Financial Advisors view of investment choices

TABLE OF CONTENTS

Overview

Catalyst

Summary

Methodology

Executive Summary

Market Context

Sector Issues

Market Context

The Survey sample consists mostly of sole traders

Financial advisors believe sales of many savings products will remain unchanged in the future

In terms of providers, financial advisors have a particularly positive attitude towards Skandia, Friends Provident & Standard Life

In terms of mutual fund providers, advisors are most positive about Invesco Perpetual & Fidelity

Data

Sector Issues

Advisors’ choice of provider is most affected by provider service and financial strength

Life companies’ asset management arms have improved somewhat over the last 5 yrs

The area of specialization varies between different fund managers

The key opportunities in the market lie with products such as wraps and REITs, as well as areas such as the Far East

Size of fees have a most significant impact in the choice of life company

Advisors find complex funds fairly simple to communicate to clients

REIT funds are seen as a particular area of growth

Data

APPENDIX

Definitions

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

TABLE OF FIGURES

Figure 1: Sole Traders constitute just over 40% of the total survey sample

Figure 2: Just over a quarter of respondents have more than 50% of their client base classified as high net worth

Figure 3: Approximately half of respondents have more than 50% of their customer base classified as mass affluent

Figure 4: The majority of financial advisors believe sales of many savings products will remain unchanged over the next 6 months

Figure 5: Financial advisors are most optimistic as to the growth potential of ISA, SIPP & personal pensions products over the next 6 months

Figure 6: Very few advisors had an overtly negative view of providers

Figure 7: A large proportion of respondents were indifferent towards providers, citing the belief that their products were not matched to their business model

Figure 8: In terms of product providers, financial advisors have a particularly favorable attitude towards Skandia & Friends Provident

Figure 9: Financial advisors are most impressed by Invesco Perpetual and Fidelity in terms of mutual fund providers

Figure 10: Financial strength and provider service are the greatest influences on an advisor’s choice of provider

Figure 11: Over half of financial advisors believe that the asset management arms of life companies have improved over recent years

Figure 12: Standard Life, Skandia and Legal & General are perceived to have the best asset management arms

Figure 13: Jupiter, Invesco & New Star are mutual fund providers who are also highly rated as asset managers

Figure 14: Norwich Union, New Star & Standard Life are perceived to be the top three property fund managers

Figure 15: Invesco, Jupiter & Fidelity are the top rated equity fund managers

Figure 16: Fidelity, Jupiter & Invesco Perpetual are the three most highly rated international equity fund managers

Figure 17: Over three quarters of financial advisors believe that the size of management fees have some impact on their choice of life company

Figure 18: Over 70% of financial advisors believe that management fees have an affect on their choice of mutual fund provider

Figure 19: Half of those surveyed believed that the level of fee transparency is a particularly important consideration when choosing an investment product

Figure 20: Having a wide range of underlying investment funds is important in all product areas

Figure 21: Nearly two thirds of financial advisors find fund of fund investments relatively easy to explain to clients

Figure 22: More than half of financial advisors find manager of manager funds straightforward to explain to clients

Figure 23: Nearly half of financial advisors believe that higher charging structures on fund of fund investments are only occasionally justified

Figure 24: Just under a quarter of financial advisors believe that returns achieved through manager of manager investments are not worth the higher charging structures

Figure 25: More than 80% of financial advisors believe REITs funds have growth potential over the next 5 years

Figure 26: Nearly half of financial advisors believe that equity REITs hold the most potential out of all REIT products

TABLE OF TABLES

Table 1: Funds under management levels, 2006, split by asset class

Table 2: Composition of survey sample, segmented by type of company

Table 3: Percentage of respondents who classify more than half their customer base as high net worth

Table 4: Percentage of respondents who classify more than half their customer base as mass affluent

Table 5: Advisor opinion as to how sales of certain investment products will change over the next six months, % of respondents

Table 6: Advisor attitude towards a selection of life companies, % of respondents

Table 7: Advisor attitude towards a selection of mutual fund companies, % of respondents

Table 8: Percentage of respondents who believe a selection of factors have an influence on their choice of life company

Table 9: Financial advisor opinion as to the development of life company asset management arms over recent years

Table 10: Providers perceived to have the best asset management arms

Table 11: Mutual fund providers rated highly as asset managers

Table 12: The top property fund managers

Table 13: The top equity fund managers

Table 14: The top international equity fund managers

Table 15: Financial advisor opinion towards the effect of management fees on their choice of life company

Table 16: Financial advisor opinion towards the effect of management fees on their choice of mutual fund provider

Table 17: Financial advisor opinion as the effect of fee transparency on their choice of investment product

Table 18: Financial advisor opinion as to the importance of a wide range of underlying investment funds for a selection of products

Table 19: Financial advisor opinion as to whether they find fund of fund investments straightforward to explain to their clients

Table 20: Financial advisor opinion as to whether they find manager of manager investments straightforward to explain to their clients

Table 21: Financial advisor opinion as to whether they believe returns achieved through fund of fund investments are worth the higher charging structures

Table 22: Financial advisor opinion as to whether they believe returns achieved through manager of manager investments are worth the higher charging structures

Table 23: Financial advisor opinion as to the growth potential for REITs over the next 5 years

Table 24: Financial advisor opinion as to which type of REIT holds the biggest growth potential