Abstract
Overview
Introduction
Financial Advisors' Views of Product Innovation uses information from
Datamonitor' s quarterly survey of financial advisors to assess their views of
newly launched financial products, it examines what products appeal to them
and which providers they most commonly use. The report presents the views of
over 100 randomly selected IFAs.
Scope
- This report gauges financial advisor opinion toward a selection of life
and mutual fund providers.
- This report examines the opinions of financial advisors in relation to the
launch of a series of innovative financial products.
- This report profiles key providers of offshore bond investments, variable
annuity products and self-invested personal pensions in the UK market.
Report Highlights
Of the surveyed IFAs, the majority of their business was conducted in pensions
and life-based investment products, while a large proportion of advisors
claimed that mortgage products accounted for no part of their business.
The majority of surveyed financial advisors stated that they prefer variable
annuities over traditional annuities for producing income, while they also
said that they significantly favour income drawdown for income generation over
variable annuities.
The majority of financial advisors offer their customers offshore bond
investments, while the most commonly used providers for this investments
include Skandia, Standard Life and Norwich Union. Most advisors use offshore
bonds for investment and inheritance tax planning.
Reasons to Purchase
- Gain insights from financial advisors' opinion on newly launched
investment products.
- Review profiles of leading providers in the offshore bond investment,
variable annuity product and self-invested personal pension markets.
Table of Contents
- Overview
- Executive Summary
- Market Context
- Advisors are predominantly sole independent traders, with a low
average case size
- Advisors are somewhat optimistic over sales growth for the coming 6
months
- Distribution Dynamics
- Offshore bonds are commonly offered to clients for investment and tax
planning
- The majority of financial advisors offer variable annuities to their
clients for flexibility and the potential to earn higher income.
- Two thirds of financial advisors offer SIPPs to their clients while
the initial surge in popularity for these investments appear to have slowed
- Table of Contents
- Table of figures
- Table of tables
- Market context
- The sample consists of predominatly sole traders
- The financial advice market remains almost entirely independent or whole
of market
- The average business case dealt with in this survey is less than £5,000
- The majority of business is conducted in pension and life based
investments
- There have been some notable changes since Q2
- 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
- Individual savings accounts (ISAs) are the most likely products to
increase their sales over the next six month
- The majority of advisors expect protection product sales to remain
static in the near future
- The outlook for pension products is bright
- Financial advisors have very positive attitudes towards Standard Life,
Skandia and Legal and General
- Attitutdes have remained similar to those in Q2 2007
- Financial advisors are positive about Invesco Perpetual, Fidelity and
Jupiter
- The majority of financial advisors were somewhat optimistic about the
future
- Data
- Distribution Dynamics
- 64% of advisors offer offshore bond products to their customers
- A third of advisors have experienced a change in demand for offshore
bonds over the last 18 months
- Offshore bonds are prodominately used for investment and inheritance tax
planning
- Other products used for inheritance tax planning are onshore bonds,
discounted gift schemes and whole of life policies
- Advisors are torn over the attractiveness of a regular premium payments
into offshore products
- The key providers in the offshore product market are Skandia, Standard
Life and Scottish Equitable
- Skandia was the most popular provider of offshore bond investment
according to the respondents
- Standard Life offers offshore products to the high-end of the market
- Scottish Equitable offers three main offshore investment products to
clients
- 57% of advisors offer variable annuities to their clients
- 34% of advisors had seen an increase in popularity of variable annuities
over the last 18 months
- The key advantages of variable annuities are percieved to be flexibility
and potentially higher income
- For those who do not see an advantage to these products, the issues
that variable annuity providers face are lack of income guarantees and
increasing customer awareness
- Variable annuities are seen to be preferable to traditional annuity
products although less advantageous than income drawdown
- Traditional pension providers or those with SIPP or income drawdown
experience are seen as the most likely to suceed in the variable annuity
market
- The key providers in the variable annuity market are Prudential, Canada
Life and Norwich Union
- Prudential was the most commonly used provider of variable annuities
- Canada Life offers its clients a flexible range of annuities
- Norwich Union is one of the world' s largest insurance groups
- 67% of advisors offer SIPPs to their clients
- The initial surge in popularity of SIPPs appears to have slowed
- Regulatory moves to simplify SIPPs are not yet having the desired effect
- 70% of advisors feel that the charging structure of SIPPs is getting
simpler
- Much of the product innovation is in fact seen to be in the delivery
platforms rather than the SIPP product
- The majority of business is put into full SIPP by the surveyed financial
advisors
- There is unlikely to be a significant change in this business mix over
the next 2 years
- The key providers in the SIPP market are Standard Life and Scottish
Equitable
- Standard Life is a leading provider of SIPPs in the UK
- Scottish Equitable' s SIPP products provide clients with control in the
timing and size of income payments
- Advisors have mixed views on the usefulness of Group SIPPs
- The flexibility of investment choices is one of the key advantages of
Group SIPPs
- There were few respondents that perceived advantages of joining a
Group SIPP for mass market clients
- 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? (Q3 2007)
- Table 4: Which of these statements best describes your attitude to
these insurers? (Q2 2007)
- Table 5: Which of these best describes your company?
- Table 6: What business model do you operate?
- Table 7: What is the average case size of the business you deal with?
- Table 8: What percentage of your business is conducted in each of the
following areas?
- Table 9: Over the next six months how do you expect sales in each of
the following products to change?
- Table 10: How do you feel about these insurers?
- Table 11: How do you feel about these mutual fund providers?
- Table 12: Do you believe in the next 6 months the UK Financial Advice
market will:
- Table 13: Have you seen a continued surge in popularity for SIPPs over
the last three months?
- Table 14: Do you offer offshore bond products to your customers?
- Table 15: Have you seen an increase in popularity of offshore bonds
over the last 18 months?
- Table 16: What purposes do your customers use offshore bonds for?
- Table 17: Is the option of a regular premium payment into an offshore
product attractive to your customer base?
- Table 18: Do you offer Variable Annuity products to your customers?
- Table 19: Have you seen an increase in popularity of Variable Annuity
over the last 18months?
- Table 20: Do you see any advantages of variably annuities for your
client base?
- Table 21: Which of the following types of provider do you think is
best placed to capitalize on the variable annuity opportunity?
- Table 22: How would you rate Variable Annuities against Income
Drawdown for generation of income?
- Table 23: How would you rate Variable Annuities against conventional
annuities for generation of income?
- Table 24: Do you offer SIPPs to your customers?
- Table 25: Are charging structures for SIPPs getting simpler?
- Table 26: Have you seen a continued surge in popularity of these
products over the last 3 months?
- Table 27: Are the FSAs moves to improve transparency and simplicity in
SIPPs having any impact?
- Table 28: Are the key SIPP innovations actually in the delivery
platforms rather than the products?
- Table 29: What proportion of your SIPP business (in terms of value) do
you place in each of the following?
- Table 30: Do you expect these proportions to change over the next 2
years?
- Table 31: Are Group SIPPs a key innovation in the SIPP market?
- Table 32: What are the key advantages to Group SIPPs?
- Table 33: Is there any advantage to mass market employees of joining a
group SIPP program?
- List of Figures
- Figure 1: Sole Traders constitute 36% of the total survey sample
- Figure 2: The majority of advisors operate an independent business
model
- Figure 3: Most advisors deal with an average case size of less than
£5,000
- Figure 4: Young adviser deal with higher average case size than their
older colleagues
- Figure 5: Pensions and life-based investments demonstrate the largest
business areas
- Figure 6: The majority expect the sales of life products to remain the
same over the next six months
- Figure 7: Respondents believe mutual funds and ISAs are expected to
increase their sales
- Figure 8: Protection products are likely to have static sales in the
coming six months
- Figure 9: Personal pensions and SIPPs sales look to be positive over
the next six months
- Figure 10: Standard Life is the most popular insurer in Q3
- Figure 11: Invesco Perpetual is the most popular mutual fund provider
- Figure 12: HSBC stand out as the least popular mutual fund provider
- Figure 13: Over half of the surveyed financial advisors expect some
growth in the next six months
- Figure 14: The majority of financial advisors offer offshore bond
products to their customers
- Figure 15: The majority of financial advisors have seen no change in
demand for offshore bonds
- Figure 16: Customers use offshore bonds mostly for inheritance tax
planning and investment
- Figure 17: Is the option of a regular premium payment into an offshore
product attractive to your customer base?
- Figure 18: The majority of advisors offer variable annuities to their
clients
- Figure 19: The majority of advisors have seen no change in the
popularity of variable annuities over the past 18 months
- Figure 20: The majority of advisors see some advantages for their
clients in variable annuities
- Figure 21: The majority of advisors prefer variable annuities over
traditional annuities for generating income
- Figure 22: Most advisors prefer income drawdown over a variable
annuity for income generation
- Figure 23: Traditional pension providers and SIPP or income drawdown
specialists are most likely to capitalize on the variable annuity
opportunity
- Figure 24: Two-thirds of advisors offer SIPPs to their clients
- Figure 25: The majority of advisors believe that the FSA' s efforts to
improve transparency and simplicity in SIPPs is having no impact
- Figure 26: The majority of advisors agree that SIPPs charging
structure is becoming simpler
- Figure 27: Two thirds of respondents stated that SIPP innovation came
from delivery platforms rather than the products themselves
- Figure 28: Full SIPP represents the largest proportion of SIPP
business for advisors
- Figure 29: The majority of financial advisors expect SIPP business to
stay the same over the next few years
- Figure 30: Are Group SIPPs a key innovation in the SIPP market?
- Figure 31: What are the key advantages of Group SIPPs?
- Figure 32: Is there any advantages to mass market employees of joining
a Group SIPP program?
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