Financial Advisors' views of Providers

Datamonitor surveyed 100 UK IFAs in Q1 2009 to get their ratings of providers. This report reveals the extent to which online services are taken up by IFAs and which service aspects are being demanded by IFAs during challenging economic times.

Report Highlights
In today’s uncertain markets, IFAs desire strong service from providers and new answers to address their administrative burdens and gain new business. It is important that providers’ offerings couple this with effective and regular communications to maintain IFA confidence.
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Table of Contents 3
Table of figures 4
Table of tables 4
ADVISORS ARE UNCERTAIN ABOUT THE FUTURE OF THE COMPETITIVE MARKET 5
Introduction to Datamonitor's Q1 2009 Financial Advisor Survey 5
The financial advisory industry is dominated by small firms with a broad business base 5
Provider opportunities for 2009 lie in guiding consumers towards protection and pension products 7
Protection sales will be maintained as their importance is highlighted in the current economic climate 7
Pensions products will prove to be less difficult sales compared to other products 8
ISAs are likely to increase sales over the next 6 months 9
Advisors are most uncertain about the future sales of investment bonds 9
Advisors expect the market structure to consolidate 10
Banks will sell off their asset management and life operations as they focus on core competencies 10
Advisors are expecting to see providers diversify activities and minimize costs 11
Advisors are uncertain about how their dealings with a provider will be affected during a restructure 12
ADVISORS BENCHMARK PROVIDERS 13
Advisors place business disparately with life companies compared to the more concentrated asset management market 13
More IFAs invest their life and pensions business with Scottish Equitable and Legal &General compared to others 13
Invesco Perpetual is more popular among advisors than other asset managers 15
HSBC receives the least business from advisors 16
Some large providers have stronger online penetration with IFAs than others 17
The life provider most preferred for online business is Abbey 17
Skandia has also achieved popular recognition among IFAs for online service performance 18
Advisors favor Fidelity's online services the most compared to other asset managers 19
Advisors are not keen to embrace technological advances 20
Value-focused concerns keep advisors skeptical regarding wrap propositions 20
The magnitude of picking the right wrap proposition delays uptake 21
IFAs face a challenge to improve their take-up of wrap platforms 21
Advisors perceive some life companies as offering best service than others 22
Skandia and Standard Life is viewed by advisors to offer better overall service 22
Skandia is seen as offering the best service among life companies 22
Standard Life offers customer-relevant solutions to address tough market conditions 23
Standard Life has the fastest speed of response to queries and quality of telephone service 24
Aviva is commended by advisors for the strength of their product range 25
Advisors rank the quality of Legal & General's products highly compared to others 26
Advisors rank Invesco Perpetual at top spot in all aspects of service but Fidelity is a close second 27
Invesco Perpetual's product range is renowned for their consistent performance 27
Fidelity also remains a popular provider among IFAs 29
IFAs are indifferent about providers' advertisement campaigns 30
PROVDIERS CAN IMPROVE THE QUALITY OF SERVICE TO MAINTAIN CONFIDENCE AMONG ADVISORS 31
Emphasis on communication and service is the key method of differentiation for providers 31
Providers must maintain strong communications with advisors to continue business relationships 31
Advisors appreciate efficient and quality of communication from providers 33
Advisors want to work with knowledgeable domestic call centers 33
Advisors preferred method of communication for information on product launches is through email 34
APPENDIX 36
Data 36
Definitions 45
Single premium policy 45
Regular premium 45
Wrap accounts 46
Product definitions 46
Life based savings products 46
Life Assurance 46
Single premium life 46
With-profit bond 47
Unit-linked bond 47
Income and growth bonds 47
Guaranteed equity bonds 47
Distribution bonds 47
Purchased life annuities 47
Other bonds 47
ISAs 47
Matrix-Data definitions 48
IFA firm types 48
Further reading 48
Ask the analyst 48
Datamonitor consulting 48
Disclaimer 49
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Table 1: How do you see business in each of the following areas changing over the next 6 months? 9
Table 2: Which of the following life companies do you conduct business with? 15
Table 3: Which of the following asset management companies do you conduct business with? 17
Table 4: What type of organization do you work for? 36
Table 5: Roughly what proportion ob your business is currently carried out in each of the following areas? 36
Table 6: What one thing should a provider make sure it is doing right in order to maintain a strong relationship with you? 36
Table 7: What one thing is sure to damage your relationship with a provider? 37
Table 8: Which of the following do you conduct business with? (Life companies) 37
Table 9: Which of the following companies do you conduct business with? (Asset management companies) 38
Table 10: In general, do you prefer to deal with each of the following online or offline? 39
Table 11: How do you rank the following companies in terms of their overall service? 40
Table 12: How do you rank the following companies in terms of their speed of response to queries? 41
Table 13: How do you rank the following companies in terms of quality of their telephone service? 42
Table 14: How do you rank the following insurers in terms of strength of their product range? 43
Table 15: How do you rank the following insurers in terms of the quality of their products? 44
Table 16: How do you rank the following companies in term of the effectiveness of their advertising campaigns? 45
Figure 1: Sole traders are the predominant IFA type 5
Figure 2: IFA firms conduct business in several product areas 6
Figure 3: Advisors believe protection and pension business will see an increase over the next 6 months 8
Figure 4: Advisors expect banks to sell their asset management and life operations 10
Figure 5: Advisors are expecting to see providers diversify activities and minimize costs 11
Figure 6: Advisors are more likely to conduct business via telephone rather than online 12
Figure 7: Scottish Equitable and L&G are the most popular life companies among IFAs 14
Figure 8: Advisors conduct most business with asset management leader Invesco Perpetual 16
Figure 9: Abbey and Skandia have higher online penetration with IFAs over other life companies 18
Figure 10: Advisors deal online mostly with Fidelity and Invesco Perpetual than other asset managers 20
Figure 11: IFAs do not show an interest in support services using new technology 21
Figure 12: Financial advisors are most impressed by Skandia's and Standard Life's overall service 23
Figure 13: Standard Life ranks the highest in IFAs' perception of their speed of response to queries 24
Figure 14: Aviva is perceived by advisors to have a strong product range 25
Figure 15: Legal & General is viewed highly by advisors for the quality of their products 26
Figure 16: Invesco Perpetual is perceived as offering best overall service 27
Figure 17: Invesco Perpetual impresses advisors the most with the strength of their product range 28
Figure 18: Advisors perceive Invesco Perpetual as better quality products than other asset managers 29
Figure 19: Aviva comes top in advisors ranking of effectiveness of advertising campaigns 30
Figure 20: Advisors desire regular communication from providers in order to maintain a strong relationship 32
Figure 21: Advisors believe a good service offering is vital to maintain relationships with providers 33
Figure 22: Advisors want domestic call centers with knowledgeable operators 34
Figure 23: Advisors prefer online communication when being informed of new product launches 35
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