Table of Contents
Executive Summary
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- The financial advice market
- Numbers of financial advisers continue to increase post-RDR
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- Figure 1: Number of advisers, by sub-type, December 2012, July 2013 and January 2014
- The RDR – More phases are implemented
- Economic and demographic context
- A lack of disposable income makes it difficult for consumers to save
- The consumer
- Consumers use banks for advice more regularly than financial advisers
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- Figure 2: Types of financial advice used, January 2014
- Referrals and recommendations are still a popular way for consumers to find an adviser
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- Figure 3: Methods for finding financial advice, January 2014
- Face-to-face remains the most popular way to receive financial advice
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- Figure 4: Accessing financial advice, January 2014
- The cost of advice is still a concern for consumers
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- Figure 5: Attitudes towards financial advice, January 2014
- The majority of consumers would prefer ad hoc advice
- More consumers would prefer to make their own decisions rather than rely on professional advice
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- Figure 6: Attitudes towards managing finances, January 2014
- What we think
Issues and Insights
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- Online tools can make financial advice affordable for younger consumers
- The facts
- The implications
- Flexibility is the key to attracting wealthier consumers
- The facts
- The implications
- Banks and building societies still have the perfect platform for offering mass-market advice
- The facts
- The implications
- Advice through money advice or employers can give consumers greater confidence
- The facts
- The implications
Trend Application
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- Keep it local
- DIY administration for cheaper financial advice
- Mintel Futures: Generation Next
Regulatory Context
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- Key points
- The RDR – More phases are implemented
- Capital adequacy rules to be delayed until 2017
- First thematic review on how firms are implementing the RDR
- Second thematic review on delivering independent advice
- Non-advised and simplified advice
- RDR has not reduced the financial adviser population
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- Figure 7: Number of advisers, by sub-type, December 2012, July 2013 and January 2014
- Mortgages
- MMR comes into force banning most non-advised sales
- The 2014 Budget proposes to ‘guarantee guidance’ for consumers at retirement
- European regulation
- MiFID II could challenge the rules of the RDR
- …rules on PRIPs could also conflict with the RDR
Economic Context
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- Key points
- A lack of disposable income makes it difficult for consumers to save
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- Figure 8: Increases in the cost of living and the growth in average wages, January 2008-February 2014
- Economic improvement begins to pull down the savings ratio
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- Figure 9: Quarterly change in UK GDP and Household savings ratio, Q1 2004-Q4 2013
- Low interest rates continue to undermine appeal of cash savings
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- Figure 10: Official bank base rate and three-month LIBOR, January 2007-February 2014
- FTSE continued to edge higher in 2013
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- Figure 11: FTSE 100 and FTSE All-share – Daily index movements, January 2008-March 2014
Consumer Sentiment
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- Key points
- Consumer confidence increased sharply in 2013
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- Figure 12: UK consumer confidence index, January 1989-December 2013
- Consumers’ finances are slowly improving…
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- Figure 13: Trends in consumer financial situation, June 2009-January 2014
- …yet 29% feel that their financial position is worse than last year
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- Figure 14: Trend in financial situation compared to a year ago, July 2011-February 2014
- Consumers are more optimistic about the future
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- Figure 15: Trend in consumer sentiment for the coming year, June 2009-December 2013
Value of Savings and Investments
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- Key points
- Overall, consumers have low levels of savings and investments
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- Figure 16: Value of savings and investments, January 2014
- Financial advisers target affluent consumers
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- Figure 17: Wealth of advised clients, August 2013
- Older consumers are more likely to be seeking financial advice
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- Figure 18: Value of savings and investments, by age, January 2014
Expected Demand for Financial Advice by Product
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- Key points
- The majority of consumers expect to receive advice on a financial product in the future
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- Figure 19: Expected demand for financial advice by product, January 2014
- Younger consumers are more likely to expect to receive advice in the future
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- Figure 20: Expected demand for financial advice by product, by age, January 2014
- Over 55s underestimate their need for pension advice
- Wealthier consumers are more likely expect to receive advice on savings and investments
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- Figure 21: Expected demand for financial advice by product, by value of savings and investments, January 2014
- There is potential for cross-selling of services across the advice industry
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- Figure 22: Expected demand for financial advice by product, by expected demand for financial advice by product, January 2014
Types of Advice Used
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- Key points
- Bank and building societies top list of most used professional source of advice
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- Figure 23: Types of advice used, January 2014
- Financial advisers are more likely to be used by wealthier consumers
- Friends and family hold sway with younger consumers
- Online channels of advice are widely used to inform financial decisions
- People want to learn from the experiences of others
- Money Advice Service is yet to attract widespread use as a channel of advice
- Employers also remain a niche source of advice
- Wealthier consumers are more likely to have used a financial adviser
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- Figure 24: Value of savings and investments, by types of advice used, January 2014
Expected Sources of Advice
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- Key points
- Half of consumers expect to receive some form of online financial advice in the future
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- Figure 25: Expected sources of advice, January 2014
- The Money Advice Service has the potential to increase its usage
- Expected use of online sources of advice is even across age groups
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- Figure 26: Expected sources of advice, by age, January 2014
- Low income groups are unlikely to expect to use financial advisers in the future
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- Figure 27: Expected sources of advice, by current financial situation and gross annual income, January 2014
- People who expect to use a financial adviser are more likely to do so as the first port of call
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- Figure 28: Expected sources of advice, January 2014
Methods of Finding Professional Financial Advice
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- Key points
- High street presence remains the most popular way to find financial advice
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- Figure 29: Methods of finding financial advice, January 2014
- Word of mouth is still a popular way for consumers to find an adviser
- Online methods of finding an adviser are becoming more important
- A small proportion of over 65s found their adviser online
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- Figure 30: Methods of finding financial advice, by age, January 2014
- Financial advisers are more likely to attract people through referrals and recommendations
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- Figure 31: Methods of searching for financial advice, by types of advice used, January 2014
Accessing Financial Advice
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- Key points
- Face-to-face remains the most popular way to receive financial advice
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- Figure 32: Accessing financial advice, January 2014
- Only 8% of consumers would rule out receiving advice from a bank or building society
- Younger consumers are more open to receiving advice online
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- Figure 33: Accessing financial advice, by age, January 2014
- Online reviews are more persuasive for younger consumers
- Wealthier investors are more likely to prefer local advice firms and home visits
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- Figure 34: Accessing financial advice, by value of savings and investments, January 2014
- The desire for face-to-face advice is a universal amongst consumers
Attitudes Towards Financial Advice
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- Key points
- The majority of consumers would prefer ad hoc advice
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- Figure 35: Attitudes towards financial advice, January 2014
- The cost of advice is still a concern for consumers
- Younger consumers are more trusting of financial advisers
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- Figure 36: Attitudes towards financial advice, by age, January 2014
- The value of the ‘independent’ tag is likely to fade over time
- Advised consumers are more likely to want an ‘independent’ adviser
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- Figure 37: Attitudes towards financial advice, by types of financial advice used, January 2014
Attitudes Towards Managing Finances
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- Key points
- The majority of consumers to manage their finances independently
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- Figure 38: Attitudes towards managing finances, January 2014
- The majority of consumers prefer to research first, before considering advice
- More consumers would prefer to make their own decisions than rely on professional advice
- Only 22% of consumers are not very confident in their ability to make financial decisions
- Consumers are aware of the importance of planning and regular saving
Appendix – Value of Savings and Investments
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- Figure 39: Value of savings and investments, by demographics, January 2014
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- Figure 40: Value of savings and investments, by demographics, January 2014 (continued)
- Figure 41: Expected demand for financial advice by product, by value of savings and investments, January 2014
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Appendix – Expected Demand for Financial Advice by Product
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- Figure 42: Expected demand for financial advice by product, by demographics, January 2014
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- Figure 43: Expected demand for financial advice by product, by value of savings and investments, January 2014
- Figure 44: Future demand for financial advice products, by future demand for financial advice products, January 2014
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Appendix – Types of Advice Used
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- Figure 45: Most popular types of financial advice used, by demographics, January 2014
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- Figure 46: Next most popular types of financial advice used, by demographics, January 2014
- Figure 47: Other types of financial advice used, by demographics, January 2014
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- Figure 48: Value of savings and investments, by types of advice used, January 2014
- Figure 49: Value of savings and investments, by next most popular types of advice used, January 2014
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Appendix – Expected Sources of Advice
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- Figure 50: Most popular expected sources of advice, by demographics, January 2014
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- Figure 51: Next most popular expected sources of advice, by demographics, January 2014
- Figure 52: Other expected sources of advice, by demographics, January 2014
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- Figure 53: Expected sources of advice – All financial advice, by demographics, January 2014
- Figure 54: Expected sources of advice – All online, by demographics, January 2014
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- Figure 55: Expected sources of advice – Financial adviser or financial planner, not based in a bank/building society, by demographics, January 2014
- Figure 56: Expected sources of advice – Friends and/or family, by demographics, January 2014
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- Figure 57: Expected sources of advice – Adviser at a bank or building society, by demographics, January 2014
- Figure 58: Expected sources of advice – Price comparison websites, by demographics, January 2014
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Appendix – Methods of Finding Financial Advice
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- Figure 59: Most popular methods of finding financial advice, by demographics, January 2014
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- Figure 60: Next most popular methods of finding financial advice, by demographics, January 2014
- Figure 61: Methods of searching for financial advice, by types of advice used, January 2014
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Appendix – Accessing Financial Advice
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- Figure 62: Most popular accessing financial advice, by demographics, January 2014
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- Figure 63: Next most popular accessing financial advice, by demographics, January 2014
- Figure 64: Accessing financial advice, by value of savings and investments, January 2014
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Appendix – Attitudes Towards Financial Advice
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- Figure 65: Agreement with the statement ‘It is better to pay for financial advice if, and when it is needed, rather than on an ongoing basis’, by demographics, January 2014
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- Figure 66: Agreement with the statement ‘I am concerned that I will not be able to afford the cost of professional financial advice’, by demographics, January 2014
- Figure 67: Agreement with the statement ‘I would only use a financial adviser that describes their services as ‘independent’’, by demographics, January 2014
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- Figure 68: Agreement with the statement ‘Financial advisers can be trusted to act in their clients best interests’, by demographics, January 2014
- Figure 69: Agreement with the statement ‘It is better to use one advice company for all types of financial advice’, by demographics, January 2014
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- Figure 70: Agreement with the statement ‘I expect a financial adviser to make decisions on my behalf’, by demographics, January 2014
- Figure 71: Attitudes towards financial advice, by types of financial advice used, January 2014
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- Figure 72: Attitudes towards financial advice, by types of financial advice used, January 2014 (continued)
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Appendix – Attitudes Towards Managing Finances
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- Figure 73: Agreement with the statement ‘It is important to be generally aware of the balance in your current account’, by demographics, January 2014
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- Figure 74: Agreement with the statement ‘I prefer to manage my own financial transactions when I can’, by demographics, January 2014
- Figure 75: Agreement with the statement ‘It is important to plan for your financial future’, by demographics, January 2014
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- Figure 76: Agreement with the statement ‘It is better to research financial products yourself first, before considering financial advice’, by demographics, January 2014
- Figure 77: Agreement with the statement ‘It is important to save/invest regularly’, by demographics, January 2014
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- Figure 78: Agreement with the statement ‘Making big financial decisions is daunting’, by demographics, January 2014
- Figure 79: Agreement with the statement ‘It is better to make your own financial decisions rather than rely on professional financial advice’, by demographics, January 2014
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- Figure 80: Agreement with the statement ‘Managing my personal finances is complicated’, by demographics, January 2014
- Figure 81: Agreement with the statement ‘I am not very confident in my ability to make financial decisions’, by demographics, January 2014
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- Figure 82: Agreement with the statement ‘It is pointless creating financial goals because I am unlikely to be able to achieve them’, by demographics, January 2014
- Figure 83: Agreement with the statement ‘I cannot be bothered to think about my long-term financial goals’, by demographics, January 2014
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- Figure 84: Agreement with the statement ‘There is no point saving/investing for the future’, by demographics, January 2014
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