Selling financial services to under 35s

Published by: Datamonitor

Published: Feb. 14, 2008 - 65 Pages

Table of Contents

Overview

Catalyst

Summary

Executive Summary

Market Context

Most surveyed advisors are independent sole traders with a low average case size

The majority expect that product sales will remain the same over the next six months

Distribution Dynamics

Almost half the advisors have some concerns over the potential of a recession occurring in the next 12 months although a significant number are unconcerned

81% of advisors do not actively target the under 35s

69% of advisors feel that the under 35s are very important for the future of the financial services market

market context

The majority of respondents are sole traders

The financial advisor market remains dominated by independent advisors

Most advisors in this survey deal with an average business case size of less than £5,000

The majority of business is conducted in pensions, life based investments and protection products

Advisors have lowered their expectations for growth in the future

The majority expect that product sales will remain the same over the next six months

The majority of advisors expect life products sales to remain static

ISAs remain the most likely products to increase their sales over the next six months

Two-thirds of advisors expect protection product sales to remain static in the near future

Some advisors predict pension product sales to increase

Financial advisors have very positive attitudes towards Standard Life, Skandia and Legal and General

Attitudes have remained similar to those in Q3 2007

Financial advisors are positive about Invesco Perpetual, Fidelity and Jupiter

Data

distribution dynamics

Almost half the advisors have some concerns over a possible recession occurring in the next 12 months although a significant number are unconcerned

Advisors expect clients to save more money in a recession while their long term personal finances are likely to be unaffected

Service and financial stability are considered the most important qualities of a provider in a market downturn

Having an attractive introductory offer and price were considered to be the least important qualities of a provider in a market downturn

The majority of advisors have a plan in place in the event of a market downturn

Income protection, guaranteed equity bonds and capital protected products are the most likely products to become popular if a significant market slowdown occurred

The majority of advisors feel that providers will not support them adequately in a market downturn

The majority of advisors claim their average client is over 35

81% of advisors do not actively target under 35s

Most advisors claim they do not target the under 35s because they do not have any marketing strategy

The majority of advisors target under the 35s with mortgage products

Most claim that only a small proportion of business comes from the under 35s

Most of the under 35s business is in mortgages

Insurance based investment bonds and mutual funds are the least popular products for the under 35s

Financial obligations and immediate spending are limiting the savings of young clients

Most advisors have no interest in targeting young clients

87% of respondents believe that young people are not adequately educated about their finances

It is a combined responsibility of schools/government, families and financial advisory industry to educate these young clients

Media campaigns promoting the need to save and targeted marketing are viewed as the best methods to attract young people as clients

69% of advisors feel that under 35s are very important for the future of the financial services market

Data

APPENDIX

Definitions

Pension product definitions

Personal Pensions

Stakeholder Pensions

Group Self-Invested Personal Pensions (Group SIPPs)

Employer Sponsored Stakeholder pension (ESS)

SIPPs (Self Invested Personal Pensions)

Definitions of distribution channels

Independent Financial Advisors (IFAs)

Tied agents

Multi-tied agents

Matrix Definitions

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: What percentage of your business is conducted in each of the following areas?

Table 2: Over the next six months how do you expect sales in each of the following products to change?

Table 3: Which of these statements best describes your attitude to these insurers? (Q4 2007)

Table 4: Which of these statements best describes your attitude to these insurers? (Q3 2007)

Table 5: Which of these statements best describes your attitude to these mutual fund providers? (Q3 2007)

Table 6: Which of these best describes your company?

Table 7: Under what business model do you operate?

Table 8: What is the average case size of the business you deal with?

Table 9: What percentage of your business is conducted in each of the following areas?

Table 10: What do you expect for the UK financial advice market over the next six months?

Table 11: Over the next six months how do you expect sales in each of the following products to change?

Table 12: How do you feel about the following insurers?

Table 13: How do you feel about the following mutual fund providers?

Table 14: To what extent do you agree with the following statements on your clients reactions to their personal finances in a recession?

Table 15: How concerned are you about the potential for a recession in the next year?

Table 16: To what extent do you agree with the following statements regarding your clients' reactions to their personal finances during a recession?

Table 17: Which of the following provider qualities would be more or less important during a market downturn than now?

Table 18: Do you have a strategy in place to sustain your business if there is a market downturn in 2008?

Table 19: Which of the following products will you see an increase in demand for if there is a significant market slowdown?

Table 20: What is the average age of your customer base?

Table 21: Do you actively target the under 35 age group?

Table 22: What proportion of your business is conducted with those under 35?

Table 23: Which savings and investment products are commonly purchased by those under 35?

Table 24: What factors limit the attractiveness of saving for younger clients?

Table 25: What are the biggest challenges you face in expanding your client base to younger clients?

Table 26: Do younger customers receive adequate education about their finances?

Table 27: Whose responsibility is it to educate younger people about their finances?

Table 28: What could providers do to help you expand your client base to these younger clients?

Table 29: How important do you see the under 35 age group being to the future of the financial services market?

List of Figures

Figure 1: The majority of respondents deal with an average case size of less than £5,000

Figure 2: Only 15% of advisors claim that they actively target the under 35s

Figure 3: 39% of respondents operate as sole traders

Figure 4: Over three-quarters of respondents have an independent business model

Figure 5: The majority of respondents deal with an average case size of less than £5,000

Figure 6: The majority of business is conducted in pension products

Figure 7: 70% of respondents expect static or limited growth over the next six months

Figure 8: The majority expect the sales of life products to remain the same over the next six months

Figure 9: ISA sales are the most likely to increase over the next six months

Figure 10: Protection products are expected to have static sales over the next six months

Figure 11: Advisors are most upbeat about the sales growth of personal pensions and SIPPs

Figure 12: Standard Life remains the most popular insurer in Q4 2007

Figure 13: Fidelity is the most popular mutual fund provider in Q4 2007

Figure 14: 18% of advisors are very concerned over the potential of a recession occurring in the next 12 months

Figure 15: Almost half of the respondents feel that the service of a provider will be much more important in a market downturn than now

Figure 16: Having an attractive introductory offer is considered the least important quality of a provider in a market downturn

Figure 17: Price is considered to be one of the least important qualities of a provider in a market downturn

Figure 18: Most respondents have a strategy in place or plan to react as the market conditions change

Figure 19: Advisors are expecting demand for most products to remain the same in a market slowdown

Figure 20: 95% of advisors claim their client base has an average age of over 35

Figure 21: Only 15% of advisors actively target under 35s

Figure 22: 78% of advisors feel that only 0-20% of business comes from the under 35s group

Figure 23: Mortgages are the most popular products purchased by clients under the age of 35

Figure 24: Young clients lack savings because of financial obligations and immediate spending habits

Figure 25: While many advisors are not interested in targeting younger clients, it appears that these clients do not want financial advice and are unwilling to pay for the service

Figure 26: Most advisors do not believe that young people receive adequate education about their finances

Figure 27: A combined effort from schools, families and the financial advice industry is required to educate young people about their finances

Figure 28: Targeted marketing and media campaigns promoting saving are seen as the best strategies for targeting young clients

Figure 29: Over two-thirds of advisors believe that under 35s are very important for the future of the financial services market

Abstract

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