Advisors are predominantly sole independent traders, with a low
average case size
Advisors are cautiously optimistic over sales growth in the next 6
months
Distribution Dynamics:
Regulation and administration are the two biggest concerns for
advisors in Q2
Advisors seem happy with the pace of change but are still
uncomfortable with the idea of fee-based remuneration
Most advisor firms are small, but recruitment is not considered a
problem
Table of Contents
Table of figures
Table of tables
MArket Context
The sample consists predominantly of sole traders
Advisors have retained an independent or whole of market model
The average case size in this sample is below £5,000
42% of advisors in this sample have a majority of high net worth clients
The majority of business is currently conducted in pensions and
life-based investment products
Advisors are losing business to online sales for simpler products
There have been few changes since Q1
The majority of financial advisors are cautiously optimistic
Advisors expect sales of most products to remain static over the next 6
months
There has been little definitive change from Q1
The outlook for life products is positive
Advisors are more optimistic over mutual funds than ISAs
Protection sales look to remain largely static, but some advisors
predict a decrease
Advisors are most optimistic regarding pension sales over the next 6
months
Financial advisors are most positive towards Standard Life, Skandia, and
Legal & General
Standard Life is a leading UK fund manager employing a "focus on
change" investment philosophy
Skandia has been a prominent name in the UK savings & investments
market in recent years
Legal & General has won a number of awards in 2007
Attitudes have remained similar to those in Q1 2007
Invesco Perpetual and Fidelity have the highest approval ratings from
advisors in Q2
Invesco Perpetual is one of the largest independent asset management
companies in the UK
Fidelity is the UK' s largest mutual fund manager
HSBC is the least popular provider by a significant margin
Data
Distribution Dynamics
Confusing regulation is the biggest challenge for all ages of advisors
Younger advisors are more concerned about technological change
Over half the surveyed advisors believe providers are not helpful in
quieting their fears
Paperwork is the key source of dissatisfaction for all ages of advisor
Most advisors feel comfortable with the pace of change
The younger age groups are most confident about keeping pace with
change
Over half of advisors believe that better training is the answer
Most advisors remain reluctant to move away from upfront commissions
The 30-40 age group is most open to the idea of fee-based remuneration
Most advisors are concerned with loss of profitability when moving
away from commissions
The predominant innovations have been in the area of delivery platforms
There is a close link between advisor age and enthusiasm for product
delivery developments
Few advisors work in firms of more than 2 employees
Younger advisors are more likely to work in larger firms
Older advisors are ambiguous about retirement
The younger advisors work for firms with the best succession plans
Most advisors do not believe they have a problem with recruitment
Advisors are happy to handle recruitment without external help
Many advisors are ambivalent about forming a partnership with another
firm
Most advisors would prefer to partner with accountants or other IFA firms
Reputation and a natural fit are the two most important criteria in
financial advice partnerships
Data
APPENDIX
Definitions
Pension product definitions
Personal Pensions
Stakeholder Pensions
Group personal pensions
Employer Sponsored Stakeholder pension (ESS)
SIPPs (Self Invested Personal Pensions)
Definitions of distribution channels
Independent Financial Advisors (IFAs)
Direct sales forces
Tied agents
Multi-tied agents
Bancassurance
Direct marketing
Telesales
Other
Matrix Definitions
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Tables
Table 1: What percentage of your business is conducted in each of the
following areas?
Table 2: Over the next six months how do you expect sales in each of
the following products to change?
Table 3: Over the next six months how do you expect sales in each of
the following products to change?
Table 4: Which of the following statements best describes your
attitude to these insurers? (Q2 2007)
Table 2: Which of the following statements best describes your
attitude to these insurers? (Q1 2007)
Table 6: Which of the following best describes your company?
Table 7: What business model do you operate?
Table 8: What is the average case size of the business you deal with?
Table 9: Does more than 50% of your customer base have total liquid
assets of over £200k? i.e would you describe more than half of your
customer base as High Net Worth?
Table 10: Does more than 50% of your customer base have total liquid
assets of below £30 000? i.e would you describe more than half of your
customer base as Mass affluent?
Table 11: What percentage of your business is conducted in each of the
following areas?
Table 12: I believe in the next 6 months the UK Financial Advice
market will:
Table 13: Which of the following statements best describes your
attitude to these insurers?
Table 14: Which of the following statements best describes your
attitude to these mutual fund providers?
Table 15: Do you believe that providers will really work with IFAs to
meet these needs and concerns?
Table 2: What do you find dissatisfying about your work?
Table 3: What could be done by providers to help you keep pace with
change?
Table 18: What are the 3 biggest challenges facing your firm?
Table 19: What do you find dissatisfying about your work?
Table 20: Do you feel you are keeping pace with the changes occurring
in the market?
Table 21: Do you feel you are keeping pace with the changes occurring
in the market?
Table 22: What could be done by providers to help you keep pace with
change?
Table 23: Do you feel your firm is open to the idea of removal of
up-front commissions?
Table 24: What are the key challenges facing firms who wish to move
away from upfront commissions?
Table 25: What have been the most interesting product developments
over the last five years?
Table 26: How many advisors work in your firm?
Table 27: Are any members of your firm likely to retire in the next 5
years?
Table 28: Is there a succession plan in place?
Table 29: Are you facing issues surrounding recruitment of new
advisors into your business?
Table 30: Do you feel that providers could do more to help recruit new
advisors into the industry?
Table 31: Would your firm look to forming a partnership with another
organisation?
Table 32: Which kind of partners do you think would be suitable for
IFAs? (choose up to 3)
Table 33: What qualities would you be looking for in such a
partnership? (choose up to 3)
List of Figures
Figure 1: Almost half the Q2 advisors surveyed are sole traders
Figure 2: The majority of advisors operate an independent business
model
Figure 3: Most participants deal with an average case size of less
than £5,000
Figure 4: Younger advisors deal with higher value average cases than
their older colleagues
Figure 5: Less than half the sample have a majority of high net worth
clients
Figure 6: Over half of respondents consider the majority of their
customer base to be mass affluent
Figure 7: Almost a quarter more advisors claim a majority of HNW
clients in Q2 compared to Q1
Figure 8: Pensions and life-based investments demonstrate the
strongest business performance
Figure 9: The majority of advisors forecast limited growth when asked
how the market will develop over the next 6 months
Figure 8: The majority expect life products sales to remain the same
over the next 6 months
Figure 9: Non-life products may see a gradual increase in sales over
the next 6 months
Figure 10: Some advisors predict a decrease in protection sales over
the next 6 months
Figure 11: Personal pension sales look positive over the next 6 months
Figure 13: Skandia is the most popular insurer with advisors in Q2
Figure 13: Invesco Perpetual remains the most popular mutual fund
provider
Figure 14: HSBC is the least popular mutual fund provide by some
distance
Figure 15: Confusing regulation is one of the key challenge for almost
two thirds of advisors
Figure 18: The Under 30s are worried about technological change
Figure 16: Over half of surveyed advisors had little faith in
providers to help assuage their worries
Figure 17: Advisors are unconcerned about learning new products and
technologies
Figure 18: Over half of advisors feel confident that they are keeping
up-to-date with change
Figure 22: The 30-40 age group is most confident about the pace of
change
Figure 19: The majority of advisors feel uncomfortable with the idea
of removing up-front commissions
Figure 24: Only the 30-40 age group has a majority open to moving away
from up-front commissions
Figure 20: Almost half of advisors are primarily concerned with
profitability when considering moving away from up-front commissions
Figure 21: Delivery platforms are considered some of the most
interesting product developments in recent years
Figure 27: Younger advisors are most excited about delivery platforms
Figure 22: How many advisors work in your firm?
Figure 23: Older advisors are far more likely to work alone than their
younger colleagues
Figure 30: Retirement possibilities increase in firms with older
advisors
Figure 31: Older advisors are less well-provided for in terms of
succession plans
Figure 24: Recruitment of new advisors is most challenging in the
50-55 age group
Figure 25: Over two thirds of advisors feel they do not require
recruitment assistance from providers
Figure 26: Advisors between 30 and 50 are least open to the idea of a
partnership
Figure 27: Over half of advisors say accountants would be a potential
partnership choice
Figure 36: A natural fit is the most important quality in an IFA
partnership
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