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Published by: Datamonitor
Published: Aug. 28, 2007 - 36 Pages
Table of Contents
DATAMONITOR VIEW CATALYST SUMMARY EXECUTIVE SUMMARY MARKET SIZE The European market for private investments is robust and growing Market growth is having an important effect on the distribution landscape Liquid assets in Germany and the UK are particularly high Liquid assets across the key European markets are projected to grow strongly in value The growth in the value of long term investment assets is more variable across Europe The UK is home to a proportionally large number of high net worth individuals The number of mass affluent and high net worth individuals is projected to grow steadily Overall growth in the high net worth sector is predicted to be even stronger The sophistication of the financial advisory sector varies widely across Europe The financial intermediary population is often swelled by largely unqualified advisors The regulatory purity of investment markets in Europe varies widely Limited regulation in Germany may open up opportunities for quality investment advice The UK and Switzerland are subject to detailed regulatory guidelines The IFA sector in the UK is particularly well developed Single tied advisors dominate the advisory markets in a majority of European countries Bancassurance is currently the dominant distribution channel in Europe A significant proportion of long term investment assets are distributed via the bancassurance channel France is the largest bancassurance market in Europe The distribution landscape in Germany is slowly diversifying The UK and Switzerland represent exceptions to the rule Data MARKET DRIVERS The bancassurance channel is very strong across most of Europe In continental Europe, the bancassurance channel dominates the distribution of retail investment products Consumers in much of Europe are unused to paying for financial advice The strength of the banking channel is driving the development of bancassurance partnerships Demographic change is stretching state pension schemes to breaking point The support ratio is decreasing in almost all European countries The closure of defined benefit schemes is polarizing the market Mass market consumers are driving demand for long term investments via the bancassurance channel However, as defined benefit schemes close, more affluent consumers are seeking independent advice In turn, this has driven the development of partnerships with firms of financial advisors In the UK, foreign and domestic banks are responding to consumer demand for long term investments Foreign banks have identified an opportunity to compete with the IFA sector in the UK for top end clients Domestic banks are considering developing their own distribution channels REGULATION Regulatory change has had a key impact on the investment and savings landscape in Europe The Financial Services Action Plan was intended to create a unified financial services market in Europe Insurance Mediation Directive Markets in Financial Instruments Directive (MiFID) Other pieces of national legislation are also having an impact on the investment distribution landscape A new financial advice certificate is being developed in Spain The new status of Conseiller en Investissement Financier has been established in France The effects of depolarization in the UK are slowly effecting a shift in the distribution landscape The Treating Customers Fairly initiative in the UK was intended to ensure the quality of financial advice ACTION POINTS European markets offer strong potential for distributing investment products Demand for investment products is growing across Europe Increasing demand combined with the impact of regulation is opening up the distribution landscape Distribution strategies must be tailored to different markets and market segments Each market and consumer segment requires a clearly differentiated strategy In order to develop effective distribution networks, partnerships can be highly effective As the pensions market evolves, opportunities emerge to sell new investment products Variable annuities may become a more prominent feature in the European investment landscape APPENDIX Definitions Further reading Ask the analyst Datamonitor consulting Disclaimer List of Tables Table 1: Value of liquid assets in Europe in 2006e, EURbn Table 2: Projected value of European liquid assets, 2005 - 2010f, EURbn Table 3: European life and pensions assets, 2006e - 2010f EURbn Table 4: European mutual funds assets, 2006e - 2010f EURbn Table 5: Number of wealthy individuals in Europe, 2006e (000s) Table 6: Number of mass affluent individuals in Europe, 2006e - 2010f Table 7: Number of high net worth individuals in Europe, 2006e - 2010f Table 8: Financial intermediaries in Europe segmented by type, 2005 Table 9: Financial intermediaries in Europe segmented by channel (%), 2005 List of Figures Figure 1: Value of liquid assets in Europe in 2006, EURbn Figure 2: Projected value of European liquid assets, 2005 - 2010f, EURbn Figure 3: European life and pensions assets, 2006e - 2010e EURbn Figure 4: European mutual funds assets, 2006e - 2010e EURbn Figure 5: Number of wealthy individuals in Europe, 2006 Figure 6: Number of mass affluent individuals in Europe, 2006e - 2010f Figure 7: Number of high net worth individuals in Europe, 2006e - 2010f Figure 8: Individual financial intermediaries in Europe segmented by country, 2005 Figure 9: Modified number of Individual financial intermediaries in Europe segmented by country, 2005 Figure 10: Comparative size and sophistication of European investment markets Figure 11: Financial intermediaries in Europe segmented by channel (%), 2005 AbstractIntroduction
This brief looks at the future of distribution of long-term investment products in Europe. The market for long term investment products is projected to grow strongly in coming years. Demographic change, regulatory developments and the evolution of the pensions landscape is driving a diversification in distribution channels and opening up the markets for new entrants.
Scope
Sizes and forecasts the European market for retail assets and high net worth individuals Examines the key issues facing distributors in these markets Assesses how regulatory changes will impact distribution in these geographies Provides action points for firms operating in these changing markets
Highlights
Datamonitor believes that a significant opportunity exists to develop profitable distribution strategies for long term investment products in Europe over the next five years. The expanding pool of wealth will drive demand both for financial advice and for investment products Although bancassurance has been traditionally dominant in most European markets, shifts in the pensions landscape coupled with regulation to improve the standards adhered to by financial advisors, is opening up the distribution landscape.
Reasons to Purchase
Gain insight into the scale and
Scope
of the European investment distribution market. Understand the nature of the regulatory environment in Europe Obtain invaluable information as to the state of the distribution landscape in Europe, along with potential opportunities for market entry.
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