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Financial Advisors and the At-retirement Market

Datamonitor
December 19, 2008
27 Pages - SKU: DFMN2069251

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Introduction

The study examines how developments in the at-retirement market are affecting the business of financial advisors in the UK. It reveals how product ranges can be developed to meet advisors needs. It provides action points for how to improve your at-retirement offerings.

Scope

A Datamonitor proprietal survey of 100 UK IFAs revealing their views on providers' offerings in the at-retirement market.
In-depth analysis of what advisors want from annuity and drawdown products and highlights opportunities in the market.
Reveals IFAs attitudes towards major life companies, mutual fund providers, annuities providers and income drawdown providers.

Highlights

This report assesses how well your major competitors are currently performing. It reveals the seven core components that advisors want from at-retirement products. However, some of the components are mutually exclusive. It therefore details how best to respond to this problem.

It analyses each factor and shows how products can be better tailored to advisors' needs. The most important component for an at-retirement product is security. This is logical considering current market conditions.

Reasons to Purchase

Gives you access to Datamonitor's proprietary survey of UK IFAs from Q3 2008.
Allows you to see where you fit in against your at-retirement peers.
Helps you tailor your products to meet the directly expressed needs of IFAs.

Overview: Catalyst; Summary; Methodology; Executive Summary; Table of Contents; Table of figuresTable of tables; Table of tables; IFAs' perception of providers; Introduction to Datamonitor's Q3 2008 Financial Advisor Survey; The Financial Advisor Survey tracks the main changes in advisor opinion each quarter; The financial advisor industry is still dominated by sole traders; The IFA industry is still characterized principally by average case sizes of less than £5,000; Advisors view some insurers and mutual funds as better than others; Financial advisors have a positive view of Standard Life, Legal & General, Skandia and Aviva as insurers; Abbey is viewed more negatively by IFAs than other life companies; Invesco Perpetual, Fidelity and Jupiter rank top among mutual fund providers, while HSBC is at the bottom; Providers' products must match IFAs' business models; What IFAs want from at-retirement products; The size of the at-retirement market continues to grow; Prudential is the largest at-retirement player; IFAs describe their 'Holy-Grail' of at-retirement products; IFAs must be able to better understand products that they are selling; IFAs are calling for at-retirement products to be simple; Advisors are calling for providers to train them in the products they offer; IFAs believe that providers need to market their products better; Customers need to be able to see the benefits of the at-retirement products offered; Security is important to IFAs' customers; IFAs' clients want to be offered low cost products; Flexibility is a key concern for IFAs and their clients; Guarantees are a way for providers to show confidence in their products; IFAs' ideal at-retirement product is unattainable; Prudential comes in top of the advisors' annuity rankings; Prudential is the dominant provider and IFAs are happy with their offering; Friends Provident may have come through the worst of their dark period; Just Retirement and other niche players are becoming a force to be reckoned with; Advisors admit they are not always aware of the best options; IFAs seem unsure of what constitutes a sufficiently large pension pot; As awareness of the Open Market Option has increased, so has its popularity; Worryingly, 20% of clients still don't realize that they can switch provider; Providers are selling products before IFAs can inform clients of the Open Market Option; Advisors vary in awareness of alternatives to fixed annuities; There are opportunities for providers in the variable annuities market; US providers are translating products into the UK market; Clients' search for flexibility has had no real impact on with-profit annuities; Inflation concerns are driving with-profits annuity sales; Increased interest in Income Drawdown has been pronounced since A-Day; Flexibility is the main reason for the popularity of Income Drawdown; Standard Life provides the best Income Drawdown proposition
APPENDIX: Definitions; Association of British Insurers definitions of products; Pension annuities; Income drawdown; Association of British Insurers definitions of distribution channels; Independent financial advisors (IFAs); Other definitions; Annuity; Product definitions; Bibliography; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: The size of the annuities market 2004-2008; Table 2: The largest at-retirement players 2007; Table 3: Which of the following type of firm best describes your company?; Table 4: Average case size of business dealt with by financial advisors; Table 5: What is your view of the following life providers?; Table 6: Results of financial advisors' view of the following life providers Q2 2008; Table 7: What is your view of the following mutual fund providers?; Table 8: Life companies' products not matching IFA business models; Table 9: Mutual fund providers' products not matching advisors' business models; Table 10: Is the following a retirement priority for the majority of your clients?; Table 11: What is your view of the following annuity providers?; Table 12: Just Retirement was the top 'other' annuity provider; Table 13: What is the average size of a money purchase pension pot amongst your clients?; Table 14: What problems do you face when selling annuity products to clients?; Table 15: What proportion of your client base takes the open market option?; Table 16: Why do some clients choose not to take an open market option?; Table 17: Do you currently sell variable annuity products?; Table 18: What is currently hampering growth in the variable annuity market?; Table 19: Have you seen a growth in sales of with-profit annuities?; Table 20: What drives the sale of with-profits annuity products?; Table 21: Have you seen an increased interest in income drawdown since A-day?; Table 22: What is the key reason you see for the income drawdown option becoming more popular?; Table 23: What is your view of the following Income Drawdown providers?
List of Figures: Figure 1: Sole traders account for 49% of firms surveyed; Figure 2: Financial advisors deal mostly with average case sizes of less than £5,000; Figure 3: Financial advisors are most impressed by Standard Life, Legal & General and Skandia; Figure 4: Invesco Perpetual, Fidelity and Jupiter are highly regarded by IFAs; Figure 5: Life companies' products are not matching IFA business models; Figure 6: Mutual fund providers' products are not matching advisors' business models; Figure 7: The annuities market has grown every year since 2004; Figure 8: Prudential is the largest at-retirement player; Figure 9: IFAs want seven characteristics in their perfect at-retirement offering; Figure 10: Security is top of the priorities for advisors' clients; Figure 11: Financial advisors are most impressed by Prudential's annuity offering; Figure 12: Just Retirement was the top 'other' annuity provider; Figure 13: Most consumers have over £50,000 in their money purchase pension pot; Figure 14: IFAs have difficulties as clients' pension pots are too small; Figure 15: The majority of IFAs' clients take the Open Market Option; Figure 16: Some consumers still do not know about the Open Market Option; Figure 17: Most advisors do not currently sell variable annuities; Figure 18: A lack of advisor understanding is hampering growth in the variable annuities market; Figure 19: Advisors have reported no real growth in sales of with-profit annuities; Figure 20: Any growth in with-profits annuities has generally been caused by inflation concerns; Figure 21: There has been increased interest in income drawdown since A-day; Figure 22: Flexibility is the main reason for the increase in income drawdown; Figure 23: Financial advisors are most impressed by Standard Life's Income Drawdown products; Figure 24: Q2 2008 Advisors Survey showed similar results to Q3 2008

Financial Advisors and the At-retirement Market

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