Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Savings and Investing - Intermediary Focus - UK - November 2013

“Financial advisers are burdened by increased costs due to the RDR, however, they are yet to embrace the power of online tools to engage with larger numbers of consumers and make efficiency savings.”

– Alex Hiscox – Senior Financial Services Analyst

Some questions answered in this report include:

  • Where next for unprofitable saving and investment clients?
  • Should intermediaries improve online presence to better serve their local market?
  • Will advisers cling onto the badge of ‘independence’?

Financial advisers are in a strong position as qualified experts, whilst the face-to-face aspect of their business helps them to build strong relationships with their clients. This has been a successful model for financial advisers, 60% of whom, do not market their businesses to attract new clients; instead they allow recommendations and referrals to do the work for them.

However, looking forward, online channels are likely to play a larger role in the savings and investment intermediaries market. Even in local markets, it is hard to imagine a business that can succeed without some form of online exposure. If small financial advice firms continue to ignore this trend, they will find the future increasingly tough. Tomorrow’s older and more affluent consumers will be increasingly tech-savvy, and will expect an online presence.

This report examines the savings and investment intermediary marketplace and considers both the opportunities and threats that intermediaries in this industry face over the coming years. The report discusses the key factors driving the market, the effect of recent regulatory and legislation changes, as well as the competition within the industry. The size of the market, channels of distribution, key financial advice firms and advertising activity are all discussed. Furthermore, Mintel’s exclusive IFA (Independent Financial Adviser) research considers adviser business models, the wealth of their clients, what strategies they implement for attracting new business, features that they value in an investment platform, and what challenges advisers face.

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • The number of financial advisers increased in 2012
              • Figure 1: Size of IFA and tied advice market, by firm size, 2010-12
            • Intermediated sales account for over 90% of the unit trust and OEIC market
              • Figure 2: Estimated share of gross retail unit trust and OEIC sales, by distribution channel, 2012
            • Market factors
              • Impact of the RDR
                • Almost all advisers have gained full qualifications post-RDR
                  • Face-to-face is the preferred way to receive financial advice
                    • Figure 3: Preferred channels for financial advice, June 2013
                  • An increasing number of consumers manage their own investments
                    • Figure 4: Attitudes towards financial advice, by amount of savings and investments, June 2013
                  • Companies, products and innovations
                    • Financial advice firms diversifying their client offering
                      • Direct discretionary fund managers present a new challenge
                        • The adviser
                          • The majority of advisers remain independent, as the idea of restricted advice fails to catch on
                            • Figure 5: Adviser business models, August 2013
                          • Financial advisers fight over a small pool of mass affluent and affluent clients
                            • Figure 6: Wealth of advised clients, August 2013
                          • Advisers are doing very little marketing to attract new business
                            • Figure 7: Adviser strategies for attracting new business, August 2013
                          • Online channels are often underused by advisers for attracting new clients
                            • Advisers weigh up three key factors when choosing an investment platform
                              • Figure 8: Features that advisers consider important in an investment platform, August 2013
                            • The main challenge to advisers is the increased cost of regulation
                              • Figure 9: Challenges that advisers are facing, August 2013
                            • What we think
                            • Issues in the Market

                                • Where next for unprofitable saving and investment clients?
                                  • Should intermediaries improve online presence to better serve their local market?
                                    • Will advisers cling onto the badge of ‘independence’?
                                      • How can financial advisers differentiate themselves from DIY X-O providers?
                                      • Trend Application

                                        • Intermediaries could embrace online forms of communication to save time and money
                                          • Educating consumers is key in making them realise the importance of saving and investing
                                            • Intermediaries will have to change the way they market to and manage senior investors
                                            • Regulation and Legislation

                                              • Key points
                                                • Impacts of the RDR
                                                  • Summary of the RDR changes
                                                    • Figure 10: Summary of the key requirements for the retail investment market, pre- and post- RDR, 2013
                                                  • The FCA’s thematic review outlines how firms are implementing the RDR changes
                                                    • Some financial advisers are unclear on the distinction between independent and restricted advice
                                                      • Platforms pulled into the independent/restricted debate
                                                        • Almost all advisers have gained full qualifications post-RDR
                                                          • Figure 11: Number of advisers as of 31 July, 2013
                                                        • There still remains some confusion around adviser charging
                                                          • Capital adequacy rules have been delayed for two years
                                                            • FSCS levies continue to place a regulatory burden on advisory firms
                                                              • Auto-enrolment could have knock-on effect for the savings and investment intermediaries market
                                                              • Market Drivers

                                                                • Key points
                                                                  • Intended investment activity is out of sync with the rising stock market
                                                                    • Figure 12: Intended investment activity, Q3/Q4 2002-Q3/Q4 2013
                                                                  • Inflation has remained stubbornly high
                                                                    • Only 14% of consumers have over £50,000 in savings and investments
                                                                      • Figure 13: Amount of savings and investments, June 2013
                                                                    • Face-to-face is still the preferred way to receive financial advice
                                                                      • Figure 14: Preferred channels for financial advice, June 2013
                                                                    • Direct-to-consumer DIY methods gain in popularity
                                                                    • Who’s Innovating?

                                                                      • Key points
                                                                        • OpenWork offers advisers support to build their brand identity
                                                                          • Hargreaves Lansdown looks to appeal to consumers trapped in the advice gap
                                                                            • Asset Match will allow IFAs to secure funding
                                                                              • Informed Choice and Best Price Advice launch direct to consumer offerings
                                                                              • SWOT Analysis

                                                                                  • Figure 15: Swot analysis for the saving and investment intermediary market, 2013
                                                                              • Competitor Channels

                                                                                • Key points
                                                                                  • A note on Product Sales Data
                                                                                    • Most banks and building societies have withdrawn from the investment advice market
                                                                                      • Figure 16: Volume of regulated retail sales of investment products, year-to-March 2013
                                                                                    • An increasing number of consumers manage their own investments
                                                                                      • Figure 17: Attitudes towards financial advice, by amount of savings and investments, June 2013
                                                                                    • Financial advice firms diversifying their client offering
                                                                                      • Discretionary services increase in popularity, particularly amongst intermediaries
                                                                                        • Figure 18: Full-service stockbroker assets, by management channel, 2009-12
                                                                                      • The direct discretionary model offers a new challenge
                                                                                        • Figure 19: Attitudes towards the concept of discretionary fund management, June 2013*
                                                                                    • Adviser Share of the Investment Market

                                                                                      • Key points
                                                                                        • Intermediated sales of unit trusts and OEICS increase in 2012
                                                                                          • Figure 20: Gross retail sales of unit trusts and OEICs, by distribution channel, 2008-13
                                                                                        • Platforms are popular amongst advisers
                                                                                          • Figure 21: Share of gross retail unit trust and OEIC sales, by distribution channel, 2012
                                                                                        • Intermediaries dominate distribution of investment bonds
                                                                                          • Figure 22: New investment bond premiums*, by sales channel, 2008-12
                                                                                      • Adviser Market Size and Firm Rankings

                                                                                        • Key points
                                                                                          • The number of directly authorised advisers stabilised in 2012
                                                                                            • Figure 23: Size of IFA and tied advice market, by firm size, 2010-12
                                                                                          • Total population of the advice market has continued to decrease overall
                                                                                            • Figure 24: Size of the registered investment advisers (RIA) population, by firm type, 2010-12*
                                                                                          • Number of advisers has increased post-RDR
                                                                                            • Figure 25: Adviser numbers (estimated 2012 and actual end 2012 and 2013)
                                                                                          • Large advice networks generate the majority of sales
                                                                                            • Figure 26: Top 20 financial advisers in the UK, based on gross sales, Q3 2012-Q2 2013
                                                                                          • Note on Matrix Solutions data
                                                                                          • Companies and Products

                                                                                            • Brewin Dolphin
                                                                                              • Ranking
                                                                                                • Company description
                                                                                                  • Product range
                                                                                                    • Financial performance indicators
                                                                                                      • Recent activity
                                                                                                        • Hargreaves Lansdown
                                                                                                          • Ranking
                                                                                                            • Company description
                                                                                                              • Product range
                                                                                                                • Financial performance indicators
                                                                                                                  • Recent activity
                                                                                                                    • St. James’ Place
                                                                                                                      • Ranking
                                                                                                                        • Company description
                                                                                                                          • Product range
                                                                                                                            • Financial performance indicators
                                                                                                                              • Recent activity
                                                                                                                                • Sesame Bankhall Group (SBG)
                                                                                                                                  • Ranking
                                                                                                                                    • Company description
                                                                                                                                      • Product range
                                                                                                                                        • Financial performance indicators
                                                                                                                                          • Recent activity
                                                                                                                                          • Advertising and Promotion

                                                                                                                                            • Key points
                                                                                                                                                • Figure 27: Advertising expenditure relating to financial advice and intermediaries, by sub-category, three years to 31 August 2013
                                                                                                                                              • Schroder’s was the biggest advertiser to savings and investment intermediaries in 2012/13
                                                                                                                                                • Figure 28: Top ten advertisers in the intermediary savings and investments income sub-categories, 2010-13
                                                                                                                                              • Fund managers continue to advertise to savings and investment intermediaries through print
                                                                                                                                                • Figure 29: Proportional distribution of advertising expenditure on intermediary savings and investments advice, by media type, 2010-13
                                                                                                                                                • Figure 30: Proportional distribution of advertising expenditure on intermediary pensions and investments income advice, by media, 2010-13
                                                                                                                                              • A note on adspend
                                                                                                                                              • Adviser Business Models

                                                                                                                                                • Key points
                                                                                                                                                  • About Mintel’s financial advice research
                                                                                                                                                    • The majority of advisers remain independent, as the idea of restricted advice fails to catch on
                                                                                                                                                      • Figure 31: Adviser business models, August 2013
                                                                                                                                                    • Advisers are confused about restriction and independence
                                                                                                                                                      • The number of restricted advisers has increased post-RDR
                                                                                                                                                        • Figure 32: Adviser business models, August 2012 and 2013
                                                                                                                                                    • Wealth of Advised Clients

                                                                                                                                                      • Key points
                                                                                                                                                        • Mass-market consumers find it more difficult to access financial advice
                                                                                                                                                          • Figure 33: Wealth of advised clients, August 2013
                                                                                                                                                        • Financial advisers mainly fight over a small pool of affluent clients
                                                                                                                                                        • Adviser Strategies for Attracting New Business

                                                                                                                                                          • Key points
                                                                                                                                                            • Advisers are doing very little marketing to attract new business
                                                                                                                                                              • Figure 34: Adviser strategies for attracting new business, August 2013
                                                                                                                                                            • Online channels are often underused by advisers for attracting new clients
                                                                                                                                                              • Only 4% of advisers have looked into advertising through employers to attract new business
                                                                                                                                                                • Only 8% of advisers have lowered their charges to attract new business
                                                                                                                                                                • Features that Advisers Value in an Investment Platform

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Advisers consider usability as the most important feature in an investment platform
                                                                                                                                                                      • Figure 35: Features that advisers consider important in an investment platform, August 2013
                                                                                                                                                                    • Platform cost is important to half of advisers
                                                                                                                                                                      • Advisers can diversify their clients’ assets by having access to a wide range of investments
                                                                                                                                                                        • Customer service-related features are less important for financial advisers when choosing a platform
                                                                                                                                                                        • Adviser Challenges

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Increased compliance costs present a challenge to half of advisers
                                                                                                                                                                              • Figure 36: Challenges that are facing saving and investment intermediaries, August 2013
                                                                                                                                                                            • Further price pressure coming from consumers
                                                                                                                                                                              • Few advisers see direct-to-consumer competitors as a significant challenge
                                                                                                                                                                                • Only 13% of advisers a facing cash flow challenges
                                                                                                                                                                                  • Capital adequacy requirements are not a major concern
                                                                                                                                                                                    • Around a fifth of advisers aren’t facing any significant challenges

                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                    • Aviva Plc
                                                                                                                                                                                    • Barclays Bank plc
                                                                                                                                                                                    • Brewin Dolphin Holdings PLC
                                                                                                                                                                                    • Clydesdale Bank
                                                                                                                                                                                    • Cofunds
                                                                                                                                                                                    • ComPeer Limited
                                                                                                                                                                                    • Coventry Building Society
                                                                                                                                                                                    • Financial Services Authority (The)
                                                                                                                                                                                    • Hargreaves Lansdown Plc
                                                                                                                                                                                    • Lloyds Banking Group

                                                                                                                                                                                    Savings and Investing - Intermediary Focus - UK - November 2013

                                                                                                                                                                                    £1,995.00 (Excl.Tax)