High Net Worth Financial Advisors 2006

Published by: Datamonitor

Published: Oct. 18, 2006 - 91 Pages

Table of Contents

EXECUTIVE SUMMARY

Introduction

The UK HNW IFA Market

A-Day and Its effects on the High Net Worth IFA market

What do IFAs mean by service?

Action points

CHAPTER 1 THE UK HIGH NET WORTH IFA MARKET

Introduction

Key findings

Sole traders remain the largest segment of the high net worth IFA market

Nearly a third of HNW IFAs conduct between 31-50% of their business in areas of pensions & investments making them the most prominent HNW IFA issues

On the other hand, nearly half of HNW IFAs conduct between 0-10% of their business in areas such as mortgages, financial planning & protection products

HNW IFAs are conservative about the future growth prospects of investment products

The large majority of high net worth IFAs believe demand for investment products will either stay the same or increase by a minimal amount over the coming six months

Skandia and Standard Life are the most popular insurers among high net worth IFAs, while Abbey & Aviva are the least popular

Invesco Perpetual, Fidelity & Jupiter are the most popular mutual fund providers

Nearly two thirds of high net worth IFAs believe that the market will either see limited growth or stay the same within the next 6 months

Data

CHAPTER 2 A-DAY AND ITS EFFECTS ON THE HIGH NET WORTH IFA MARKET

Introduction

Key findings

The emergence of A-Day has had a pronounced impact on IFAs and clients alike

A-Day has been well received by the IFA community with over two thirds of IFAs affirming the positive impact of the legislation on their business

High net worth IFAs believe that Skandia & Standard Life were the most helpful providers in guiding them through legislation in the run up to A-Day

As a result of A-Day legislation, nearly half of HNW IFAs have enacted a formal reappraisal of all their client's retirement provisions

Just under half of high net worth IFAs surveyed have noticed some growth in client awareness of pensions & related issues since A-Day

SIPP investments offer significant potential for future growth in the pensions industry

Increased client awareness has not translated into significant levels of new SIPP business for just under two thirds of IFAs surveyed

However, approximately one third of IFAs have seen a substantial increase in new SIPP business since A-Day and they believe greater flexibility has been the main reason for this growth

Approximately a third of IFAs currently offer group SIPP products with only a minimal number planning to do so in the future

Two thirds of IFAs perceive SIPP products as a potential growth area for the future

The semi-compulsory NPSS pension scheme is an attempt to encourage investors to save for their retirement

There is still no definitive decision as to how the NPSS will be run, with opinion split as to whether the scheme will be operated by the government or the insurance industry

Anxiety over the scheme's implications are felt by many industry experts but this is not the case for over two thirds of HNW IFAs who believe the scheme will have no effect on their business

The lack of perceived impact is due to the role of the NPSS as a cost-reducing initiative that targets lower income & mass market customers

IFAs & Investment Products

The primary vehicle suggested by HNW IFAs for clients to save for their retirement is an ISA investment

Three quarters of HNW IFAs surveyed believe that ISAs will also see some level of growth in the future

CHAPTER 3 WHAT DO HIGH NET WORTH IFAS MEAN BY SERVICE?

Introduction

Key findings

Over 90% of HNW IFAs believe that service is important in influencing the choice of provider

Skandia & Standard Life are perceived to offer the best ""all-round"" service

Just over two thirds of HNW IFAs give between 0-50% of their business to the provider with the best overall service

Aviva and Legal & General are cited as providers with the worst ""all-round"" service

Unsurprisingly, nearly 95% of HNW IFAs give the lowest 0-25% of their business to the provider with the worst overall service

HNW IFAs believe that quality of communication and efficiency of processing claims & queries are the most important aspects of service when choosing a provider

Skandia & Standard Life are ranked as the best providers in terms of quality of communication and efficiency of processing claims & queries

AXA and Abbey National were the least popular in terms of communication and processing claims & queries

In terms of efficiency of commission payments, Skandia & Standard Life are also the most popular, while AXA and Abbey National are once more the least popular

IFAs save the most time by ensuring there is good communication between provider and advisor

Improving the quality of help lines is the best that providers can do to improve levels of communication between themselves and IFAs

Online communication is IFAs preferred method of communication with providers

IFAs are dissatisfied at the level of service they receive from providers

Nearly three quarters of HNW IFAs believe the service they receive from providers has deteriorated over the last 5 years

However, growth in online applications & processing and management of policies has improved the service that HNW IFAs have received from providers

Most HNW IFAs are in agreement that technology has improved service, simplified dealings with providers or impacted the investment side of IFAs' business

Policy processing is most efficient when dealing with life insurance bonds

Data

CHAPTER 4 ACTION POINTS

Introduction

Key findings

Despite the ever increasing importance of good service, HNW IFAs' choice of product provider remains largely driven by fund performance

Providers need to keep IFAs well informed about their plans and product launches, as well as taking steps to learn more about the profile of the HNW client base

Online platforms and integrating technology are important for the future, but providers must do their best to ease HNW IFA understanding of internet propositions

SIPP products are a potential growth area for the future

Retirement planning is also key in the HNW space

APPENDIX

Definitions

Independent Financial Advisers (IFAs)

FSA

Multi-tied agents

SIPPs (Self Invested Personal Pensions)

Stakeholder Pensions

Tied agents

Further reading

Savings and Investments SPP

Interactive Databases

Reports

Briefs

Life and Pensions SPP

Interactive Databases

Reports and Briefs

Financial Advice Market SPP

SPP writing team

List of Tables

Table 1: Classification of HNW IFAs from all surveys

Table 2: Percentage of HNW IFA business conduct in a range of investment areas

Table 3: HNW IFA opinion of how sales of investment products will change over the next 6 months

Table 4: HNW IFA attitude towards insurers, segmented by positive, neutral and negative categories

Table 5: HNW IFA attitude towards mutual fund providers, segmented by positive, neutral and negative categories

Table 6: HNW IFA attitude towards growth of the HNW IFA market over the next 6 months

Table 7: Impact of A-Day legislation on HNW IFA business

Table 8: HNW IFAs' perception of the most helpful providers in helping them deal with the run up to A-Day

Table 9: Measures put in place by HNW IFAs as a result of A-Day legislation

Table 10: HNW IFA perception of growth in awareness of pensions and related issues among their clients

Table 11: HNW IFA perception as to changes in the volume of their SIPP business since A-Day

Table 12: HNW IFA perception as to the main driver behind growth in the SIPP market

Table 13: Number of HNW offering Group SIPP products

Table 14: HNW IFA perception on Group SIPPs and their potential for growth

Table 15: HNW IFA opinion of the potential impact of the NPSS on their business

Table 16: HNW IFA view as to whether the NPSS will be run by the government or insurance industry

Table 17: Top ranked tax efficient retirement products in the eyes of HNW IFAs (ranked by 1-6)

Table 18: Growth of prospective retirement planning products in the eyes of HNW IFAs

Table 19: HNW IFA ranking of providers offering the best all round service

Table 20: Percentage of business given by HNW IFAs to providers with the best overall service

Table 21: Worst ranked providers in terms of all round service in the eyes of HNW IFAs

Table 22: Percentage of business given by HNW IFAs to providers with the worst overall service

Table 23: Relative importance of certain aspects of service in the eyes of HNW IFAs.

Table 24: Best providers in terms of quality of communication, ranked in order of importance by HNW IFAs

Table 25: Best providers in terms of efficiency of processing claims & queries, ranked in order of importance by HNW IFAs

Table 26: Best providers in terms of efficiency of commission payments, ranked in order of importance by HNW IFAs

Table 27: Time saved by HNW IFAs by receiving good service from providers in a variety of areas

Table 28: HNW IFA ranking of factors that providers should take into account to improve levels of communication

Table 29: Ranking of HNW IFAs' preferred method of communication with providers

Table 30: HNW IFA opinion as to whether the service they receive from providers has improved in the last 5 years

Table 31: HNW IFA opnion as to whether general online developments have helped improve the service they receive from providers

Table 32: HNW IFAs' agreement/disagreements with a variety of statements regarding the integration of technology in the advisory industry

Table 33: HNW IFA ranking of the efficiency of policy processing in a variety of areas

List of Figures

Figure 1: Sole traders make up just under a third of HNW IFAs surveyed

Figure 2: Most HNW IFA business is conducted in the areas of investments and pensions

Figure 3: The vast majority of HNW IFAs believe that demand for investment products is likely to either stay the same or increase by a minimal amount over the next six months

Figure 4: Skandia & Standard Life are the most popular insurers in the eyes of HNW IFAs, while Abbey & Aviva are the least popular

Figure 5: Invesco Perpetual & Fidelity are the most popular mutual fund providers according to HNW IFAs, while HSBC & Henderson Global Investors are the least popular

Figure 6: Most HNW IFAs believe that the IFA market will either remain static or experience minimal growth over the next 6 months

Figure 7: None of the HNW IFAs surveyed have reported a negative impact on their business arising from A-Day legislation

Figure 8: HNW IFAs believe that Standard Life & Skandia were the most helpful providers in guiding them through A-Day

Figure 9: Nearly half of all HNW IFAs surveyed have carried out a formal reappraisal of all their client's retirement provisions as a result of A-Day legislation

Figure 10: Three quarters of HNW IFAs have noticed growth in awareness of pensions and related issues among their clients since A-Day

Figure 11: Nearly sixty percent of HNW IFAs have seen their levels of SIPP business unchanged by A-Day developments

Figure 12: Just over a third of HNW IFAs who have seen an increase in SIPP business believe it is due to enhanced flexibility

Figure 13: More than half of HNW IFAs do not offer group SIPP products and only a minimal number plan to do so in the future

Figure 14: More than two thirds of HNW IFAs believe that the SIPPs market has potential for future growth

Figure 15: Just over two thirds of HNW IFAs believe that the proposed introduction of NPSS will have no impact on their business whatsoever

Figure 16: Nearly 90% of HNW IFAs suggest clients use ISAs above any other investment to save for their retirement

Figure 17: Three quarters of HNW IFAs believe that ISAs will experience some level of future growth in terms of being utilized as a retirement planning vehicle

Figure 18: Skandia & Standard Life received the highest number of responses under the ""most important"" category in terms of all-round service

Figure 19: Just under half of HNW IFAs surveyed, give between 0-25% of their total business to providers with the best overall service

Figure 20: Aviva and Legal & General are cited as the providers with the worst all-round service

Figure 21: The overwhelming majority of HNW IFAs give between 0-25% of their business to the provider with the worst overall service

Figure 22: Skandia & Standard Life are ranked as the most important providers in terms of quality of communication according to HNW IFAs

Figure 23: Standard Life & Skandia are ranked as the most successful providers for the efficiency of processing claims and queries

Figure 24: Skandia & Standard Life were ranked as the best providers in terms of efficiency of commission payments by HNW IFAs

Figure 25: HNW IFAs save the most time when there is good communication between provider and advisor

Figure 26: HNW IFAs believe the best providers can do to ensure better communication between the two parties is to improve the quality of provider helplines

Figure 27: HNW IFAs prefer to communicate with providers electronically

Figure 28: The vast majority of HNW IFAs believe the service they receive from providers has deteriorated over the last five years

Figure 29: Three fifths of HNW IFAs believe growth in online applications, processing & management of policies has improved the service they receive from providers

Figure 30: Most HNW IFAs agree that technology has generally improved service and made it easier to deal with providers

Figure 31: Most HNW IFAs believe policy processing is most efficient with life insurance bonds

Abstract

• The report draws on data Datamonitor's surveys of over 400 IFAs throughout 2005 and 2006, including the opinions of 75 high net worth IFAs
• In-depth analysis of the potential impact of A-Day pensions legislation upon the high net worth financial advisory community
• Identification of key issues crucial to the high net worth financial advisory community and recommendations for future development

• Gain insight into the attitudes and views of the high net worth advisor market
• Discover which providers have been most helpful in guiding high net worth advisors through pensions reform
• Understand how to effectively target the UK high net worth IFA market and how to focus your business proposition

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