Italian Financial Advice Market

Published by: Datamonitor

Published: Oct. 29, 2009

Table of Contents

Overview

Catalyst

Summary

Executive Summary

Market Structure

Regulatory Developments

Customer Demands

Table of Contents

Table of figures

Table of tables

Market structure

The financial advisory distribution channel in Italy is fairly large in comparison to other EU countries and is comprised of mainly non-independent financial advisors

Bancassurers are the most important channel for provision of advice in the Italian market

The Italian financial advice market has a unique shape compared to the rest of Europe

A promotore finanziario is the Italian equivalent of an independent advisor

SIMs are legally separated bank stockbroking arms

SGRs are banking arm fund managers

Italy's financial intermediary market is fairly developed but in the main controlled by banks and their intermediaries

Italy has a medium sized financial intermediary market, including 60,000 financial advisors

Traditional distribution channels are dominant in both mutual fund distribution and the life insurance market

Multi-tied advisors account for three quarters of financial advisors in Italy

Regulatory developments

Consob is the main body regulating financial advisors in the Italian market

Consob attempts to level the playing field between structured products and mutual funds

The Bank of Italy also has a role to play in regulation of the financial markets

ANASF is a professional association representing Italian financial advisors

NAFOP is Italy's national association representing "fee-only" advisors

ABI, Assogestioni & Assoreti are organizations also working to further promote the awareness of their members' practices in the Italian financial market

The numerous associations and overlapping roles of regulators have created a confusing regulatory environment in Italy

The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in Italy in recent years

IMD allows cross borders advice

MiFID increases the suitability of advice

Servicing customers

Italian HNWs have a higher than average appetite for risk and a weaker understanding of current market conditions

Italian consumers need guidance so as to better understand the market and to better align their risk appetites

Tax advice, simple transparent investments and asset preservation top the list of consumer demands today

HNW demands for the future revolve around a range of investments

Tax advice remains a priority, joined by foreign currency investments and capital protected funds

The competition between funds and structured products remains complicated

Increased communication and a holistic financial planning service are essential for increasing wallet share and customer retention

Increased face to face contact and financial planning provision drive customer wallet share

Advice from the wealth managers: communication and a selection of products are the most effective means of retaining clients

Italy's retail customers are unconvinced by professional financial advice

APPENDIX

Definitions

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

Overview

Table 1: Market share breakdown by type of intermediary: Italy vs. European Average*

Table 2: Branches per thousand members of the population

List of Figures

Figure 1: Italy has 60,000 financial intermediaries with just over 2,000 other intermediaries

Figure 2: Traditional Channels like banking, post offices etc remain dominant in both mutual fund and life insurance distribution

Figure 3: The Italian financial intermediary market is dominated by multi-tied agents

Figure 4: Italian HNWs have a slightly higher than average appetite for risk , dangerously paired with a lower understanding of the effects of market conditions

Figure 5: Italian consumers are more interested in face to face relationship management than their European neighbors

Figure 6: Simple investments, asset preservation and tax advice are chief among HNW demands

Figure 7: Tax advice , foreign currency investments and capital protected funds will be the chief demands in two years time

Figure 8: Increased face to face contact and financial planning are crucial for increasing wallet share, both in Italy and abroad

Figure 9: Increased communication and expansion of product range are the keys to customer retention in the Italian advice market

Figure 10: Less than 30% of Italian consumers choose not to seek out professional advice before making financial decisions

Figure 11: 43% of consumers seek professional advice from their primary bank versus 24% who disagree

Figure 12: Italian investors follow the global average in seeking better options elsewhere

Figure 13: Italian consumers are more distrustful of financial advisors/brokers than the global average

Abstract

Introduction

The recession is causing investors to seek advice, and FS providers are focusing their attention on their advisory models.

Scope

• Structure of the Italian advisory market including distribution data.
• HNW investors' views of, and use of, financial advice based on Datamonitor's proprietary survey
• Italian consumers' trust in banks and independent financial advisors based on results from Datamonitor's proprietary survey.
• Regulatory environment for financial advice in Italy.

Highlights

The more traditional channels, such as banks and post offices, make up the most significant distribution of both mutual funds and life insurance/pension premiums. Banks account for 65% of the distribution of mutual funds in Italy and 68% of life insurance/pension premiums.

Consumers are beginning to see the peace of mind guaranteed by a financial advisor that has only the interests of his client in mind. Misaligned incentives provided through the kickback system lead to malcontent consumers holding unsuitable products.

Over 35% of wealth managers in Italy believe that talking to customers more is one of the best techniques of increasing client retention. Through increased interaction with clients, wealth managers can gain a better understanding of their specific clients' needs.

Reasons to Purchase

• Understand the structure of the Italian financial advice market, and the broader financial services distribution channels.
• Gain an insight into what customers are demanding from their financial advisors, both now and in the future.
• Find out what impact regulation has had on the financial advice market landscape in Italy.

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