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Mass Affluent and Affluent Financial Advice - UK - November 2017

“The financial advice market for mass affluent and affluent consumers is in a healthy position. This is a segment of consumers with above-average need for advice and greater capacity to pay for it. However, it is not without its challenges, with new regulations on the horizon and the ongoing challenge of convincing mass affluent consumers of the positives of robo-advice.”
– Rich Shepherd, Senior Financial Services Research Analyst

This Report looks at the following areas:

  • Room for improvement in consumer perceptions
  • Automated advisers need to allay security concerns
  • Does a focus on individual events raise the value of specialist advice?

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Table of contents

  1. Overview

    • What you need to know
      • Definitions
      • Executive Summary

          • The market
            • The number of advice firms fell slightly in 2016
              • Figure 1: Number of financial advice firms, 2008-16
            • MiFID II and a new definition of advice on the horizon
              • The consumer
                • 69% have used professional advice in the last three years
                  • Figure 2: Sources of financial advice used in the last three years, August 2017
                • Investments are the most common reason to seek advice
                  • Figure 3: Products and services for which advice has been used in the last three years, August 2017
                • Meeting face-to-face is the preferred channel…
                  • Figure 4: Willingness to pay for different financial advice channels, by type of product, August 2017
                • …and is the most influential factor in choosing an adviser
                  • Figure 5: Important factors when choosing a financial adviser, August 2017
                • Consumers need help to understand the cost and quality of advice
                  • Figure 6: Concerns about using financial advice, August 2017
                • Independent advisers are preferred over product providers
                  • Figure 7: Attitudes towards financial advice, August 2017
                • Automated advice has a lot of convincing to do
                  • Figure 8: Attitudes towards automated advice services, August 2017
                • What we think
                • Issues and Insights

                  • Room for improvement in consumer perceptions
                    • The facts
                      • The implications
                        • Automated advisers need to allay security concerns
                          • The facts
                            • The implications
                              • Does a focus on individual events raise the value of specialist advice?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • The number of advice firms fell slightly in 2016
                                      • MiFID II and a new definition of advice on the horizon
                                      • The Financial Advice Market

                                        • The number of advice firms fell slightly in 2016
                                          • Figure 9: Number of financial advice firms, 2008-16
                                        • Complaints continued to fall last year
                                          • Figure 10: Number of complaints made to financial services firms associated with advising, selling and arranging, 2013-16
                                          • Figure 11: Number of complaints made to financial services firms associated with advising, selling and arranging, by product type, H2 2016
                                      • Regulatory and Legislative Changes

                                        • Changing the definition of advice
                                          • MiFID II due to come into effect
                                            • FCA delays review of RDR until 2019…
                                              • APFA and WMA merge to form new adviser trade body
                                              • Companies and Brands – What You Need to Know

                                                • Firms look to expand automated services in the mass affluent sector
                                                  • Fee structures could be set for an overhaul
                                                  • Competitive Strategies

                                                    • High street banks
                                                      • Barclays
                                                        • HSBC
                                                          • Lloyds
                                                            • RBS Group
                                                              • Santander
                                                                • Automated options for the mass affluent sector
                                                                  • MiFID II to prompt a price war?
                                                                  • The Consumer – What You Need to Know

                                                                    • 69% have used professional advice in the last three years
                                                                      • Investments are the most common reason to seek advice
                                                                        • Meeting face-to-face is the preferred channel…
                                                                          • …and is the most influential factor in choosing an adviser
                                                                            • Consumers need help to understand the cost and quality of advice
                                                                              • Independent advisers are preferred over product providers
                                                                                • Automated advice has a lot of convincing to do
                                                                                • Sources of Financial Advice

                                                                                  • A greater need for advice
                                                                                    • Figure 12: Sources of financial advice used in the last three years, August 2017
                                                                                  • 40% have consulted an IFA in the last three years
                                                                                    • Under-45s are significantly more likely to use professional advice
                                                                                      • Figure 13: Sources of financial advice used in the last three years, by age, August 2017
                                                                                  • Reasons for Using Advice

                                                                                    • Savings, investments and pensions dominate advice needs
                                                                                      • Figure 14: Products and services for which advice has been used in the last three years, August 2017
                                                                                    • Consumers’ need for advice is shaped by their stage of life
                                                                                      • Figure 15: Products and services for which advice has been used in the last three years, by age, August 2017
                                                                                  • Interest in Financial Advice Channels

                                                                                    • Face-to-face is the preferred channel
                                                                                      • Figure 16: Willingness to pay for different financial advice channels, by type of product, August 2017
                                                                                    • Insurance brokers have fallen from favour
                                                                                      • Younger consumers are the most willing to pay
                                                                                        • Figure 17: Unwillingness to pay for financial advice via any channel, by type of product, by age, August 2017
                                                                                      • Around one in ten is willing to pay for automated advice
                                                                                        • Figure 18: Willingness to pay for financial advice using an automated online service, by type of product, by gender, August 2017
                                                                                    • Factors Affecting Choice of Adviser

                                                                                      • Sector specialists are favoured over independent advisers
                                                                                        • Figure 19: Important factors when choosing a financial adviser, August 2017
                                                                                      • Cost is key
                                                                                        • Online channels have a long way to go…
                                                                                          • …but appeal to a fifth of under-45s
                                                                                            • Figure 20: Important channel-based factors when choosing a financial adviser, by age, August 2017
                                                                                        • Concerns about Using Financial Advice

                                                                                          • Consumers struggle to judge the quality of advice
                                                                                            • Figure 21: Concerns about using financial advice, August 2017
                                                                                          • Providers need to do more to justify the cost of advice…
                                                                                            • …and to improve their perceived trustworthiness
                                                                                              • Figure 22: Response to the statement “Financial advisers can’t be trusted to offer impartial advice”, by age, August 2017
                                                                                            • IFAs provide a more convincing case about the benefits of advice
                                                                                              • Figure 23: Agreement with concerns about using financial advice, by source of financial advice used in the last three years, August 2017
                                                                                          • Attitudes towards Financial Advice

                                                                                            • Partiality is a major concern
                                                                                              • Figure 24: Attitudes towards financial advice, August 2017
                                                                                            • More could be done to improve the perception of the benefits of advice
                                                                                              • Tailoring services around life events could expand the market
                                                                                              • Attitudes towards Automated Advice

                                                                                                • Human advisers are overwhelmingly preferable to automated platforms
                                                                                                  • Figure 25: Attitudes towards automated advice services, August 2017
                                                                                                • Convincing people of security credentials is essential for growth
                                                                                                  • Nearly half of wealthy consumers consider their needs too complex for robo-advice…
                                                                                                    • …but 62% of younger consumers would be willing to give it a try
                                                                                                      • Figure 26: Agreement with the statement “I would feel comfortable following automated advice based on my financial information”, by age, August 2017
                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                    • Abbreviations
                                                                                                      • Consumer research methodology

                                                                                                      Companies Covered

                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                      Mass Affluent and Affluent Financial Advice - UK - November 2017

                                                                                                      US $2,914.30 (Excl.Tax)