Is There Any Money in Advice? - UK : Market Research Report

Is There Any Money in Advice? - UK

Published by: Mintel International Group Ltd.

Published: Aug. 1, 2007 - 129 Pages

ISSUES IN THE MARKET: Key issues covered in the report; Abbreviations
INSIGHTS AND OPPORTUNITIES: There are clear opportunities for the banking sector to exploit; Mortgages and pensions represent particularly attractive markets; Inheritance tax planning and ISAs also provide distinct opportunities; Advisers need to do more to promote the value of their services; They also need to allay consumer fears over cost and rebuild trust
MARKET IN BRIEF: A variety of factors are driving demand for financial advice; Advisers’ key markets have seen strong growth in recent years; Trade perspective: Consumers remain resistant to fee-based advice; Mintel’s research findings: Sources of advice; Mintel’s research findings: Demand for advice; Mintel’s research findings: Drivers and deterrents
MARKET FACTORS - DRIVING THE MARKET ONWARDS: Key points; A variety of factors will influence demand for financial advice; Rising life-expectancy has heightened the need for advice…; Erosion of state support is raising the need for self-provision…; Workplace benefit provision is also being eroded; An end to the job for life; Self-employment presents new problems; Changing lifestyles are boosting demand for advice…; …as well as pushing finance down the list of priorities; Rising debt levels have also created a need for advice; Increased product complexity…; …and a lack of clarity
MARKET CONSTRAINTS: Key points; A lack of trust is constraining demand for financial advice; The industry needs to improve its tarnished image; High street banks are no exception; Consumer apathy is also felt to be constraining the market; This problem is exacerbated by low levels of financial literacy…; …although the FSA is working to combat this issue; The Internet has allowed some consumers to take personal control; Online tools risk marginalising advice
MAIN MARKETS FOR FINANCIAL ADVICE: PENSIONS; INVESTMENTS; TAX PLANNING; MORTGAGES
FINANCIAL ADVICE - THE MARKET STRUCTURE: Key points; More than 5,000 financial advice firms are registered with the FSA; Depolarisation has altered the structure of the industry
FINANCIAL ADVICE - MARKET SIZE: Key points; Is there any money in advice?; Profitability varies widely; Mortgage and pensions markets offer the most potential; The IFA sector still dominates the main markets for financial advice; Bancassurers hold a significant share of regular-premium life sales; IFAs enjoy a large share of individual pension product sales
THE HIGH STREET BANK IN A DEPOLARISED WORLD: Key points; Banks enjoy potential advantages in offering financial advice; There are now a range of business models that can be adopted; HSBC was the first bank to announce a shift to multi-tied status; Barclays has also adopted a multi-tied approach; Other banks have retained emphasis on their bancassurance arms
IFAS - FEES OR COMMISSION?: Key points; Remuneration has traditionally been via commission payments…; …but this system has led to accusations of adviser bias; Depolarisation signalled a shift from commission to a menu of fees; There still appears to be resistance to fee-based advice…; …but the proportion of consumers opting to pay fees is rising; Further FSA reforms could speed up the trend to fee-based advice; The new system would incorporate a wider definition of ‘fees’
BROKERS - A ROLE FOR THE SPECIALISTS?: Key points; The need for mortgage advice has heightened in recent years; Brokers have benefited from this increase in choice and complexity; Mortgage brokers are now a common source of advice; The intermediary sector looks set to retain a position of prominence; Home Inspection Plans will provide a boost for estate agents
TRADE PERSPECTIVE: Opinion is evenly divided over the current state of the market; A broad range of factors appear to be hindering market growth; Regulatory requirements have added to the cost base; Investments and pensions are seen as particularly profitable; Most consumers are still resistant to fee-based advice; The drive for higher-level qualifications could boost the industry
THE CONSUMER - SOURCES OF ADVICE: Key points; Survey background; Branch staff are the most common source of financial advice; Implications and opportunities; Sources of advice vary by age and socio-economic status; Half of all adults have sought advice from a professional adviser; Scottish consumers typically turn to branch staff for advice; Broadsheet readers tend to prefer professional advisers; ABC1s account for two thirds of the IFA customer base; Almost a quarter of consumers have used four or more sources; More than a quarter of ABs have used five or more sources; Branch staff and family or friends dominate the single-source group; Dissecting the sample according to sources of advice used
THE CONSUMER - DEMAND FOR ADVICE: Key points; Pensions and mortgages present opportunities for financial advisers; Four in ten 45-54-year-olds expressed an interest in pensions; Tax key for older consumers; Inheritance tax planning is relevant to almost a quarter of ABs; A mortgage is the product most consumers would seek advice on; The 25-44s are most likely to want advice on mortgages; C2s are likely to be a key target audience for certain products; Prospective mortgage customers are most likely to approach an adviser; 10 million consumers would use an adviser to arrange a mortgage; Mortgage and pensions markets are particularly attractive; Around one in ten consumers hold savings of more than £50,000; ABs tend to have comparatively large amounts of savings; Third age consumers tend to hold relatively large sums in savings; People with large sums in savings are more likely to use an adviser
THE CONSUMER - DRIVERS AND DETERRENTS: Key points; Lack of product knowledge is a key reason for seeking advice; Three in ten 25-44s are driven by the fear of making a mistake; Almost a third of ABs want to receive non-biased information; People with high savings balances value non-biased advice; Some consumers feel they can cope without a financial adviser; The cost of advice is more of a concern to younger consumers; ABs often prefer to conduct their own research; Savers with high balances fear advice will be driven by commission
THE FUTURE: What does Mintel’s research tell us?; Advisers need to do more to promote the value of their services; The slow drift from commission- to fee-based advice will continue
PRODUCT OWNERSHIP - DETAILED DEMOGRAPHICS: Figure 46: Most commonly held financial services products, by gender, age, socio-economic group, marital; status, lifestage, Mintel’s Special Groups, working status, household income, tenure, region, ACORN; category, media usage and supermarket usage, May 2007; Figure 47: Next-most commonly held financial services products, by gender, age, socio-economic group,; marital status, lifestage, Mintel’s Special Groups, working status, household income, tenure, region, ACORN; category, media usage and supermarket usage, May 2007
ADVICE USED - DETAILED DEMOGRAPHICS: Figure 48: Sources of advice used, by gender, age, socio-economic group, marital status, lifestage, Mintel’s; Special Groups, working status, household income, tenure, region, ACORN category, media usage and; supermarket usage, May 2007
RELEVANT FINANCIAL SERVICES PRODUCTS - DETAILED DEMOGRAPHICS: Figure 49: Most relevant financial services products, by gender, age, socio-economic group, marital status,; lifestage, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category,; media usage and supermarket usage, May 2007; Figure 50: Next most relevant financial services products, by gender, age, socio-economic group, marital; status, lifestage, Mintel’s Special Groups, working status, household income, tenure, region, ACORN; category, media usage and supermarket usage, May 2007
APPENDIX: RESEARCH METHODOLOGY

Abstract

During the last few years, the market for financial advice has undergone a period of dramatic and far-reaching change. In particular, this trend has been driven by regulatory changes that initially centred on the introduction of the polarisation regime and subsequently the depolarisation reforms.

This report aims to provide a summary of the current state of play within the market for financial advice, as well as considering the future prospects for market growth. In addition, it seeks to identify which particular product areas are likely to offer the best prospects for advisers and considers what factors are currently acting to deter more consumers from seeking financial advice.

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Is There Any Money in Advice? - UK

Table of Contents

Abstract