The Generational shift of Financial Advisors: Industry Research Report

The Generational shift of Financial Advisors

Published Date: July 2007

Published By: Datamonitor

Page Count: 75

Order Code: R313-24142

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Overview: Catalyst; Summary; Methodology; Executive Summary; Market Context:; Advisors are predominantly sole independent traders, with a low average case size; Advisors are cautiously optimistic over sales growth in the next 6 months; Distribution Dynamics:; Regulation and administration are the two biggest concerns for advisors in Q2; Advisors seem happy with the pace of change but are still uncomfortable with the idea of fee-based remuneration; Most advisor firms are small, but recruitment is not considered a problem; Table of Contents; Table of figures; Table of tables; MArket Context; The sample consists predominantly of sole traders; Advisors have retained an independent or whole of market model; The average case size in this sample is below £5,000; 42% of advisors in this sample have a majority of high net worth clients; The majority of business is currently conducted in pensions and life-based investment products; Advisors are losing business to online sales for simpler products; There have been few changes since Q1; The majority of financial advisors are cautiously optimistic; Advisors expect sales of most products to remain static over the next 6 months; There has been little definitive change from Q1; The outlook for life products is positive; Advisors are more optimistic over mutual funds than ISAs; Protection sales look to remain largely static, but some advisors predict a decrease; Advisors are most optimistic regarding pension sales over the next 6 months; Financial advisors are most positive towards Standard Life, Skandia, and Legal & General; Standard Life is a leading UK fund manager employing a ""focus on change"" investment philosophy; Skandia has been a prominent name in the UK savings & investments market in recent years; Legal & General has won a number of awards in 2007; Attitudes have remained similar to those in Q1 2007; Invesco Perpetual and Fidelity have the highest approval ratings from advisors in Q2; Invesco Perpetual is one of the largest independent asset management companies in the UK; Fidelity is the UK's largest mutual fund manager; HSBC is the least popular provider by a significant margin; Data; Distribution Dynamics; Confusing regulation is the biggest challenge for all ages of advisors; Younger advisors are more concerned about technological change; Over half the surveyed advisors believe providers are not helpful in quieting their fears; Paperwork is the key source of dissatisfaction for all ages of advisor; Most advisors feel comfortable with the pace of change; The younger age groups are most confident about keeping pace with change; Over half of advisors believe that better training is the answer; Most advisors remain reluctant to move away from upfront commissions; The 30-40 age group is most open to the idea of fee-based remuneration; Most advisors are concerned with loss of profitability when moving away from commissions; The predominant innovations have been in the area of delivery platforms; There is a close link between advisor age and enthusiasm for product delivery developments; Few advisors work in firms of more than 2 employees; Younger advisors are more likely to work in larger firms; Older advisors are ambiguous about retirement; The younger advisors work for firms with the best succession plans; Most advisors do not believe they have a problem with recruitment; Advisors are happy to handle recruitment without external help; Many advisors are ambivalent about forming a partnership with another firm; Most advisors would prefer to partner with accountants or other IFA firms; Reputation and a natural fit are the two most important criteria in financial advice partnerships; Data
APPENDIX: Definitions; Pension product definitions; Personal Pensions; Stakeholder Pensions; Group personal pensions; Employer Sponsored Stakeholder pension (ESS); SIPPs (Self Invested Personal Pensions); Definitions of distribution channels; Independent Financial Advisors (IFAs); Direct sales forces; Tied agents; Multi-tied agents; Bancassurance; Direct marketing; Telesales; Other; Matrix Definitions; Methodology; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: What percentage of your business is conducted in each of the following areas?; Table 2: Over the next six months how do you expect sales in each of the following products to change?; Table 3: Over the next six months how do you expect sales in each of the following products to change?; Table 4: Which of the following statements best describes your attitude to these insurers? (Q2 2007); Table 2: Which of the following statements best describes your attitude to these insurers? (Q1 2007); Table 6: Which of the following best describes your company?; Table 7: What business model do you operate?; Table 8: What is the average case size of the business you deal with?; Table 9: Does more than 50% of your customer base have total liquid assets of over £200k? i.e would you describe more than half of your customer base as High Net Worth?; Table 10: Does more than 50% of your customer base have total liquid assets of below £30 000? i.e would you describe more than half of your customer base as Mass affluent?; Table 11: What percentage of your business is conducted in each of the following areas?; Table 12: I believe in the next 6 months the UK Financial Advice market will:; Table 13: Which of the following statements best describes your attitude to these insurers?; Table 14: Which of the following statements best describes your attitude to these mutual fund providers?; Table 15: Do you believe that providers will really work with IFAs to meet these needs and concerns?; Table 2: What do you find dissatisfying about your work?; Table 3: What could be done by providers to help you keep pace with change?; Table 18: What are the 3 biggest challenges facing your firm?; Table 19: What do you find dissatisfying about your work?; Table 20: Do you feel you are keeping pace with the changes occurring in the market?; Table 21: Do you feel you are keeping pace with the changes occurring in the market?; Table 22: What could be done by providers to help you keep pace with change?; Table 23: Do you feel your firm is open to the idea of removal of up-front commissions?; Table 24: What are the key challenges facing firms who wish to move away from upfront commissions?; Table 25: What have been the most interesting product developments over the last five years?; Table 26: How many advisors work in your firm?; Table 27: Are any members of your firm likely to retire in the next 5 years?; Table 28: Is there a succession plan in place?; Table 29: Are you facing issues surrounding recruitment of new advisors into your business?; Table 30: Do you feel that providers could do more to help recruit new advisors into the industry?; Table 31: Would your firm look to forming a partnership with another organisation?; Table 32: Which kind of partners do you think would be suitable for IFAs? (choose up to 3); Table 33: What qualities would you be looking for in such a partnership? (choose up to 3)
List of Figures: Figure 1: Almost half the Q2 advisors surveyed are sole traders; Figure 2: The majority of advisors operate an independent business model; Figure 3: Most participants deal with an average case size of less than £5,000; Figure 4: Younger advisors deal with higher value average cases than their older colleagues; Figure 5: Less than half the sample have a majority of high net worth clients; Figure 6: Over half of respondents consider the majority of their customer base to be mass affluent; Figure 7: Almost a quarter more advisors claim a majority of HNW clients in Q2 compared to Q1; Figure 8: Pensions and life-based investments demonstrate the strongest business performance; Figure 9: The majority of advisors forecast limited growth when asked how the market will develop over the next 6 months; Figure 8: The majority expect life products sales to remain the same over the next 6 months; Figure 9: Non-life products may see a gradual increase in sales over the next 6 months; Figure 10: Some advisors predict a decrease in protection sales over the next 6 months; Figure 11: Personal pension sales look positive over the next 6 months; Figure 13: Skandia is the most popular insurer with advisors in Q2; Figure 13: Invesco Perpetual remains the most popular mutual fund provider; Figure 14: HSBC is the least popular mutual fund provide by some distance; Figure 15: Confusing regulation is one of the key challenge for almost two thirds of advisors; Figure 18: The Under 30s are worried about technological change; Figure 16: Over half of surveyed advisors had little faith in providers to help assuage their worries; Figure 17: Advisors are unconcerned about learning new products and technologies; Figure 18: Over half of advisors feel confident that they are keeping up-to-date with change; Figure 22: The 30-40 age group is most confident about the pace of change; Figure 19: The majority of advisors feel uncomfortable with the idea of removing up-front commissions; Figure 24: Only the 30-40 age group has a majority open to moving away from up-front commissions; Figure 20: Almost half of advisors are primarily concerned with profitability when considering moving away from up-front commissions; Figure 21: Delivery platforms are considered some of the most interesting product developments in recent years; Figure 27: Younger advisors are most excited about delivery platforms; Figure 22: How many advisors work in your firm?; Figure 23: Older advisors are far more likely to work alone than their younger colleagues; Figure 30: Retirement possibilities increase in firms with older advisors; Figure 31: Older advisors are less well-provided for in terms of succession plans; Figure 24: Recruitment of new advisors is most challenging in the 50-55 age group; Figure 25: Over two thirds of advisors feel they do not require recruitment assistance from providers; Figure 26: Advisors between 30 and 50 are least open to the idea of a partnership; Figure 27: Over half of advisors say accountants would be a potential partnership choice; Figure 36: A natural fit is the most important quality in an IFA partnership

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