Financial Deal Insights Transport and Logistics Q1 2007

Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market Context 2
Most surveyed advisors are independent sole traders with a low average case size 2
The majority expect that product sales will remain the same over the next six months 2
Distribution Dynamics 3
Almost half the advisors have some concerns over the potential of a recession occurring in the next 12 months although a significant number are unconcerned 3
81% of advisors do not actively target the under 35s 3
69% of advisors feel that the under 35s are very important for the future of the financial services market 4
Table of Contents 5
Table of figures 6
Table of tables 7
market context 8
The majority of respondents are sole traders 8
The financial advisor market remains dominated by independent advisors 9
Most advisors in this survey deal with an average business case size of less than �5,000 10
The majority of business is conducted in pensions, life based investments and protection products 11
Advisors have lowered their expectations for growth in the future 13
The majority expect that product sales will remain the same over the next six months 14
The majority of advisors expect life products sales to remain static 15
ISAs remain the most likely products to increase their sales over the next six months 16
Two-thirds of advisors expect protection product sales to remain static in the near future 18
Some advisors predict pension product sales to increase 19
Financial advisors have very positive attitudes towards Standard Life, Skandia and Legal and General 21
Attitudes have remained similar to those in Q3 2007 23
Financial advisors are positive about Invesco Perpetual, Fidelity and Jupiter 24
Data 26
distribution dynamics 31
Almost half the advisors have some concerns over a possible recession occurring in the next 12 months although a significant number are unconcerned 31
Advisors expect clients to save more money in a recession while their long term personal finances are likely to be unaffected 32
Service and financial stability are considered the most important qualities of a provider in a market downturn 33
Having an attractive introductory offer and price were considered to be the least important qualities of a provider in a market downturn 35
The majority of advisors have a plan in place in the event of a market downturn 37
Income protection, guaranteed equity bonds and capital protected products are the most likely products to become popular if a significant market slowdown occurred 39
The majority of advisors feel that providers will not support them adequately in a market downturn 41
The majority of advisors claim their average client is over 35 42
81% of advisors do not actively target under 35s 43
Most advisors claim they do not target the under 35s because they do not have any marketing strategy 43
The majority of advisors target under the 35s with mortgage products 44
Most claim that only a small proportion of business comes from the under 35s 45
Most of the under 35s business is in mortgages 46
Insurance based investment bonds and mutual funds are the least popular products for the under 35s 47
Financial obligations and immediate spending are limiting the savings of young clients 48
Most advisors have no interest in targeting young clients 49
87% of respondents believe that young people are not adequately educated about their finances 50
It is a combined responsibility of schools/government, families and financial advisory industry to educate these young clients 51
Media campaigns promoting the need to save and targeted marketing are viewed as the best methods to attract young people as clients 52
69% of advisors feel that under 35s are very important for the future of the financial services market 53
Data 54
APPENDIX 60
Definitions 60
Pension product definitions 60
Personal Pensions 60
Stakeholder Pensions 60
Group Self-Invested Personal Pensions (Group SIPPs) 60
Employer Sponsored Stakeholder pension (ESS) 60
SIPPs (Self Invested Personal Pensions) 60
Definitions of distribution channels 60
Independent Financial Advisors (IFAs) 60
Tied agents 60
Multi-tied agents 61
Matrix Definitions 61
Methodology 61
Further reading 61
Ask the analyst 61
Datamonitor consulting 61
Disclaimer 62
List of Tables
Table 1: What percentage of your business is conducted in each of the following areas? 13
Table 2: Over the next six months how do you expect sales in each of the following products to change? 15
Table 3: Which of these statements best describes your attitude to these insurers? (Q4 2007) 22
Table 4: Which of these statements best describes your attitude to these insurers? (Q3 2007) 23
Table 5: Which of these statements best describes your attitude to these mutual fund providers? (Q3 2007) 25
Table 6: Which of these best describes your company? 26
Table 7: Under what business model do you operate? 26
Table 8: What is the average case size of the business you deal with? 27
Table 9: What percentage of your business is conducted in each of the following areas? 27
Table 10: What do you expect for the UK financial advice market over the next six months? 28
Table 11: Over the next six months how do you expect sales in each of the following products to change? 28
Table 12: How do you feel about the following insurers? 29
Table 13: How do you feel about the following mutual fund providers? 30
Table 14: To what extent do you agree with the following statements on your clients reactions to their personal finances in a recession? 33
Table 15: How concerned are you about the potential for a recession in the next year? 54
Table 16: To what extent do you agree with the following statements regarding your clients' reactions to their personal finances during a recession? 54
Table 17: Which of the following provider qualities would be more or less important during a market downturn than now? 55
Table 18: Do you have a strategy in place to sustain your business if there is a market downturn in 2008? 55
Table 19: Which of the following products will you see an increase in demand for if there is a significant market slowdown? 56
Table 20: What is the average age of your customer base? 56
Table 21: Do you actively target the under 35 age group? 57
Table 22: What proportion of your business is conducted with those under 35? 57
Table 23: Which savings and investment products are commonly purchased by those under 35? 57
Table 24: What factors limit the attractiveness of saving for younger clients? 58
Table 25: What are the biggest challenges you face in expanding your client base to younger clients? 58
Table 26: Do younger customers receive adequate education about their finances? 58
Table 27: Whose responsibility is it to educate younger people about their finances? 58
Table 28: What could providers do to help you expand your client base to these younger clients? 59
Table 29: How important do you see the under 35 age group being to the future of the financial services market? 59
List of Figures
Figure 1: The majority of respondents deal with an average case size of less than �5,000 2
Figure 2: Only 15% of advisors claim that they actively target the under 35s 4
Figure 3: 39% of respondents operate as sole traders 8
Figure 4: Over three-quarters of respondents have an independent business model 9
Figure 5: The majority of respondents deal with an average case size of less than �5,000 10
Figure 6: The majority of business is conducted in pension products 12
Figure 7: 70% of respondents expect static or limited growth over the next six months 14
Figure 8: The majority expect the sales of life products to remain the same over the next six months 16
Figure 9: ISA sales are the most likely to increase over the next six months 17
Figure 10: Protection products are expected to have static sales over the next six months 19
Figure 11: Advisors are most upbeat about the sales growth of personal pensions and SIPPs 20
Figure 12: Standard Life remains the most popular insurer in Q4 2007 21
Figure 13: Fidelity is the most popular mutual fund provider in Q4 2007 24
Figure 14: 18% of advisors are very concerned over the potential of a recession occurring in the next 12 months 31
Figure 15: Almost half of the respondents feel that the service of a provider will be much more important in a market downturn than now 34
Figure 16: Having an attractive introductory offer is considered the least important quality of a provider in a market downturn 36
Figure 17: Price is considered to be one of the least important qualities of a provider in a market downturn 37
Figure 18: Most respondents have a strategy in place or plan to react as the market conditions change 38
Figure 19: Advisors are expecting demand for most products to remain the same in a market slowdown 40
Figure 20: 95% of advisors claim their client base has an average age of over 35 42
Figure 21: Only 15% of advisors actively target under 35s 43
Figure 22: 78% of advisors feel that only 0-20% of business comes from the under 35s group 45
Figure 23: Mortgages are the most popular products purchased by clients under the age of 35 46
Figure 24: Young clients lack savings because of financial obligations and immediate spending habits 48
Figure 25: While many advisors are not interested in targeting younger clients, it appears that these clients do not want financial advice and are unwilling to pay for the service 49
Figure 26: Most advisors do not believe that young people receive adequate education about their finances 50
Figure 27: A combined effort from schools, families and the financial advice industry is required to educate young people about their finances 51
Figure 28: Targeted marketing and media campaigns promoting saving are seen as the best strategies for targeting young clients 52
Figure 29: Over two-thirds of advisors believe that under 35s are very important for the future of the financial services market 53