Financial Advisors' Views on Technology 2008

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • The financial advice survey tracks the main changes inadvisor opinion each quarter
  • Financial advisors have a particularly positive viewtowards Standard Life, Legal & General, Aviva and Scottish Equitableas life companies
    • Financial advisors are dealing less with Skandia becauseits products don' t match the business models of IFAs
    • Friends Provident revealed a £46m loss in 2007, and hasmade job cuts, lost its finance director and is at the center of takeoverspeculation
    • A small percentage of IFAs will not work with someinsurance providers because of a negative experience in the past
      • Aviva and Abbey are viewed more negatively by IFAs thanother life companies
  • Financial advisors have a particularly positive viewtowards Fidelity, Invesco and Jupiter as mutual fund providers.
    • Invesco Perpetual is one of the largest independent assetmanagement companies in the UK
    • Fidelity is popular but recent research shows their UKfund underperforming
    • The Jupiter Group has received more than 120 awards overthe past four years
  • Some large life companies have low online penetration butothers are winning
    • The providers most used for online services are Legal& General, Norwich Union and Friends Provident
      • Legal & General, Norwich Union and Friends Providentare more popular as providers of online services because they are moreactively promoting their online services
  • IFAs favor applications over enquiries when conductingonline business
    • The majority of IFAs conduct less than 25% of their newbusiness through online systems.
    • The internet is widely used by UK households to enquireabout financial services
    • Bond and protection applications are the most favoredonline business for IFAs
      • Bonds applications are less dependent on individual datacapture
      • IFAs do not apply online for bonds because they find iteasier to complete applications offline
      • Some types of protection application are more formulaicand therefore more easily conducted online
    • Just 37% of all pensions applications made by IFAs overthe last six months have been online
    • SIPP products and their customers are more suited toonline applications than standard pensions
      • Technology and communications are pivotal in thedevelopment of the SIPP market
      • Towards a more simplified future UK pension market?
  • New business tracking enquiries are more popular onlinethan policy enquiries
    • IFAs are still not convinced that their new businesstracking enquiries can be answered online
    • Policy enquiries are the least favored online activitywith IFAs believing that they can get better quality information over thetelephone
  • IFAs do not show an interest in support services using newtechnology
  • Unipass certificates are important tools
  • IFAs conduct less that 25% of their new policy businessonline and prefer to deal directly with providers
  • IFAs are more interested in working directly withproviders rather than through fund supermarkets and wrap platforms
    • Wrap platforms need to have better functionality for IFAsto use them more
    • Providers need to give more online support to IFAs in achallenging market
    • Wraps and fund supermarkets are a convenient way for IFAsto manage their client business
      • Fund supermarkets already operate some elements of wrap
      • Life and pensions providers have the scale to launch anddevelop Wrap
      • Wrap should be viewed and sold as a new distributionchannel rather than as a product
      • Providers or fund supermarkets offering Wrap technologyneed to pay attention to the needs of IFAs for successful distribution inthe intermediary market
• APPENDIX
  • Definitions
    • Data
  • Bibliography
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
• List of Tables
  • Table 1: Which of the following statements bestdescribes your attitude to these providers?
  • Table 2: Which of the following statements bestdescribes your attitude to these insurers? Q1 2007
  • Table 3: Which of the following statements bestdescribes your attitude to these mutual fund providers?
  • Table 4: Which of the following statements bestdescribes your attitude to these mutual fund providers? Q1 2007
  • Table 5: Have you made any of the following applications/ enquiries offline or online in the last 6 months?
  • Table 6: Have you have made a new business trackingenquiry offline instead of online in the last 6 months?
  • Table 7: Why do you make new business tracking enquiriesoffline instead of online?
  • Table 8: Have you made a policy enquiry offline insteadof online in the last 6 months?
  • Table 9: Why have you made policy enquiries offlineinstead of online in the last 6 months?
  • Table 10: What type of organization do you work for? Q42007
  • Table 11: What is the average case size of business youdeal with?
  • Table 12: What proportion of your new policy business doyou conduct through the following online systems?
  • Table 13: Have you made a bond application offlineinstead of online in the last six months?
  • Table 14: If you have made an offline bond applicationin the last 6 months, why did you choose to make the bond applicationoffline?
  • Table 15: Have you made a protection application offlineinstead of online in the last 6 months?
  • Table 16: If you made a protection application offlinerather than online in the last six months, why did you choose to make theprotection application offline rather than online?
  • Table 17: Have you made a pension application offlineinstead of online in the last 6 months?
  • Table 18: If you made a pension application offlinerather than online in the last 6 months, why did you choose to make theprotection application offline rather than online?
  • Table 19: SIPP new business is forecast to continue toincrease in the pensions market
  • Table 20: ¥Were any of the offline pension applicationsyou made in the last 6 months for SIPPs? (Base: those IFAs who have madean offline pension application in the last 6 months.)
  • Table 21: How interested would you be in any of theseonline services from a product provider?
  • Table 22: If you conduct less than 25% of your businessthorough a wrap platform, which online services attract you to a wrapplatform?
  • Table 23: To what extent do you agree with eachstatement?
• List of Figures
  • Figure 1: Financial Advisors have a particularlyfavorable attitude towards Standard Life and Legal & General asinsurance product providers
  • Figure 2: Some life companies are less highly regardedthan in Q1 2007
  • Figure 3: A small percentage of IFAs will not work withsome insurance providers because of a negative experience in the past
  • Figure 4: Financial advisors are most impressed byFidelity, Invesco and Jupiter as mutual fund providers
  • Figure 5: A small percentage of IFAs will not work withsome mutual fund providers because of a negative experience in the past
  • Figure 6: Most mutual fund providers are more highlyregarded than in Q1 2007
  • Figure 7: Some large life companies have low onlinepenetration although others are winning
  • Figure 8: Bond applications is the favored type ofonline business for IFAs, with half having made online bond applicationsduring the last six months
  • Figure 9: The IFA industry is characterized principallyby single outlets
  • Figure 10: The IFA industry is characterized principallyby case sizes of less than £5,000
  • Figure 11: The majority of IFAs conduct less than 25% oftheir new business through online systems
  • Figure 12: Half of all bond applications by IFAs aremade online
  • Figure 13: IFAs make bond applications offline becausethey find it easier than online
  • Figure 14: Nearly half of all protection applicationsmade by IFAs over the last six months have been online
  • Figure 15: IFAs make protection applications offlinebecause they find it easier than online
  • Figure 16: 37% of IFAs have made an online pensionapplication in the last six months
  • Figure 17: IFAs find pension applications easier tocomplete offline
  • Figure 18: SIPP new business is growing and well suitedto new technology
  • Figure 19: 40% of IFAs have made an online SIPPapplication in the last six months
  • Figure 20: IFAs prefer to conduct new business trackingenquiries offline rather than online
  • Figure 21: IFAs are concerned about the quality ofinformation available online when tracking new business
  • Figure 22: Policy enquires are least likely to beconducted online than other types of IFA business
  • Figure 23: IFAs believe that they get more reliableinformation about policies by telephone
  • Figure 24: IFAs do not show an interest in supportservices using new technology
  • Figure 25: IFAs would like more support to betterutilize wrap platforms
  • Figure 26: IFAs think that they get sufficient supportfrom providers, but would like more tools available online