Abstract
Overview
Introduction
This brief looks at the future of distribution of long-term investment
products in Europe. The market for long term investment products is projected
to grow strongly in coming years. Demographic change, regulatory developments
and the evolution of the pensions landscape is driving a diversification in
distribution channels and opening up the markets for new entrants.
Scope
- Sizes and forecasts the European market for retail assets and high net
worth individuals
- Examines the key issues facing distributors in these markets
- Assesses how regulatory changes will impact distribution in these
geographies
- Provides action points for firms operating in these changing markets
Report Highlights
Datamonitor believes that a significant opportunity exists to develop
profitable distribution strategies for long term investment products in Europe
over the next five years. The expanding pool of wealth will drive demand both
for financial advice and for investment products
Although bancassurance has been traditionally dominant in most European
markets, shifts in the pensions landscape coupled with regulation to improve
the standards adhered to by financial advisors, is opening up the distribution
landscape.
Reasons to Purchase
- Gain insight into the scale and scope of the European investment
distribution market.
- Understand the nature of the regulatory environment in Europe
- Obtain invaluable information as to the state of the distribution
landscape in Europe
Table of Contents
- DATAMONITOR VIEW
- EXECUTIVE SUMMARY
- MARKET SIZE
- The European market for private investments is robust and growing
- Market growth is having an important effect on the distribution
landscape
- Liquid assets in Germany and the UK are particularly high
- Liquid assets across the key European markets are projected to grow
strongly in value
- The growth in the value of long term investment assets is more
variable across Europe
- The UK is home to a proportionally large number of high net worth
individuals
- The number of mass affluent and high net worth individuals is
projected to grow steadily
- Overall growth in the high net worth sector is predicted to be even
stronger
- The sophistication of the financial advisory sector varies widely across
Europe
- The financial intermediary population is often swelled by largely
unqualified advisors
- The regulatory purity of investment markets in Europe varies widely
- Limited regulation in Germany may open up opportunities for quality
investment advice
- The UK and Switzerland are subject to detailed regulatory guidelines
- The IFA sector in the UK is particularly well developed
- Single tied advisors dominate the advisory markets in a majority of
European countries
- Bancassurance is currently the dominant distribution channel in Europe
- A significant proportion of long term investment assets are
distributed via the bancassurance channel
- France is the largest bancassurance market in Europe
- The distribution landscape in Germany is slowly diversifying
- The UK and Switzerland represent exceptions to the rule
- Data
- MARKET DRIVERS
- The bancassurance channel is very strong across most of Europe
- In continental Europe, the bancassurance channel dominates the
distribution of retail investment products
- Consumers in much of Europe are unused to paying for financial advice
- The strength of the banking channel is driving the development of
bancassurance partnerships
- Demographic change is stretching state pension schemes to breaking point
- The support ratio is decreasing in almost all European countries
- The closure of defined benefit schemes is polarizing the market
- Mass market consumers are driving demand for long term investments via
the bancassurance channel
- However, as defined benefit schemes close, more affluent consumers are
seeking independent advice
- In turn, this has driven the development of partnerships with firms
of financial advisors
- In the UK, foreign and domestic banks are responding to consumer demand
for long term investments
- Foreign banks have identified an opportunity to compete with the IFA
sector in the UK for top end clients
- Domestic banks are considering developing their own distribution
channels
- REGULATION
- Regulatory change has had a key impact on the investment and savings
landscape in Europe
- The Financial Services Action Plan was intended to create a unified
financial services market in Europe
- Insurance Mediation Directive
- Markets in Financial Instruments Directive (MiFID)
- Other pieces of national legislation are also having an impact on the
investment distribution landscape
- A new financial advice certificate is being developed in Spain
- The new status of Conseiller en Investissement Financier has been
established in France
- The effects of depolarization in the UK are slowly effecting a shift
in the distribution landscape
- The Treating Customers Fairly initiative in the UK was intended to
ensure the quality of financial advice
- ACTION POINTS
- European markets offer strong potential for distributing investment
products
- Demand for investment products is growing across Europe
- Increasing demand combined with the impact of regulation is opening up
the distribution landscape
- Distribution strategies must be tailored to different markets and market
segments
- Each market and consumer segment requires a clearly differentiated
strategy
- In order to develop effective distribution networks, partnerships can
be highly effective
- As the pensions market evolves, opportunities emerge to sell new
investment products
- Variable annuities may become a more prominent feature in the European
investment landscape
- APPENDIX
- Definitions
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Value of liquid assets in Europe in 2006e, EURbn
- Table 2: Projected value of European liquid assets, 2005 - 2010f, EURbn
- Table 3: European life and pensions assets, 2006e - 2010f EURbn
- Table 4: European mutual funds assets, 2006e - 2010f EURbn
- Table 5: Number of wealthy individuals in Europe, 2006e (000s)
- Table 6: Number of mass affluent individuals in Europe, 2006e - 2010f
- Table 7: Number of high net worth individuals in Europe, 2006e - 2010f
- Table 8: Financial intermediaries in Europe segmented by type, 2005
- Table 9: Financial intermediaries in Europe segmented by channel (%),
2005
- List of Figures
- Figure 1: Value of liquid assets in Europe in 2006, EURbn
- Figure 2: Projected value of European liquid assets, 2005 - 2010f,
EURbn
- Figure 3: European life and pensions assets, 2006e - 2010e EURbn
- Figure 4: European mutual funds assets, 2006e - 2010e EURbn
- Figure 5: Number of wealthy individuals in Europe, 2006
- Figure 6: Number of mass affluent individuals in Europe, 2006e - 2010f
- Figure 7: Number of high net worth individuals in Europe, 2006e - 2010f
- Figure 8: Individual financial intermediaries in Europe segmented by
country, 2005
- Figure 9: Modified number of Individual financial intermediaries in
Europe segmented by country, 2005
- Figure 10: Comparative size and sophistication of European investment
markets
- Figure 11: Financial intermediaries in Europe segmented by channel
(%), 2005
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