Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- Advice revenues rose by 8% in 2018
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- Figure 1: Total revenue earned by firms advising on retail investment business, mortgage business and non-investment insurance business, 2014-18
- Companies and brands
- Robo-advice continues to be the key area of innovation
- Companies spent £11.5 million on above-the-line advertising in the last year
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- Figure 2: Total above-the line, online display and direct mail advertising expenditure on financial advice, 2014/15-2018/19
- The consumer
- Mortgages are a gateway to financial advice
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- Figure 3: Products arranged or amended in the last three years, May 2019
- A third of advice clients used an IFA or mortgage adviser
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- Figure 4: Sources of financial advice used in the last three years, May 2019
- Price comparison sites are the primary source of guidance
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- Figure 5: Sources of financial guidance used in the last three years, May 2019
- Major life events dominate prompts to seek advice
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- Figure 6: Likely prompts to seek professional financial advice, May 2019
- Consumers are split on willingness to pay for advice
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- Figure 7: Likelihood to pay for financial advice, May 2019
- IFAs and mortgage advisers are seen to have greater expertise
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- Figure 8: Correspondence Analysis, May 2019
- Consumers are keen to keep control of their personal data
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- Figure 9: Willingness to provide financial advisers with personal and financial data, May 2019
- Online information is a threat to advisers’ authority
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- Figure 10: Attitudes towards financial advice, May 2019
- What we think
Issues and Insights
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- Focus on life events, not products, could boost appeal of advice
- The facts
- The implications
- Online advice has a long way to go to convince the average consumer…
- The facts
- The implications
- …but online guidance is a real threat to advisers
- The facts
- The implications
The Market – What You Need to Know
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- Advice revenues rose by 8% in 2018
- The FCA opens reviews of the effects of the RDR and FAMR
The Financial Advice Market
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- Advice revenues rose by 8% in 2018
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- Figure 11: Total number of firms and revenue earned by firms advising on retail investment business, mortgage business and non-investment insurance business, 2014-18
- Financial advisers and insurance intermediaries make up 84% of firms
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- Figure 12: Share of financial advice firms, by type of firm, 2018
- Increase in PPI disputes fuels rise in advice complaints
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- Figure 13: Number of complaints made to financial services firms associated with advising, selling and arranging, 2013-17
- Figure 14: Number of complaints made to financial services firms associated with advising, selling and arranging, by product type, H2 2018
Regulatory Context
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- The FCA launches review of RDR and FAMR effects…
- …and opens consultations on mortgage advice
- Call for compulsory advice on pension savings
- Single Financial Guidance Body relaunched as Money and Pensions Service
Companies and Brands – What You Need to Know
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- Robo-advice continues to be the key area of innovation
- £11.5 million spent on above-the-line advertising in the last year
Competitive Strategies
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- Robo-advice continues to be the key area of innovation
- Lloyds and Schroders partner up to challenge advice giants
- Nutmeg launches personal financial advice service
Advertising and Marketing Activity
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- Advisers spent £11.5 million on above-the-line advertising in the last year
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- Figure 15: Total above-the line, online display and direct mail advertising expenditure on financial advice, 2014/15-2018/19
- Santander invested heavily to promote its digital advice service
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- Figure 16: Top six advertisers for above-the line, online display and direct mail advertising expenditure on financial advice, 2016/17-2018/19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Mortgages are a gateway to financial advice
- A third of advice clients used an IFA or mortgage adviser
- Price comparison sites are the primary source of guidance
- Major life events dominate prompts to seek advice
- Consumers are split on willingness to pay for advice
- IFAs and mortgage advisers are seen to have greater expertise
- Consumers are keen to keep control of their personal data
- Online information is a threat to advisers’ authority
- Consumers are split on compulsory advice
Product Engagement and Use of Advice
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- Short-term products prompt greater engagement
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- Figure 17: Products arranged or amended in the last three years, May 2019
- Higher-earners more likely to engage with complex products…
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- Figure 18: Selected products arranged or amended in the last three years, by household income, May 2019
- …which are most likely to require advice
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- Figure 19: Use of financial advice for different products, May 2019
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- Figure 20: Use of financial advice for different products, by products arranged or amended in the last three years, May 2019
Types of Financial Advice Used
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- A third of advice clients used an IFA or mortgage adviser
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- Figure 21: Sources of financial advice used in the last three years, May 2019
- Branch closures are limiting access to advice and guidance
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- Figure 22: Sources of financial advice used in the last three years, by type of area people live, May 2019
Types of Financial Guidance Used
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- Price comparison sites are the primary source of guidance
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- Figure 23: Sources of financial guidance used in the last three years, May 2019
- Friends and family are key influences well into adulthood
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- Figure 24: Use of friends and/or family for financial guidance in the last three years, by age, May 2019
Prompts for Seeking Financial Advice
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- Two thirds can identify a reason to get advice
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- Figure 25: Likely prompts to seek professional financial advice, May 2019
- Four in ten would seek advice after a change in their family situation
- Macro-economic changes have little influence on the average consumer
Paying for Financial Advice
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- Consumers are split on willingness to pay for advice
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- Figure 26: Likelihood to pay for financial advice, May 2019
- Experience of advice is a huge boost to perceived value
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- Figure 27: Likelihood to pay for financial advice, by experience of professional financial advice in the last three years, May 2019
Perceptions of Financial Advice – Correspondence Analysis
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- Methodology
- Non-branch advisers are considered to have greater expertise
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- Figure 28: Correspondence Analysis, May 2019
- Online services have major hurdles to overcome
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- Figure 29: Perceptions of types of financial advice, May 2019
Attitudes towards Data Sharing and Financial Advice
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- Three quarters are reluctant to give ongoing access to data…
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- Figure 30: Willingness to provide financial advisers with personal and financial data, May 2019
- …but providers can persuade existing clients
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- Figure 31: Willingness to provide financial advisers with personal and financial data, by experience of professional financial advice in the last three years, May 2019
Attitudes towards Financial Advice
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- Online information is a threat to advisers’ authority
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- Figure 32: Attitudes towards financial advice, May 2019
- Consumers are split on compulsory advice
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- Figure 33: Attitudes towards compulsory financial advice, by age, May 2019
- Advisers’ suggestions can be hamstrung by closed-minded clients
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- Figure 34: Attitudes towards financial advice recommendations, by experience of professional financial advice in the last three years, May 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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