Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- The number of financial advisers increased in 2012
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- Figure 1: Size of IFA and tied advice market, by firm size, 2010-12
- Intermediated sales account for over 90% of the unit trust and OEIC market
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- Figure 2: Estimated share of gross retail unit trust and OEIC sales, by distribution channel, 2012
- Market factors
- Impact of the RDR
- Almost all advisers have gained full qualifications post-RDR
- Face-to-face is the preferred way to receive financial advice
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- Figure 3: Preferred channels for financial advice, June 2013
- An increasing number of consumers manage their own investments
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- Figure 4: Attitudes towards financial advice, by amount of savings and investments, June 2013
- Companies, products and innovations
- Financial advice firms diversifying their client offering
- Direct discretionary fund managers present a new challenge
- The adviser
- The majority of advisers remain independent, as the idea of restricted advice fails to catch on
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- Figure 5: Adviser business models, August 2013
- Financial advisers fight over a small pool of mass affluent and affluent clients
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- Figure 6: Wealth of advised clients, August 2013
- Advisers are doing very little marketing to attract new business
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- Figure 7: Adviser strategies for attracting new business, August 2013
- Online channels are often underused by advisers for attracting new clients
- Advisers weigh up three key factors when choosing an investment platform
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- Figure 8: Features that advisers consider important in an investment platform, August 2013
- The main challenge to advisers is the increased cost of regulation
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- Figure 9: Challenges that advisers are facing, August 2013
- What we think
Issues in the Market
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- Where next for unprofitable saving and investment clients?
- Should intermediaries improve online presence to better serve their local market?
- Will advisers cling onto the badge of ‘independence’?
- How can financial advisers differentiate themselves from DIY X-O providers?
Trend Application
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- Intermediaries could embrace online forms of communication to save time and money
- Educating consumers is key in making them realise the importance of saving and investing
- Intermediaries will have to change the way they market to and manage senior investors
Regulation and Legislation
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- Key points
- Impacts of the RDR
- Summary of the RDR changes
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- Figure 10: Summary of the key requirements for the retail investment market, pre- and post- RDR, 2013
- The FCA’s thematic review outlines how firms are implementing the RDR changes
- Some financial advisers are unclear on the distinction between independent and restricted advice
- Platforms pulled into the independent/restricted debate
- Almost all advisers have gained full qualifications post-RDR
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- Figure 11: Number of advisers as of 31 July, 2013
- There still remains some confusion around adviser charging
- Capital adequacy rules have been delayed for two years
- FSCS levies continue to place a regulatory burden on advisory firms
- Auto-enrolment could have knock-on effect for the savings and investment intermediaries market
Market Drivers
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- Key points
- Intended investment activity is out of sync with the rising stock market
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- Figure 12: Intended investment activity, Q3/Q4 2002-Q3/Q4 2013
- Inflation has remained stubbornly high
- Only 14% of consumers have over £50,000 in savings and investments
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- Figure 13: Amount of savings and investments, June 2013
- Face-to-face is still the preferred way to receive financial advice
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- Figure 14: Preferred channels for financial advice, June 2013
- Direct-to-consumer DIY methods gain in popularity
Who’s Innovating?
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- Key points
- OpenWork offers advisers support to build their brand identity
- Hargreaves Lansdown looks to appeal to consumers trapped in the advice gap
- Asset Match will allow IFAs to secure funding
- Informed Choice and Best Price Advice launch direct to consumer offerings
SWOT Analysis
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- Figure 15: Swot analysis for the saving and investment intermediary market, 2013
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Competitor Channels
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- Key points
- A note on Product Sales Data
- Most banks and building societies have withdrawn from the investment advice market
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- Figure 16: Volume of regulated retail sales of investment products, year-to-March 2013
- An increasing number of consumers manage their own investments
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- Figure 17: Attitudes towards financial advice, by amount of savings and investments, June 2013
- Financial advice firms diversifying their client offering
- Discretionary services increase in popularity, particularly amongst intermediaries
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- Figure 18: Full-service stockbroker assets, by management channel, 2009-12
- The direct discretionary model offers a new challenge
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- Figure 19: Attitudes towards the concept of discretionary fund management, June 2013*
Adviser Share of the Investment Market
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- Key points
- Intermediated sales of unit trusts and OEICS increase in 2012
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- Figure 20: Gross retail sales of unit trusts and OEICs, by distribution channel, 2008-13
- Platforms are popular amongst advisers
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- Figure 21: Share of gross retail unit trust and OEIC sales, by distribution channel, 2012
- Intermediaries dominate distribution of investment bonds
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- Figure 22: New investment bond premiums*, by sales channel, 2008-12
Adviser Market Size and Firm Rankings
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- Key points
- The number of directly authorised advisers stabilised in 2012
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- Figure 23: Size of IFA and tied advice market, by firm size, 2010-12
- Total population of the advice market has continued to decrease overall
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- Figure 24: Size of the registered investment advisers (RIA) population, by firm type, 2010-12*
- Number of advisers has increased post-RDR
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- Figure 25: Adviser numbers (estimated 2012 and actual end 2012 and 2013)
- Large advice networks generate the majority of sales
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- Figure 26: Top 20 financial advisers in the UK, based on gross sales, Q3 2012-Q2 2013
- Note on Matrix Solutions data
Companies and Products
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- Brewin Dolphin
- Ranking
- Company description
- Product range
- Financial performance indicators
- Recent activity
- Hargreaves Lansdown
- Ranking
- Company description
- Product range
- Financial performance indicators
- Recent activity
- St. James’ Place
- Ranking
- Company description
- Product range
- Financial performance indicators
- Recent activity
- Sesame Bankhall Group (SBG)
- Ranking
- Company description
- Product range
- Financial performance indicators
- Recent activity
Advertising and Promotion
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- Key points
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- Figure 27: Advertising expenditure relating to financial advice and intermediaries, by sub-category, three years to 31 August 2013
- Schroder’s was the biggest advertiser to savings and investment intermediaries in 2012/13
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- Figure 28: Top ten advertisers in the intermediary savings and investments income sub-categories, 2010-13
- Fund managers continue to advertise to savings and investment intermediaries through print
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- Figure 29: Proportional distribution of advertising expenditure on intermediary savings and investments advice, by media type, 2010-13
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- Figure 30: Proportional distribution of advertising expenditure on intermediary pensions and investments income advice, by media, 2010-13
- A note on adspend
Adviser Business Models
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- Key points
- About Mintel’s financial advice research
- The majority of advisers remain independent, as the idea of restricted advice fails to catch on
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- Figure 31: Adviser business models, August 2013
- Advisers are confused about restriction and independence
- The number of restricted advisers has increased post-RDR
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- Figure 32: Adviser business models, August 2012 and 2013
Wealth of Advised Clients
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- Key points
- Mass-market consumers find it more difficult to access financial advice
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- Figure 33: Wealth of advised clients, August 2013
- Financial advisers mainly fight over a small pool of affluent clients
Adviser Strategies for Attracting New Business
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- Key points
- Advisers are doing very little marketing to attract new business
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- Figure 34: Adviser strategies for attracting new business, August 2013
- Online channels are often underused by advisers for attracting new clients
- Only 4% of advisers have looked into advertising through employers to attract new business
- Only 8% of advisers have lowered their charges to attract new business
Features that Advisers Value in an Investment Platform
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- Key points
- Advisers consider usability as the most important feature in an investment platform
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- Figure 35: Features that advisers consider important in an investment platform, August 2013
- Platform cost is important to half of advisers
- Advisers can diversify their clients’ assets by having access to a wide range of investments
- Customer service-related features are less important for financial advisers when choosing a platform
Adviser Challenges
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- Key points
- Increased compliance costs present a challenge to half of advisers
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- Figure 36: Challenges that are facing saving and investment intermediaries, August 2013
- Further price pressure coming from consumers
- Few advisers see direct-to-consumer competitors as a significant challenge
- Only 13% of advisers a facing cash flow challenges
- Capital adequacy requirements are not a major concern
- Around a fifth of advisers aren’t facing any significant challenges
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