Financial Advisors' Views on Emerging From the Recession

Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
IFAs are predominantly small and independent in business structure 2
Advisors view Skandia and Invesco Perpetual as offering the best level of service 2
Advisors are uncertain about the timeline for recovery, with certain products believed to offer more opportunities than others 2
Table of Contents 3
Table of figures 4
Table of tables 5
Financial advisors benchmark providers 6
Introduction to our Financial Advisor Survey, November 2009 6
IFAs continue to rank Skandia, Invesco Perpetual and Fidelity positively over other providers 8
Skandia is rated positively by IFAs for its level of service and quality of products 8
Advisors are still reluctant to conduct business with Abbey as a life assurer compared to its peers 10
IFAs continue to have strong positive opinions about Invesco Perpetual's level of service and the quality of its products 10
Among the asset managers, HSBC continues to attract a net negative response from IFAs 11
Providers need to focus on strong servicing of existing policies and ensure reliable product performance 12
Timeline for recovery and future challenges 14
Advisors are uncertain about the timeframe for the recovery of their business 14
IFAs perceive the economic climate as only a short-term challenge 15
IFAs are likely to increase their focus on HNW business over the next 12 months 16
IFAs believe that the RDR will present strong challenges to their market 17
Higher qualification requirements will intensify competitive pressures on IFAs 19
The proposed remuneration structure may cause investors to switch from the IFA route to bancassurance 19
However, the overall focus of regulation should be on meeting customers' needs and demands 20
IFAs believe that future competitive challenges will come from other IFAs and high street banks 21
Consolidation continues to be the theme for IFAs as firms seek better capitalization 22
IFAs should revisit their sales and marketing strategies to differentiate from their peers 22
High street banks are also a perceived threat but their recently tarnished brand reputation will limit their entry into the life, pensions and investment market 22
Online price comparison sites are also a strong contender for IFAs' client base 23
Aggregator sites offer a wealth of opportunities 24
Risk aversion will be a long-lasting customer attribute to emerge from the recession 24
Advisors are serving customers that are more risk averse and less willing to invest 25
Advisors believe retirement products will have stronger opportunities in the market upturn 26
IFAs believe that income drawdown and annuities will present them with strong opportunities for sales 27
Individual SIPPs may prove to be a less difficult sale as customers continue to desire a level of control over the way their assets are handled 29
Protection sales can be maintained if their importance is highlighted in the current economic climate 29
IFAs believe income protection will present them with stronger business opportunities than term assurance 29
Future sales of mortgage-related term will be impacted by the current pessimistic outlook for the housing market 30
ISAs stand out as the product about which IFAs are most positive 31
However, this does not spell the end for investment bonds 32
APPENDIX 33
Data 33
Definitions 41
Single premium policy 41
Regular premium 41
Wrap accounts 41
Product definitions 41
Life-based savings products 41
Life assurance 41
Single premium life 42
With-profit bond 42
Unit-linked bond 42
Income and growth bonds 42
Guaranteed equity bonds 42
Distribution bonds 42
Purchased life annuities 43
Other bonds 43
ISAs 43
Matrix-Data definitions 43
IFA firm types 43
Further reading 43
Ask the analyst 44
Our Consultancy 44
Disclaimer 44
List of Tables
Table 1: What type of organization do you work for? 33
Table 2: Roughly, what proportion of your customer base falls into each of the following asset bands? 33
Table 3: Please rate the following providers in terms of the level of service they provide to you? (1-5, with 5 being the highest level of service and 1 being the lowest) 34
Table 4: Please rate the following providers in terms of the quality of the products they offer? (1-5, with 5 being the highest level of quality and 1 being the lowest) 35
Table 5: Which of the following statements do you most strongly agree with? 36
Table 6: To what extent do you see the following as a challenge for the IFA market as a whole when emerging from the recession? 36
Table 7: What do you expect your major business challenges to be over the next six months? 37
Table 8: Over the next 12 months, to what extent are you likely to take the following actions? (1 = lowest likelihood, 5 = highest likelihood) 37
Table 9: What are the three most important things that a provider should do to ensure that you continue to do business with them when emerging from the recession? 38
Table 10: To what extent do you agree with the following statements regarding how the behaviors of your customers have changed due to the recession? 38
Table 11: Which of the following do you think will be permanent changes to the industry, rather than short-term changes due to the economic climate? 39
Table 12: Who do you see as your main competition for clients in your market? 39
Table 13: How do you see new opportunities for your business in the following product areas developing over the next six months? 39
Table 14: What product opportunities lie within the protection market over the next six months? 40
Table 15: What product opportunities lie within the savings and investments market over the next six months? 40
Table 16: What product opportunities lie within the pensions and annuities market over the next six months? 40
List of Figures
Figure 1: The majority of IFA firms surveyed are small single outlet firms 6
Figure 2: Most of the surveyed IFAs serve clients that have a relatively low amount of assets to invest 7
Figure 3: Skandia and Standard Life are perceived favorably by IFAs in terms of their level of service 8
Figure 4: IFAs perceive Invesco Perpetual to offer the best level of service over other asset managers 9
Figure 5: IFAs rank Skandia the highest in terms of the quality of products offered 11
Figure 6: Advisors rank Invesco Perpetual highly for the quality of the products it offers 12
Figure 7: Strong servicing of existing policies and product performance from providers are important for IFAs 13
Figure 8: IFAs are undecided on how long it will be before their business recovers 14
Figure 9: The economic climate represents the shorter-term challenge for IFAs 15
Figure 10: IFAs are likely to increase their focus on HNW business over the next 12 months 17
Figure 11: IFAs believe that the proposals set out in the RDR will pose the main challenge in their recovery from the recession 18
Figure 12: Advisors perceive other IFAs and high street banks as their main competitive threats 21
Figure 13: IFA customers have become risk averse during the recession 25
Figure 14: IFAs perceive risk-aversion to be a long-lasting consumer attribute 26
Figure 15: Pensions and annuities will fare better relative to other product segments 27
Figure 16: IFAs believe that income drawdown will provide them with a strong opportunity for business 28
Figure 17: IFAs believe income protection will present a stronger opportunity for sales than other protection products 30
Figure 18: IFAs are more positive about ISAs than other savings and investment products 32