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The Italian Financial Advice Market 2005Published by: Datamonitor Published: Apr. 4, 2005 - 100 Pages Table of ContentsTABLE OF CONTENTS EXECUTIVE SUMMARY 3 Market context 3 Financial advisers and their attitudes 3 The Italian Financial Advice Market 4 INTRODUCTION 15 What is this report about? 15 Definition of an independent financial adviser 15 The independent financial advice market is growing rapidly 16 Who is the target reader? 16 How to use this report 17 MARKET OVERVIEW 19 Introduction 19 Key findings 19 Banks continue to be the most important channel for the distribution of financial services products in Europe 20 Banks hold more than 50% investment and protection distribution 20 Tied and multi-tied agents are an important force in European financial services distribution 20 Insurance company employees are declining in importance in the European market 21 Brokers and independent financial advisers have had a limited role in European financial services distribution 21 The European financial advice market is highly fragmented 21 Europe remains some distance from developing a pan-European financial advice market 23 Lack of consumer demand and lack of legislation have deterred the development of pan European competitors. 24 Technological and regulatory change will encourage the development of some pan-European competitors going forward 24 Product providers will push the market for financial advice in Europe in the next five years 25 Pan-European Financial Advice Associations and Standards bodies are attempting to unify the European financial advice market 26 Financial advisers are somewhat more important in the mutual fund than in the life and pensions markets 29 Independent advisers hold around 8% of mutual fund distribution in Europe 29 Independent advisers currently hold a small part of life and pensions distribution market 30 Private pensions are the products with the potential to have the biggest impact on the European financial advice industry 31 The private pensions market is yet to deliver results for financial advisers 31 The life-based investment market has become less attractive 31 Hedge funds and fund-of-hedge funds are starting to figure for financial advisers 32 Structured and derivative-based products are growing rapidly in popularity in Germany 33 European regulation presents a major threat to the fledgling financial advice market in Europe 33 Financial advisers are in danger of regulation overload 33 Professional indemnity and capital adequacy ‘double whammy’ will put up to 30% of financial advisers out of business 34 The Financial Services Action Plan (FSAP) will radically change the regulatory environment in Europe 35 Independent advisers’ core customers group - the wealthy and financially aware - continue to grow in number across Europe 37 The affluent market in Europe continues to grow 37 European consumers are becoming more financially aware 38 Data 39 EUROPEAN FINANCIAL ADVISERS AND THEIR OPINIONS 42 Introduction 42 Key findings 42 Financial advice firms in Europe are typically small and independently owned 43 A minority of financial advisers surveyed are owned by product providers 43 Most financial advice firms have less than 20 staff 44 Financial advisers in Europe focus on developing a close relationship with a focused customer base 46 The French and Spanish financial advice markets are particularly highly focused on affluent customers 46 The pre-retirement market is key for financial advisers in Europe 47 Many financial advisers have expatriate customer bases 48 Close relationships are crucial to financial advisers’ success 49 The key to financial advice in Europe is direct contact between the adviser and the client 49 Customers with whom advisers are in frequent contact dominate revenues 51 Customers breed customers: the majority of new business in the financial advice channel comes through customer referals 52 Equity-based investments are the most important products for financial advisers in Europe 54 The dominance of commission is an issue for the European financial advice market 55 86% of financial advisers’ business is commission-based 55 European consumers don’t want to pay for financial advice 56 The preference for commission-based selling increases the danger of mis-selling 57 European advisers are technologically aware, but providers are yet to take advantage 57 European financial advisers are not technophobes 58 Most financial adviser-to-provider communication continues to be directed through traditional channels 59 Providers need to focus on service in order to appeal to financial advisers 60 Data 62 THE ITALIAN FINANCIAL ADVICE MARKET 69 Introduction 69 Key findings 69 The Italian financial services distribution market has three major channels 70 Recent years have been turbulent for financial services distributors in the Italian market 70 Banks gained easy business in the 1990s 70 Financial advice firms showed their strength in the market downturn 71 SIMs dominate the Italian intermediary market 71 SIM sales forces provide the main channel for third party mutual fund distribution in Italy 72 Independent advisers and brokers hold a tiny part of the life and pensions market 73 Despite consolidation in the financial advice market in 2003 and 2004 many of the smaller competitors in Italy are still independently owned 73 The larger financial advisers are owned by providers 74 Several large SIMs dominate the intermediary market in Italy 74 Financial advisers in Italy are primarily equity-focused 75 Equities and mutual funds account for 60% of financial advisers’ sales in Italy 76 Italy is the largest market in Europe for wrap-like products sold by financial advisers 77 The life and pensions markets offer advisers opportunities now and more to come 77 Financial advisers’ sales of innovative products remain limited 78 Government bonds continue to play an important role for Italian customers 78 More than 50% of Italian financial advisers offer open architecture in mutual funds 79 The Italian government is considering adding to its regulation of the financial advice market 80 The government is considering legislation to make it easier to offer fully independent financial advice 80 Government is looking to make product distribution more transparent to cut charges 80 Italian advisers have a long way to go to convince the public 80 The wealthy will begin to turn to independent advice over the next five years 82 THE FUTURE DECODED 87 Introduction 87 European financial advisers show muted optimism 88 Datamonitor believes that the next five years will see independent financial advice start to gain a foot-hold in the major continental European countries 89 APPENDIX 92 Supplementary data 92 Definitions of investment and protection distribution channels 96 Insurance company employee 96 Tied agent 96 Multi-tied agent 96 Independent financial adviser 96 Independent broker 97 Bank/ bancassurer 97 Other 97 Other definitions 97 Research methodology 99 Datamonitor’s European Financial Advice Survey, Oct 2004 99 New Consumers Insights European Consumer Survey October 2004 99 Future readings 99 SPP writing team 100 LIST OF TABLES Table 1: Financial intermediaries in Europe (individuals), 2004 39 Table 2: Financial intermediaries in Europe (firms) 2004 39 Table 3: Share of the mutual fund market held by financial advisers, 2003 40 Table 4: Share of the life and pensions market held by independent financial advisers, 2004e 40 Table 5: Professional financial advice associations by country France, Germany, Italy and Spain 2004 41 Table 6: Ownership of European financial advisers 62 Table 7: Average number of client-facing staff per firm in European financial advice firms 62 Table 8: Average number of customers per financial advice firm (percentage of financial advisers) 63 Table 9: Proportion of financial advisers’ client base in different asset bands 63 Table 10: The financial advice market in my country is focused on high net worth individuals? 64 Table 11: Proportion of financial advice customers in different age groups 64 Table 12: Proportion of financial advisers whose client base includes expatriates 65 Table 13: Proportion of communication between client and financial adviser by channel 65 Table 14: Proportion of financial advisers’ business by customer type 66 Table 15: Channels used by financial advisers to gain new customers 66 Table 16: Proportion of financial adviser business by charging structure 67 Table 17: Technological hardware used by financial advisers 67 Table 18: Factors in financial advisers’ choice of product provider 68 Table 19: Italian consumers: To what extent do you agree with the statements? 81 Table 20: Italian consumers: Which source of information would you most rely on if you were considering... 84 Table 21: Italian financial advisers: who owns your company? 84 Table 22: What percentage of your current customer base has assets of? 85 Table 23: What proportion of your sales comes from the following products? 85 Table 24: Italian financial advisers: How many providers' products do you offer in the following areas? 86 Table 25: Financial advisers view of the future of their market 91 Table 26: Percentage of life and pensions new business sold by independent financial advisers 91 Table 27: Total individuals offering intermediary financial services by country, additional countries, 2004 92 Table 28: Professional financial advice associations by country, additional countries, 2004 93 Table 29: Financial advisers’ perceptions of their reputation, 2004 94 Table 30: To what extent do you agree that financial advice is a growing element of the financial services distribution market in your country 94 Table 31: Which statement is most true about financial advisers in your country? 95 Table 32: Proportion of different products sold by European financial advisers, 2004 95 LIST OF FIGURES Figure 1: The European Financial Advice Market, report process 17 Figure 2: Germany has by far the largest number of financial intermediaries in continental Europe, 2004 22 Figure 3: Germany has more financial intermediary firms than any other European market, 2004 23 Figure 4: German financial advisers hold the largest proportion of the mutual fund distribution market, 2003 29 Figure 5: Independent advisers hold 10% or less of life and pensions distribution in the major European countries, 2004e 30 Figure 6: Most financial advice firms in Europe are independently owned, 2004 43 Figure 7: Only a small number of financial advice companies have more than 20 employees, 2004 44 Figure 8: Germany has the largest proportion of large financial advice companies, 2004 45 Figure 9: More than 30% of financial advisers’ clients are High Net Worth 46 Figure 10: The Spanish and French financial advice markets are concentrated on the pre-retirement age group 47 Figure 11: A large proportion of financial advisers in France service expatriate customers 48 Figure 12: Face-to-face and telephone communication remain the dominant forms of communication in the financial advice market 50 Figure 13: Financial advisers gain most of their revenues from customers with whom they have frequent contact 51 Figure 14: How do you go about finding new customers? 52 Figure 15: Mutual funds and stock broking are leading activities for European financial advisers 54 Figure 16: What proportion of your business is on average? 56 Figure 17: On average financial advisers’ computers are 2-3 years old 58 Figure 18: Telephone remains the most common means of communicating with providers 59 Figure 19: Service is more important than performance or commissions to European financial advisers 61 Figure 20: Italian SIMs have lost market share in Italy, 2003 72 Figure 21: Although financial advisers in Italy must have links with providers, many describe themselves as independent 74 Figure 22: Italian financial advisers are often also stockbrokers selling execution-only equities 76 Figure 23: A large proportion of Italian financial advice firms offer a wide spread of providers across product areas. 79 Figure 24: Italian consumers focus on their own research or financial advisers 82 Figure 25: Confidence in the future of the financial advice channel is muted among financial advisers 88 Figure 26: Most European countries can expect strong growth in the financial advice market over the next five years 90 AbstractIntroductionFinancial advisers hold a large part of the financial services distribution market in Italy. However these advisers are tied or multi tied agents of the product providers. The growth of a significant independent financial advice channel would require both regulatory change and a change in the attitude of consumers to the financial advice channel. Scope This brief covers the Italian market but gives crucial background information about the wider European market It covers the market share held by financial advisers in the mutual fund and life and pensions markets and forecasts forwards It includes analysis of the market for financial advice, including types of advisers, key products and leading associations It contains survey information drawn from interviews with more than 20 key financial advice companies in Italy Highlights According to FECIF Italy has around 35,000 full time professional financial advisers employed outside the banking sector, the third largest number in Europe behind Germany and the UK. There are also a substantial number of people who offer some financial distribution services while this is not their main profession. The SIM networks are an important part of the retail mutual fund distribution landscape in Italy. This channel has held approximately 10% of mutual funds distribution between 1998 and 2003, but dropped from a substantial 22% in 1996. Datamonitor believes that developing public demand for independent advice, particularly amongst the most wealthy will drive some growth in this area and draw some business away from the SIMs, which currently dominate the market for financial advice in Italy but are not fully independent. Reasons to Purchase Understand the attitudes and opinions of key players in this crucial distribution channel in order to market to it more successfully going forward Size the proportion of the life and pensions and mutual fund products currently being sold through this channel Assess the importance of this channel for distribution strategies going forward Get Full Details About This Report >> |
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