Financial Advisors and the At-retirement Market

Published by: Datamonitor

Published: Dec. 19, 2008 - 27 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

Table of Contents

Table of figuresTable of tables

Table of tables

IFAs' perception of providers

Introduction to Datamonitor's Q3 2008 Financial Advisor Survey

The Financial Advisor Survey tracks the main changes in advisor opinion each quarter

The financial advisor industry is still dominated by sole traders

The IFA industry is still characterized principally by average case sizes of less than £5,000

Advisors view some insurers and mutual funds as better than others

Financial advisors have a positive view of Standard Life, Legal & General, Skandia and Aviva as insurers

Abbey is viewed more negatively by IFAs than other life companies

Invesco Perpetual, Fidelity and Jupiter rank top among mutual fund providers, while HSBC is at the bottom

Providers' products must match IFAs' business models

What IFAs want from at-retirement products

The size of the at-retirement market continues to grow

Prudential is the largest at-retirement player

IFAs describe their 'Holy-Grail' of at-retirement products

IFAs must be able to better understand products that they are selling

IFAs are calling for at-retirement products to be simple

Advisors are calling for providers to train them in the products they offer

IFAs believe that providers need to market their products better

Customers need to be able to see the benefits of the at-retirement products offered

Security is important to IFAs' customers

IFAs' clients want to be offered low cost products

Flexibility is a key concern for IFAs and their clients

Guarantees are a way for providers to show confidence in their products

IFAs' ideal at-retirement product is unattainable

Prudential comes in top of the advisors' annuity rankings

Prudential is the dominant provider and IFAs are happy with their offering

Friends Provident may have come through the worst of their dark period

Just Retirement and other niche players are becoming a force to be reckoned with

Advisors admit they are not always aware of the best options

IFAs seem unsure of what constitutes a sufficiently large pension pot

As awareness of the Open Market Option has increased, so has its popularity

Worryingly, 20% of clients still don't realize that they can switch provider

Providers are selling products before IFAs can inform clients of the Open Market Option

Advisors vary in awareness of alternatives to fixed annuities

There are opportunities for providers in the variable annuities market

US providers are translating products into the UK market

Clients' search for flexibility has had no real impact on with-profit annuities

Inflation concerns are driving with-profits annuity sales

Increased interest in Income Drawdown has been pronounced since A-Day

Flexibility is the main reason for the popularity of Income Drawdown

Standard Life provides the best Income Drawdown proposition

APPENDIX

Definitions

Association of British Insurers definitions of products

Pension annuities

Income drawdown

Association of British Insurers definitions of distribution channels

Independent financial advisors (IFAs)

Other definitions

Annuity

Product definitions

Bibliography

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: The size of the annuities market 2004-2008

Table 2: The largest at-retirement players 2007

Table 3: Which of the following type of firm best describes your company?

Table 4: Average case size of business dealt with by financial advisors

Table 5: What is your view of the following life providers?

Table 6: Results of financial advisors' view of the following life providers Q2 2008

Table 7: What is your view of the following mutual fund providers?

Table 8: Life companies' products not matching IFA business models

Table 9: Mutual fund providers' products not matching advisors' business models

Table 10: Is the following a retirement priority for the majority of your clients?

Table 11: What is your view of the following annuity providers?

Table 12: Just Retirement was the top 'other' annuity provider

Table 13: What is the average size of a money purchase pension pot amongst your clients?

Table 14: What problems do you face when selling annuity products to clients?

Table 15: What proportion of your client base takes the open market option?

Table 16: Why do some clients choose not to take an open market option?

Table 17: Do you currently sell variable annuity products?

Table 18: What is currently hampering growth in the variable annuity market?

Table 19: Have you seen a growth in sales of with-profit annuities?

Table 20: What drives the sale of with-profits annuity products?

Table 21: Have you seen an increased interest in income drawdown since A-day?

Table 22: What is the key reason you see for the income drawdown option becoming more popular?

Table 23: What is your view of the following Income Drawdown providers?

List of Figures

Figure 1: Sole traders account for 49% of firms surveyed

Figure 2: Financial advisors deal mostly with average case sizes of less than £5,000

Figure 3: Financial advisors are most impressed by Standard Life, Legal & General and Skandia

Figure 4: Invesco Perpetual, Fidelity and Jupiter are highly regarded by IFAs

Figure 5: Life companies' products are not matching IFA business models

Figure 6: Mutual fund providers' products are not matching advisors' business models

Figure 7: The annuities market has grown every year since 2004

Figure 8: Prudential is the largest at-retirement player

Figure 9: IFAs want seven characteristics in their perfect at-retirement offering

Figure 10: Security is top of the priorities for advisors' clients

Figure 11: Financial advisors are most impressed by Prudential's annuity offering

Figure 12: Just Retirement was the top 'other' annuity provider

Figure 13: Most consumers have over £50,000 in their money purchase pension pot

Figure 14: IFAs have difficulties as clients' pension pots are too small

Figure 15: The majority of IFAs' clients take the Open Market Option

Figure 16: Some consumers still do not know about the Open Market Option

Figure 17: Most advisors do not currently sell variable annuities

Figure 18: A lack of advisor understanding is hampering growth in the variable annuities market

Figure 19: Advisors have reported no real growth in sales of with-profit annuities

Figure 20: Any growth in with-profits annuities has generally been caused by inflation concerns

Figure 21: There has been increased interest in income drawdown since A-day

Figure 22: Flexibility is the main reason for the increase in income drawdown

Figure 23: Financial advisors are most impressed by Standard Life's Income Drawdown products

Figure 24: Q2 2008 Advisors Survey showed similar results to Q3 2008

Abstract

• A Datamonitor proprietal survey of 100 UK IFAs revealing their views on providers' offerings in the at-retirement market.
• In-depth analysis of what advisors want from annuity and drawdown products and highlights opportunities in the market.
• Reveals IFAs attitudes towards major life companies, mutual fund providers, annuities providers and income drawdown providers.

• Gives you access to Datamonitor's proprietary survey of UK IFAs from Q3 2008.
• Allows you to see where you fit in against your at-retirement peers.
• Helps you tailor your products to meet the directly expressed needs of IFAs.

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