Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market for advice
- In-branch staff, internet, and family and friends closely aligned at the top
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- Figure 1: Main sources of advice used, March 2011
- Only two fifths of IFA clients have an on-going relationship with the adviser
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- Figure 2: IFA usage, March 2011
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- Figure 3: Number of sources of advice used, March 2011
- The economy and regulation
- The RDR
- Government launches Money Advice Service
- A tricky economic environment
- Impact of the Economy on sentiment
- Financial priorities
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- Figure 4: Savings, investment, borrowing and debt repayment – consumers’ expected activity, by quarter, Q3/Q4 2002-Q1/Q2 2011
- Advice and the slowdown
- The consumer
- Product Ownership
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- Figure 5: Overall financial product ownership, March 2011
- Value of investible assets
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- Figure 6: Trends in total value of investible assets, 2010 and 2011
- Paying for financial advice
- Attitudes towards financial advice
- What we think
Issues in the Market
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- What kind of advice are consumers likely to seek in the current environment?
- What do consumers think about investment adviser compensation?
- How can IFAs grow client numbers?
- Are people prepared to rely on a single source of advice?
- How will consumers be affected by the RDR?
Future Opportunities
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- The adviser social network
- A results-oriented approach to investment advice
Internal Market Environment
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- Key points
- The RDR
- Unfavourable side effects
- Barclays shuts down financial planning arm
- Will other high street banks follow suit?
- FSA issues warning about churn in the run-up to RDR
- Over three fifths of FOS complaints are about banks
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- Figure 7: Financial services firms complained about, by sector, 2006/07-2009/10
- The Money Advice service launches
Broader Market Environment
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- Key points
- Economic instability brings savings to the fore
- Economic reality keeps focus on short term
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- Figure 8: Monthly change in RPI and average weekly earnings, 2005-10
- The housing market slowdown
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- Figure 9: Gross and net secured lending, seasonally adjusted, 2000-10
- Demand for investment advice linked to market performance
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- Figure 10: FTSE 100 and FTSE All-Share – daily index movements, February 2005-February 2011
Impact of the Economy on Sentiment
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- Key points
- What consumer sentiment could mean for advice
- Consumer confidence remains in the doldrums
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- Figure 11: GfK NOP Consumer Confidence Index, March 2005-March 2011
- More now say they are feeling the effects of the slowdown
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- Figure 12: Impact of the slowdown, February 2009-February 2011
- Consumers pessimistic about 2011
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- Figure 13: Macroeconomic expectations for the coming year, December 2010
Financial Priorities
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- Key points
- Saving and investing top priority but financial activity will remain low
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- Figure 14: Savings, investment, borrowing and debt repayment – consumers’ expected activity, by quarter, Q3/Q4 2002-Q1/Q2 2011
- Many frustrated by poor returns on savings
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- Figure 15: Agreement with statements about current financial situation, March 2011
Product Ownership
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- Key points
- Consumers most likely to own non-advised products
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- Figure 16: Financial product ownership, March 2011
- Internet has made people more confident to make their own decisions
- Who’s buying advised products?
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- Figure 17: Demographic profile of product ownership in key markets for financial advice, March 2011
Value of Investible Assets
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- Key points
- No significant change in wealth distribution over the last 12 months
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- Figure 18: Trends in total value of investible assets, 2010 and 2011
- Advised product ownership linked with level of investible assets
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- Figure 19: Financial products ownership, by total value of investible assets, March 2011
- Wealth and demand for advice rises with age
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- Figure 20: Total value of investible assets, by demographics, March 2011
Sources of Financial Advice
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- Key points
- Bank staff, internet and friends and family top sources of advice
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- Figure 21: Main sources of advice used, March 2011
- Two in five IFA clients have an ongoing relationship with the IFA
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- Figure 22: IFA usage, March 2011
- More than a third now use multiple sources of advice
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- Figure 23: Number of sources of advice used, March 2011
- A positive development for the advice market
- Those using multiple sources more likely to seek professional advice
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- Figure 24: Main sources of advice used, by number of sources of advice used, March 2011
- Number of advice sources by value of investible assets
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- Figure 25: Total value of investible assets, by repertoire of main sources of advice used, March 2011
- Product ownership has an influence on the source of advice used
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- Figure 26: Main sources of advice used, by ownership of select financial products, March 2011
- Level of investible assets key indicator of type of advice used
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- Figure 27: Main sources of advice used, by total value of investible assets, March 2011
- Age a key indicator where one will go for advice
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- Figure 28: Main sources of advice used, by gender and age, March 2011
- More affluent more likely to seek out advice in the first place
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- Figure 29: Main sources of advice used, by socio-economic group, March 2011
- Friends and family significant source of advice for high earners
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- Figure 30: Main sources of advice used, by gross annual household income, March 2011
Advice and the Slowdown
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- Key points
- Most people pushing through the slowdown
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- Figure 31: Current financial situation, March 2011
- The worse off are less likely to be getting advice
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- Figure 32: Sources of financial advice, by current financial situation, March 2011
- Just over a fifth are highly concerned about their near-term prospects
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- Figure 33: Projected financial situation over the next year, March 2011
- Easing concerns with proactive advice
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- Figure 34: Sources of financial advice, by projected financial situation over the next year, March 2011
Paying for Financial Advice
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- Key points
- Most consumers believe advisers are only out for themselves
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- Figure 35: Attitudes towards paying for financial advice, March 2011
- Mixed signals about commissions vs. upfront fees
- Performance is what really matters
- A missed opportunity?
- IFA clients less sceptical of adviser integrity
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- Figure 36: Attitudes towards paying for financial advice, by use of select types of financial advice, March 2011
- Competing with free online advice
- A new approach to converting the sceptics
- Those with significant levels of wealth are most open to upfront fees
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- Figure 37: Attitudes towards paying for financial advice, by total value of investible assets, March 2011
- Statement agreement and demographics
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- Figure 38: Demographic profile of those who agreed with statements about paying for financial advice, March 2011
Attitudes towards Financial Advice
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- Key points
- Consumers most turned off by bank telephone staff
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- Figure 39: Best and worst performers for word association for each channel of advice, March 2011
- Bank branch staff rate as competent and reliable
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- Figure 40: Responses to words associated with knowledge and risk, by different channels of advice, March 2011
- Telephone staff can’t be trusted and IFAs are only out for themselves
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- Figure 41: Responses to words associated with trust, by different channels of advice, March 2011
- In-branch advice seen as value for money…
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- Figure 42: Responses to words associated with cost, by different channels of advice, March 2011
- …but in reality the internet is the most cost-effective source of advice
- Bank and building society branch staff score well on emotive factors
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- Figure 43: Responses to words associated with emotional factors, by different channels of advice, March 2011
- Respect for IFA expertise rises with value of investible assets
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- Figure 44: IFA and bank branch channel word association responses, by level of assets held, March 2011
Appendix – Product Ownership
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- Figure 45: Financial product ownership, by demographics, March 2011
- Figure 46: Financial product ownership, by demographics, March 2011
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Appendix – Value of Investible Assets
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- Figure 47: Financial product ownership, by total value of investible assets, March 2011
- Figure 48: Total value of investible assets, by demographics, March 2011
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Appendix – Sources of Financial Advice
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- Figure 49: Main sources of advice used, by financial product ownership, March 2011
- Figure 50: Main sources of advice used, by financial products ownership, March 2011 (continued)
- Figure 51: Main sources of advice used, by total value of investible assets, March 2011
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- Figure 52: Main sources of advice used, by demographics, March 2011
- Figure 53: Main sources of advice used, by demographics, March 2011 (continued)
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- Figure 54: Repertoire of main sources of advice used, by demographics, March 2011
- Figure 55: Financial product ownership, by IFA usage, March 2011
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- Figure 56: Total value of investible assets, by IFA usage, March 2011
- Figure 57: Attitudes towards paying for financial advice, by IFA usage, March 2011
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- Figure 58: IFA usage, by demographics, March 2011
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Appendix – Advice and the Slowdown
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- Figure 59: Sources of financial advice, by projected financial situation over the next year, March 2011
- Figure 60: Projected financial situation over the next year, by demographics, March 2011
- Figure 61: Current financial situation, by demographics, March 2011
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Appendix – Paying for Financial Advice
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- Figure 62: Attitudes towards paying for financial advice, by ownership of select financial products, March 2011
- Figure 63: Attitudes towards paying for financial advice, by demographics, March 2011
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- Figure 64: Attitudes towards paying for financial advice, by demographics, March 2011 (continued)
- Figure 65: Attitudes towards paying for financial advice, by demographics, March 2011 (continued)
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- Figure 66: Attitudes towards paying for financial advice, by demographics, March 2011 (continued)
- Figure 67: Financial product ownership, by attitudes towards paying for financial advice, March 2011
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- Figure 68: Financial product ownership, by attitudes towards paying for financial advice, March 2011 (continued)
- Figure 69: Financial product ownership, by attitudes towards paying for financial advice, March 2011 (continued)
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- Figure 70: Financial product ownership, by attitudes towards paying for financial advice, March 2011 (continued)
- Figure 71: Main sources of advice used, by attitudes towards paying for financial advice, March 2011
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- Figure 72: Main sources of advice used, by attitudes towards paying for financial advice, March 2011 (continued)
- Figure 73: Main sources of advice used, by attitudes towards paying for financial advice, March 2011 (continued)
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- Figure 74: Main sources of advice used, by attitudes towards paying for financial advice, March 2011 (continued)
- Figure 75: Total value of investible assets, by attitudes towards paying for financial advice, March 2011
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- Figure 76: Total value of investible assets, by attitudes towards paying for financial advice, March 2011 (continued)
- Figure 77: Total value of investible assets, by attitudes towards paying for financial advice, March 2011 (continued)
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- Figure 78: Total value of investible assets, by attitudes towards paying for financial advice, March 2011 (continued)
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Appendix – Attitudes towards Financial Advice
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- Figure 79: Sources of financial advice word association, March 2011
- Figure 80: IFA and bank branch channel word association responses, by sources of advice used, March 2011
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