The Spanish Financial Advice Market 2007

EXECUTIVE SUMMARY

Market Structure

Regulatory Developments

Competitor dynamics

Opportunities

CHAPTER 1 INTRODUCTION

What is this report about?

Who is the target reader?

How to use this report

CHAPTER 2 MARKET STRUCTURE

Introduction

Key findings

Financial advice in Spain is dominated by the banks

Some business banks with private divisions classify themselves as independent advisors

There are few independent advisors in the Spanish market as a result of insufficient regulation

There were just under 32,000 non-bank financial intermediaries in the Spanish market in 2005

Spain is home to approximately 4% of the total European financial advisor community

Compared to Europe as a whole, the Spanish financial advice market is dominated by single-tied advisors

97% of financial advisors in Spain are remunerated on a commission-fee basis

Banks are the most important channel for distribution of financial services products in the Spanish financial advice market

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

Cuts in capital gains tax in January 2007 may change the investment habits of Spanish investors

The Spanish financial advice market is fragmented and thus regulation has only had an effect on the banking channel

Financial advisors are mostly tied to banks, so tend to offer the banks' own products

Hedge fund regulation has recently been introduced into the domestic market by CNMV

Data

CHAPTER 3 REGULATORY DEVELOPMENTS

Introduction

Key findings

CNMV is the main regulatory body for financial advisors in the Spanish market

CNMV has enforced no regulatory reforms aimed specifically at the advisory market over the last five years

AIF & ANAF are the two associations that have been actively promoting increased awareness of the advisory industry

The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in Spain in recent years

The Financial Services Action Plan

Insurance Mediation Directive

UCITS III

Markets in Financial Instruments Directive (MiFID)

The MiFID directive is expected to have an impact but many firms believe they were compliant well before its arrival

Creation of a financial advice certificate may go some way towards allaying investor trust issues

Although MiFID is a step forward for financial advice, it is not necessarily the answer to their problems

The European Commission suggests a regulary 'pause' over the next five years

EC simplification project is likely to affect the insurance industry across Europe

The AIF has called for more regulation of issues related to financial advisers

CHAPTER 4 COMPETITOR DYNAMICS

Introduction

Key findings

BBVA (Banco Bilbao Vizcaya Argentaria) is one of the two biggest financial advisory banks in Spain

BBVA has pushed a significant proportion of its workforce through advisory training schemes

Santander's prowess lies in its extensive subsidiary network

Renta 4 was voted the best internet-based intermediary in 2005

CHAPTER 5 OPPORTUNITIES

Introduction

Key findings

Spain is a market characterised by limited opportunities for new entrants

Firms looking at entering the Spanish market should focus their efforts on portfolio management, wealth advice and tax planning

New entrants should look towards acquisition to establish a foothold in the market

Or perhaps take a more specialized approach by targeting family financial planning or the upper end of the mass market customer base

Firms can better supply financial advisors through adequate training and education

Banks are expected to continue their domination of the Spanish advisory market, leaving little opportunity for independents

APPENDIX

Definitions

Further reading

Financial Advice Market SPP

Savings and Investments SPP

Interactive Databases

Reports

Briefs

Global Wealth Management SPP

Interactive Databases

Market Reports

Strategic Insight Reports

Wealth Management Competitor Tracker

Datamonitor Asia Pacific Wealth Management SPP

SPP writing team

List of Tables

Table 1: Spanish intermediaries, split by channel, 2005

Table 2: European intermediaries remunerated on a purely fee-basis

Table 3: Number of Spanish intermediaries, segmented by group, 2005

Table 4: Total number of intermediaries & institutions, segmented by country, 2005

Table 5: Distribution of mutual funds in the Spanish market by distribution channel, 2006

List of Figures

Figure 1: Individual intermediaries made up the largest advisory group in the Spanish market in 2005

Figure 2: Individual intermediaries made up the largest non-bank advisory group in the Spanish market in 2005

Figure 3: Spain has the 4th highest number of intermediaries in Europe but this represents just 4% of the total EU market share

Figure 4: Single-tied advisors dominated the Spanish non-bank advisory channels in 2005

Figure 5: Spain has a minor proportion of intermediaries remunerated on a purely fee-basis

Figure 6: The retail bank is the dominant channel for the distribution of mutual funds in Spain