new APE premiums for UK individual pension business, by channel, 2003-07
- Stockmarket volatility impacts sales of collective investments
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- Figure 22: Retail sales of unit trusts and OEICs- UK domiciled, 2000-07
- Bancassurance gaining share in protection market
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- Figure 23: Proportional distribution of new APE premiums for UK individual protection business, by channel, 2003-07
- IFAs losing share in retirement income market
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- Figure 24: Proportional distribution of premiums for new retirement income products, by channel, 2003-07
- General insurance – Intermediaries under pressure
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- Figure 25: Proportional distribution of UK personal lines general insurance, by channel, 2002-06
Market Overview and Key Players
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- Market structure for financial advice
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- Figure 26: Basic overview of market for financial advice
- Key players in IFA market
- The Tenet Group
- Sesame
- Bankhall
- Simply Biz
- Key players in retail banking advice market
- Barclays Financial Planning
- Lloyds TSB/Scottish Widows
Market Developments and Innovations
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- Key points
- More firms embrace online advice
- HNW individuals seek advice of Peers
- Commissions used to reduce premiums
- FSA targets financial advice at new mums
- Popular online adviser moves to TV
- Wrap platform developments
Brand Communication and Promotion
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- Key points
- NMR
- £18.7 million spent advertising financial advice in 2007
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- Figure 27: Overview of total adspend on financial advice services, 2003-07
- Direct mail accounts for most adspend in 2007
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- Figure 28: Overview of media type used to advertise financial advice services, 2007
- Wealth management firms increase adspend
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- Figure 29: Top 15 advertisers of independent financial advice, 2003-07
- Scottish Widows top adspend for non-independent advice
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- Figure 30: Top 15 advertisers of non-independent financial advice, 2003-07
The Consumer – Product and Asset Ownership
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- Key points
- About Mintel’s consumer survey
- Internet penetration
- Overview of product ownership
- Most popular products are bought rather than sold
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- Figure 31: Overview of product ownership (not savings or investment), January 2008
- Level of debt could provide opportunities for advice
- Main markets for financial advice
- Over-35s are key target for advice
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- Figure 32: Profile of key demographics for product ownership, in main markets for financial advice, January 2008
- Ownership of savings and investment products
- Cash dominates savings and investment products…
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- Figure 33: Overview of ownership of savings and investment products, January 2008
- …but inflation could encourage people to seek advice
- Overview of savings and investment ownership
- Typical investor is AB, male and over 45
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- Figure 34: Profile of key demographics for ownership of savings and investment products, January 2008
- More than a third of savers have at least £10,000 in assets
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- Figure 35: Overview of assets held (excluding main residence), January 2008
- Asset levels increase with age
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- Figure 36: Profile of key demographics for overview of different level of assets held, January 2008
- Mid-level savers have most potential for cross-selling
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- Figure 37: Level of assets held by overall product owership, January 2008
- High levels savers more sophisticated
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- Figure 38: Level of assets held by type of savings and investments held, January 2008
The Consumer – Sources of Advice
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- Key points
- Half of savers have used a bank branch for advice…
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- Figure 39: Sources of savings and investment advice, January 2008
- …but less than a fifth expect to do so in the future
- Overview of source for advice
- IFA
- Internet – Internet in general, Internet (financial) forums
- Accountant or solicitor
- Employer – Adviser through work, employer
- Age is major influence on source of advice
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- Figure 40: Key demographic profile of the sources of advice used in the past for savings and investments, January 2008
- IFAs appeal to young affluent women
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- Figure 41: Key demographic profile of the sources of advice people expect to use in the future, January 2008
- IFA usage linked to wide product ownership
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- Figure 42: Overall financial product ownership, by sources of advice used for savings and investment advice, January 2008
- Pension holders more likely to consult IFA and Internet in future
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- Figure 43: Overall financial product ownership, by sources of advice most likely to be used in the future for savings and investment advice, January 2008
- Two thirds with more than £30,000 in savings have consulted an IFA
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- Figure 44: Level of assets held by sources of advice used in the past for savings and investments, January 2008
- Mid-level savers most likely consult branch staff in the future
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- Figure 45: Level of assets held by sources of advice most likely to be used in the future for savings and investments, January 2008
- Four out of ten savers have used more than five sources of advice
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- Figure 46: Number of sources of financial advice used in the past, January 2008
- Only a quarter take advice on important financial decisions
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- Figure 47: Agreement with statements about saving and investing, January 2008
- Over-45s most likely to seek expert advice
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- Figure 48: Profile of key demographics for those in agreement with statements about saving and investing, January 2008
- Two thirds with poor advice had consulted IFAs/branch staff
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- Figure 49: Sources of advice used in the past for saving and investments, by agreement with statements about saving and investing, January 2008
- Own research or expert advice?
The Consumer – Barriers to Advice
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- Key points
- Three fifths of adults prefer to do own financial research
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- Figure 50: Attitudes towards selected barriers to advice, January 2008
- Cost is barrier for young, but commission is issue for older adults
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- Figure 51: Attitudes towards selected barriers to advice, by gender and age, January 2008
- ABs are most concerned about commission
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- Figure 52: Attitudes towards selected barriers to advice, by socio-economic group and family status, January 2008
- Pension holders most likely to lack trust in advice
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- Figure 53: Attitudes towards selected barriers to advice, by overall product ownership, January 2008
- Mid-level savers keen to do own research
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- Figure 54: Attitudes towards selected barriers to advice, by level of assets held, January 2008
- Internet research leads to lower levels of trust
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- Figure 55: Agreement with statements about saving and investment, by sources of advice used in the past for savings and investments, January 2008
The Consumer – Attitudes to Channels of Advice
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- Key points
- Internet provides value for money but is seen as risky
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- Figure 56: Best and worst performers for word associctaions for each channel of advice, January 2008
- IFAs provide expertise but branch staff are seen as safe pair of hands
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- Figure 57: Responses to words associated with knowledge and risk, by different channels of advice, January 2008
- Telephone sales staff are the least trusted
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- Figure 58: Responses to words associated with trust, by different channels of advice, January 2008
- IFAs compete with Internet over cost
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- Figure 59: Responses to words associated with cost, by different channels of advice, January 2008
- Bank branches are seen as welcoming and IFAs as intimidating
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- Figure 60: Responses to words associated with emotional factors, by different channels of advice, January 2008
- High-level savers see IFAs as more reliable than bank branch staff
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- Figure 61: Responses to words associated with knowledge and risk of IFA and bank branch channels, by level of assets held, January 2008
- Low-level savers least likely to trust IFAs
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- Figure 62: Responses to words associated with the trustworthiness of IFA and bank branch channels, by level of assets held, January 2008
- A quarter of mid-level savers believe bank branch advice offers VFM
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- Figure 63: Responses to words associated with the cost of IFA and bank branch channels, by level of assets held, January 2008
- High-level savers more likely see IFAs as reassuring
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- Figure 64: Responses to words associated with the emotional factors of IFA and bank branch channels, by level of assets held, January 2008
- Half of IFA users trust in their expertise
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- Figure 65: Responses to words associated with knowledge and risk of IFA and bank branch channels, by sources of advice used in the past for saving and investments, 2008
- Internet appears to erode trust in main channels
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- Figure 66: Responses to words associated with the trustworthiness of IFA and bank branch channels, by sources of advice used in the past for saving and investments, 2008
- IFA costs could see people turn to media for advice
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- Figure 67: Responses to words associated with the costs associated with IFA and bank branch channels, by sources of advice used in the past for saving and investments, 2008
- IFA users broadly positive about bank branch staff
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- Figure 68: Responses to words associated with emotional factors about IFA and bank branch channels,, by sources of advice used in the past for saving and investments, 2008
- Targeting opportunities – Attitudes to the main channels of advice
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- Figure 69: Categorisation of word association statements
- More than half are positive about bank staff as a source of advice
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- Figure 70: Overview of attitudes towards IFAs and Bank/building society branch staff, January 2008
- Who is open to IFA advice?
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- Figure 71: Key demogrpahic findings for IFA attitudinal target groups, January 2008
- Key targets for branch advice
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- Figure 72: Key demogrpahic findings for Bank branch attitudinal target groups, January 2008
- Some people remain indifferent to financial advice
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- Figure 73: Cross tabulation of groups 1) IFA customers and 2) bank branch staff customers, January 2008
Appendix – Broader Market Environment
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- Figure 74: Total PDI, consumer expenditure and savings at current prices, 2003-12
- Figure 75: Number of mortgage approvals by type of loan, 1999-2007
- Figure 76: Overview of household debt, balances outstanding, 1997-2007
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Appendix: The Consumer – Product Ownership
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- Figure 77: Overall product ownership, by gender, age, soco-economic group, household income, housing tenure, region, daily newspapaers, sunday newspapers, daily internet usgage, mobile phone providers and supermarket usage, January 2008
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- Figure 78: Types of savings and investment products held, by gender age, soco-economic group, household income, housing tenure, region, daily newspapaers, sunday newspapers, daily internet usgage, mobile phone providers and supermarket usage, January 2008
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- Figure 79: Level of assets held, by gender age, soco-economic group, household income, housing tenure, region, daily newspapaers, sunday newspapers, daily internet usgage, mobile phone providers and supermarket usage, January 2008
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Appendix: The Consumer – Sources of Advice
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- Figure 80: Sources of advice used in the past for savings and investments, by gender age, soco-economic group, household income, housing tenure, region, daily newspapaers, sunday newspapers, daily internet usgage, mobile phone providers and supermarket used, January 2008
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- Figure 81: Sources of advice likely to be used in the future for savings and investments, by gender age, soco-economic group, household income, housing tenure, region, daily newspapaers, sunday newspapers, daily internet usgage, mobile phone providers and supermarket used, January 2008
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- Figure 82: Number of sources of advice used in the past by channel of advice, January 2008
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- Figure 83: Agreement with statements about saving and investing, by gender, age, socio-economic group, gross annual household income and housing tenure, January 2008
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- Figure 84: Agreement with statements about saving and investing, by region, daily papers, weekend papers, daily personal internet usage and supermarket usage, January 2008
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Appendix:The Consumer – Attitudes to Channels of Advice
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- Figure 85: Responses to words associated with knowledge and risk of different channels of advice, by level of assets held, January 2008
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- Figure 86: Responses to words associated with the trustworthiness of different channels of advice, by level of assets held, January 2008
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- Figure 87: Responses to words associated with the cost of different channels of advice, by level of assets held, January 2008
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- Figure 88: Responses to words associated with the emotional factors of different channels of advice, by level of assets held, January 2008
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- Figure 89: Responses to words associated with knowledge and risk of different channels of advice, by sources of advice used in the past for saving and investments, 2008
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- Figure 90: Responses to words associated with the trustworthiness of different channels of advice, by sources of advice used in the past for saving and investments, 2008
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- Figure 91: Responses to words associated with the costs associated with different channels of advice, by sources of advice used in the past for saving and investments, 2008
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- Figure 92: Responses to words associated with emotional factors about the different channels of advice, by sources of advice used in the past for saving and investments, 2008
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- Figure 93: Number of positive/negative views held greater than the number of negative/postive views held – Independent financial advisers
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- Figure 94: Number of positive/negative views held greater than the number of negative/postive views held – Staff at bank/building society branch
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