Table of Contents
- CHAPTER 1 EXECUTIVE SUMMARY
- Introduction
- The distribution landscape
- Regulatory developments
- The role of the Internet
- Third party distribution
- The financial advice market
- Fees and charges
- CHAPTER 2 INTRODUCTION
- What is this report about?
- Who is the target reader?
- How to use this report
- CHAPTER 3 THE DISTRIBUTION LANDSCAPE
- Introduction
- Key findings
- Distribution across Continental Europe is dominated by the retail banks
- French retail mutual fund distribution is becoming increasingly
diversified
- Banks maintain their control of overall distribution
- Sales through institutional or corporate channels represent over a
quarter of all French distribution
- The IFA channel is not making a significant impact on the
distribution landscape
- Insurance wrapped mutual funds are a large part of the French market
- Banks distribute the majority of Publikumsfonds in Germany
- The German market is diversifying but is still bank-centric
- Banks have a firm grip on the distribution of mutual funds
- The insurance channel has gained in importance despite pressure from
banks
- IFAs and other advisors remain a significant channel for the
distribution of mutual funds
- Fund supermarkets and the direct channel are relatively insignificant
- The retail banking sector's mutual fund sales account for two thirds
of the entire distribution market in Italy
- IFAs and insurers have benefited from recent changes in customer
behavior
- Other channels continue to make minimal impact on the market
- Banks alone account for over 90% of all Spanish retail mutual fund
distribution
- The density of the branch networks are the key to the success of the
retail banks
- Other channels are a marginal presence in the Spanish market
- Unlike in the rest of Europe, intermediaries dominate mutual fund
distribution in the UK
- IFAs have historically dominated the distribution of mutual funds
- Retail banks have had varied but generally little success in selling
mutual funds to their client base
- Other channels have seen their market share drastically reduced
- Data Tables
- CHAPTER 4 REGULATORY DEVELOPMENTS
- Introduction
- Key findings
- Regulation is changing mutual fund distribution across Europe but there
are still several barriers to a 'single market'
- UCITS III allows more innovation but funds still require country
approval
- Since the instigation of UCITS III tax discrimination has become less
of an issue within the EU
- France and Germany in particular had been guilty of discriminating
against foreign UCITS
- Italy and the UK were both guilty of tax discrimination
- Tax discrimination has been tackled by the European Commission
targeting the main offenders
- The European Fund Categorization Forum seeks to redress the lack of a
standardized Europe-wide fund classification system
- Rules for the financial advice market are evolving across Europe
- The French financial advice market has undergone major changes
- Regulation is likely to have mixed benefits for the German financial
advice market
- Depolarization is reshaping the UK financial advice market
- CHAPTER 5 THE ROLE OF THE INTERNET
- Introduction
- Key findings
- The growing popularity of online banking across Europe has led to the
development of online mutual fund distribution
- Online banking is common among Europeans with Internet access
- Technology and increasing Internet usage has driven the development of
online distribution
- Several models of online mutual fund distribution have become successful
- Fund supermarkets are beginning to take off in the UK while struggling
to establish a foothold in the rest of Europe
- Fund supermarkets have developed according to the needs of customers
in the market
- Many fund supermarkets have become a tool for intermediaries
- Private investor confidence will determine whether fund supermarkets
develop into IFA tools or become more customer-focused
- Wrap platforms are an important aspect of indirect distribution
- Online discount stockbrokerages have developed in America but have yet
to make an impact in Europe
- Banks and IFAs are often intermediaries for online mutual fund
distribution channels
- CHAPTER 6 THIRD PARTY DISTRIBUTION
- Introduction
- Key findings
- In just a few short years the distribution of third party funds has
become the norm across Europe
- There is significant variation in the proportion of third party fund
distribution by retail banks and wealth managers across Europe
- Third party distribution is prevalent in the Belgo-Dutch region,
particularly through the retail banking network
- Third party distribution in France is much more prevalent among the
country's wealth managers
- Only 40% of France's largest retail banks offer third party mutual
funds today
- While almost 90% of wealth managers in France offer third party
funds and/or use external fund managers
- A significant proportion of German retail and private banks do not
offer third party funds
- The private banking sector in Germany is more receptive to third
party fund distribution
- Open architecture is slightly more prevalent among Italian private
banks than Italian retail banks
- The Nordic region currently has the lowest proportion of private banks
offering third party funds of the regions surveyed
- Third party fund sales in the private banking channel is widespread in
the Spanish market
- Third party fund sales in the UK are below the European average in
both the retail and private banking markets
- CHAPTER 7 THE FINANCIAL ADVICE MARKET
- Introduction
- Key findings
- Germany has, by far, the largest intermediary market in Europe
- Germany's financial advisors are not held in high public regard
- In the UK, 40,000 individual financial intermediaries distribute 47% of
retail unit trusts and OEICs
- Despite the high degree of development, depolarization is likely to
trigger changes in the UK market
- In comparison with the UK and Germany, France has a very small and
undeveloped financial advisory market
- Asset managers are the most important non-bank source of financial
advice in France
- While the Spanish and Italian advisory markets are fairly big, they are
strongly tied to the retail banks
- Independent advice is dwarfed by the strength of the Spanish retail
banking networks
- There are 35,000 financial advisers in Italy, the third largest market
in Europe
- In the Nordic region financial advice does not come from an IFA
equivalent but other financial services professionals
- CHAPTER 8 FEES AND CHARGES
- Introduction
- Key findings
- Transparency in fees and charges was the trend for 2005
- Guidelines for reporting fees was introduced in Europe in 2005
- The UCITS III directive, including the introduction of a simplified
prospectus that disloses fees, was phased in across Europe in 2005
- Investors will benefit from standardized disclosure
- In the UK investors are able to view TER charges on funds, although
many funds retain a traditional pricing structure
- No load unit trusts are still not the norm in the UK
- Annual management fees on mutual funds in the UK range from 0 to
2.15%
- The UK's Premier Resolution Growth fund has a whopping 4.75% TER
- There is more variation in French fees and charges than in those of
the UK
- French front-loaded fees vary considerably, with 344 charging 6% or
more
- French annual management fees have a greater range than those of the
UK
- The German market is generally considered to be a level playing field
in the application of fees to funds
- Some German funds have fees applied on an ongoing or end basis
- Management fees and front loads are not generally high
- Italian funds offer investors a wide variety of fee structures
- Front loading is polarized as some are among the highest in Europe
while many other funds are not front loaded at all
- Italian management fees are average for the major European markets
- Spanish investors prefer not to pay fees up front
- Front loading has therefore not taken off in the Spanish market
although other fees remain low
- Management fees for Spanish funds peak at 3%
- CHAPTER 9 APPENDIX
- Further Reading
- Global Wealth Management SPP
- Interactive Databases
- Market Reports
- Strategic Insight Reports
- Wealth Management Competitor Tracker
- Datamonitor Asia Pacific Wealth Management SPP
- Savings and Investments SPP
- Interactive Databases
- Reports
- Briefs
- Life and Pensions SPP
- Interactive Databases
- Reports and Briefs
- Financial Advice Market SPP
- SPP writing team
- List of Tables
- Table 1: Major markets by distribution channel 2006
- Table 2: Almost 80% of wealth managers in Belgium and the Netherlands
already offer 3rd party funds to their clients, January 2006 (Table 1 of 2)
- Table 3: Almost 80% of wealth managers in Belgium and the Netherlands
already offer 3rd party funds to their clients, January 2006 (cont'd:
Table 2 of 2))
- Table 4: Dexia is the only major retail bank in Belgium and the
Netherlands not to offer 3rd party funds to their clients, January 2006
- Table 5: Within two years only Credit Agricole will be among the major
retail banks in France still closed to 3rd party funds, January 2006
- Table 6: Nearly 90% of wealth managers in France already offer 3rd
party funds to their clients, January 2006 (Table 1 of 2)
- Table 7: Nearly 90% of wealth managers in France already offer 3rd
party funds to their clients, January 2006 (cont'd: Table 2 of 2)
- Table 8: Only 60% of the main retail banks in Germany offer 3rd party
funds to their clients, January 2006
- Table 9: Nearly three quarters of the wealth managers in Germany offer
3rd party funds to clients directly through their private banking
divisions, January 2006 (Table 1 of 3)
- Table 10: Nearly three quarters of the wealth managers in Germany
offer 3rd party funds to clients directly through their private banking
divisions, January 2006 (cont'd: Table 2 of 3)
- Table 11: Nearly three quarters of the wealth managers in Germany
offer 3rd party funds to clients directly through their private banking
divisions, January 2006 (cont'd: Table 3 of 3)
- Table 12: Almost 90% of wealth managers in Italy offer 3rd party
funds, January 2006 (Table 1 of 2)
- Table 13: Almost 90% of wealth managers in Italy offer 3rd party
funds, January 2006 (cont'd: Table 2 of 2)
- Table 14: Only 2 of the main retail banks in Italy do not offer 3rd
party funds, January 2006
- Table 15: Only 60% of wealth managers in the Nordic region offer 3rd
party funds directly through their private bank, January 2006 (Table 1 of
2)
- Table 16: Only 60% of wealth managers in the Nordic region offer 3rd
party funds directly through their private bank, January 2006 (cont'd:
Table 2 of 2)
- Table 17: Almost 70% of retail banks in the Nordic region offer 3rd
party funds, January 2006
- Table 18: 70% of retail banks in Spain offer 3rd party funds, January
2006
- Table 19: 90% of wealth managers in Spain offer 3rd party funds
directly through their private bank, January 2006
- Table 20: 63% of retail banks offer third party funds, January 2006
- Table 21: 70% of wealth managers in the UK offer 3rd party funds
directly through their private bank, January 2006 (Table 1 of 2)
- Table 22: 70% of wealth managers in the UK offer 3rd party funds
directly through their private bank, January 2006 (cont'd: Table 2 of 2)
- List of Figures
- Figure 1: Retail banks control a relatively small share of mutual fund
distribution in France
- Figure 2: Distribution in Germany is slowly diversifying but is still
controlled by the banking networks
- Figure 3: Retail banks' sales alone account for almost two thirds of
mutual fund sales in Italy
- Figure 4: The retail bank is the dominant channel for the distribution
of mutual funds in Spain
- Figure 5: Almost half of all mutual funds sold in the UK are sold
through IFAs
- Figure 6: Efforts to standardize the European fund market have made
progress in some areas but others remain an issue
- Figure 7: The growth of online banking has driven online distribution,
which itself has led to greater take-up among customers
- Figure 8: The majority of wealth managers and retail banks across
Europe already offer 3rd party funds, but most of those who don't, don't
plan to in the next 2 years
- Figure 9: 90% of wealth managers in Spain offer 3rd party funds
directly through their private banks today, but only 60% of Nordic wealth
managers do
- Figure 10: In France a minority of the main retail banks offer 3rd
party funds today
- Figure 11: Three quarters of wealth managers and more than 80% of
retail banks in Belgium and the Netherlands offer third party funds to
their client bases
- Figure 12: A minority of French retail banks offer third party funds
while private banks are far more likely to distribute them
- Figure 13: 60% of retail banks and 72% of wealth managers in Germany
offer third party mutual funds today
- Figure 14: A high proportion of both retail banks and private banks in
Italy offer third party funds
- Figure 15: 65% of retail banks and just over half of private banks in
the Nordic region offer third party mutual funds
- Figure 16: 71% of retail banks and 90% of private banks in Spain offer
third party mutual funds today
- Figure 17: 62% of retail banks and 67% of private banks in the UK
offer third party mutual funds
- Figure 18: UK IFAs have by far the largest market share relative to
other European markets, while German advisers vastly outnumber those in
other markets
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