The French 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

The financial advisory distribution channel in France is one of the smallest in Europe

Financial advisors have struggled to establish their own market niche

There are currently only around 1,300 active advisors in France

France is home to just 0.8% of the total European financial intermediary community

Compared to Europe as a whole, the French channel is dominated by single-tied advisors

Over 95% of financial advisors in France are compensated on a commission-basis at some level

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

France is the biggest bancassurance market in Europe

Bancassurance in France has evolved into a sophisticated channel

The French life and pensions market has experienced strong growth since 2005, but banks have swallowed most of the benefits

Less than 10% of life and pensions distribution in France goes through independent channels

Banks retain a firm grip on sales of mutual funds

Customer loyalty makes entry difficult

CHAPTER 3 REGULATORY DEVELOPMENTS

Introduction

Key findings

There is no main body regulating the French financial services industry

The financial advice market is largely unregulated

New legislation was introduced in 2004 aimed specifically at financial advisors

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

The Financial Services Action Plan

Insurance Mediation Directive

UCITS III

Markets in Financial Instruments Directive (MiFID)

MiFID regulation is likely to have a profound impact on the French financial advice channel

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 financial services industry in France is tired of regulation

Trade association membership in France is fragmented

....However, the FECIF takes a leading role in regulatory dissemination and implementation

CHAPTER 4 COMPETITOR DYNAMICS

Introduction

Key findings

The financial advice market in France is dominated by banks

Out of those firms which present a separate financial advice offering, the market is dominated by four main firms

Cardif: The largest provider in France

Generali: Holds over 4% of the financial advice market

AXA: 35% of products distributed through independent advisors

Skandia: Works exclusively with independent advisors

M&A activity amongst independent and intermediary firms is growing

CHAPTER 5 OPPORTUNITIES

Introduction

Key findings

France is a market characterised by a dominant banking sector creating limited opportunities for new entrants to leverage financial advisor distribution

Firms looking into the French market should concentrate on the opportunities provided by private pensions and wealth management

Life product sales are controlled by the banking sector

Retail bank asset managers often fulfil the role of financial advisor for mutual fund distribution

An growing affluent sector may stimulate the advice channel

Private pensions have the most potential for long-term growth

Partnerships may be a more efficient entry strategy than acquisitions

Regulation may create a more favorable environment for financial advisors in France

The key to the development of the financial advice channel could be the legislation on appropriate charging structures

APPENDIX

Supplementary data

Definitions

Research methodology

Further reading

Savings & Investments SPP

Interactive Databases

Reports

Briefs

Global Wealth Service SPP

Interactive Databases

Market Reports

Strategic Insight Reports

Wealth Management Competitor Tracker

Datamonitor Asia Pacific Wealth Management SPP

Life and Pensions SPP

Interactive Databases

Reports and Briefs

Financial Advice Market SPP

SPP writing team

List of Tables

Table 1: Distribution of financial intermediaries and their customer base in France, 2005

Table 2: Distribution of European financial advisors, 2005

Table 3: European Intermediaries split by channel, 2005

Table 4: Overview of the French pensions industry in 2005

Table 5: Membership of intermediary trade associations in France

Table 6: The top four financial advice distributors in France, 2005

Table 7: AXA sales split by distribution channel, based on gross written premiums in 2005

Table 8: Skandia unit-linked life products growth 2004-05

Table 9: Intermediaries in France, 2005

Table 10: European intermediaries remunerated on a purely fee-basis

List of Figures

Figure 1: Single-tied advisors dominate the French advisory distribution channel

Figure 2: Single-tied advisors dominate the French advisory distribution channel

Figure 3: The UK has the greatest number of advisors remunerated on a purely fee-basis

Figure 4: Retail banks control a relatively small share of mutual fund distribution in France

Figure 5: Generali has a large number of subsidiaries in France providing products to its distribution network