French Financial Advice Market

Introduction

The recession is causing investors to seek advice, and FS providers are focusing their attention on their advisory models.

Scope

*Structure of the French advisory market including distribution data.

*HNW investors' views of, and use of, financial advice based on Datamonitor's proprietary survey.

*French consumers' trust in banks and independent financial advisors based on results from Datamonitor's proprietary survey.

*Regulatory environment for financial advice in France.

Highlights

The advisory intermediary channel in France is underdeveloped compared to the other large European markets. This is largely down to the historic talent of the incumbent banks for nurturing relationships with their customer base. The implementation of new European regulations should encourage a more developed and thriving French intermediary market.

French HNWs have a lower-than-average appetite for risk, meaning a lower-than-average number would consider leaving their advisor to manage their money on their own. French HNWs are knowledgeable regarding financial products and they have a good understanding of the impact that current market conditions will have on their portfolio.

French consumers have a strong relationship with their bank, which is manifested by respondents rating their level of trust in banks more highly than for financial advisors or brokers. In order to grow market share and retain customers, financial advisors need to understand the psyche of French consumers so that they can build up their trust level.

Reasons to Purchase

*Understand the structure of the French financial advice market, and the broader financial services distribution channels.

*Gain an insight into what customers are demanding from their financial advisors, both now and in the future.

*Find out what impact regulation has had on the financial advice market landscape in France.

Report Highlights

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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The French financial advice market is still dominated by the banking sector 2
The regulatory structure in the French market remains fairly complicated 2
French HNW consumers value a close relationship with their financial services providers 2
Table of Contents 3
Table of figures 4
Table of tables 5
Market Structure 6
France's financial intermediary market is dominated by the banks, and the movement towards seeking independent advice has been limited 6
France has a small financial intermediary market, including 20,000 ancillary financial advisors 6
Intermediaries account for a very small proportion of mutual fund distribution in France 7
The multi-tied advisor model is the most popular type of intermediary in France 8
Regulatory Developments 10
The French financial services industry has seen some simplification in terms of the jurisdiction of the various industry bodies 10
The CCLRF has an important consultative role in banking and finance regulation, but the AMF has the largest jurisdiction 11
There have been minor changes since the Financial Security Act 12
The creation of the AMF was undertaken to improve the efficiency of France's financial regulatory system 12
A new regulation was introduced in 2004, aimed specifically at financial advisors 12
While CIFs are directly regulated by the AMF, conseils en gestion de patrimoine do not deal with one particular legislative body 13
Enrolment in ORIAS is obligatory for all insurance intermediaries but it is not a regulatory body 14
The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in France in recent years 14
The Financial Services Action Plan was rolled out in order to facilitate a cross-border market for financial services 14
The Insurance Mediation Directive has had the most notable impact on the FSAP in insurance 14
The Markets in Financial Instruments Directive is improving the relevance of advice 15
As MiFID continues to seep through, the effect on the French financial advice channel will be profound 15
MiFID may bring to an end the role of CGPs as it currently stands 16
French intermediaries have a larger choice of trade association than any of their European peers 16
Servicing Customers 18
French HNWs are knowledgeable about financial products and they value the importance of a close relationship with their advisor 18
French HNWs are financially savvy, unlikely to take risks and seek to build a relationship with their provider 18
French HNWs' principle demand is for investments to be simple and transparent 20
HNW demands for the future revolve around a mixture of low- and moderate-risk investments 22
Closed-ended property funds, mortgages and financial planning are expected to be most in demand among HNWs in two year's time 22
Only around one in 10 French HNWs are looking for underpriced equities 23
A focus on offering financial planning should increase share of wallet and proactive investment advice should retain customers 24
Wealth managers should offer financial planning and leverage their customer relationship management resources 24
Proactive investment suggestions are the best way to retain HNW clients 25
France's retail customers look for professional advice before making a financial decision and are less keen to shop around for financial products 26
APPENDIX 32
Definitions 32
IFA 32
IMD 32
MiFID 32
Tied agents 32
Methodology 32
Further reading 33
Ask the analyst 33
Datamonitor consulting 33
Disclaimer 34
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List of Tables
Table 1: Number of members of different financial advice trade associations in France 17
List of Figures
Figure 1: The French intermediary market is small, with only around 4,000 firms 7
Figure 2: Banks are important players in the distribution of mutual funds and life & pension products 8
Figure 3: Three quarters of advisors have some kind of tie with a large bank or insurance company 9
Figure 4: The initial structure of French financial services supervision from August 2003 11
Figure 5: French HNWs have a strong knowledge of financial products and understanding of how current market conditions will affect their portfolio 19
Figure 6: HNW customers place much greater emphasis on the importance of personal relationships than average 20
Figure 7: HNW customers demand simplicity a view on duration of the crisis and mortgage financing 21
Figure 8: Closed-ended property funds are expected to be among the most demanded products in two years' time 23
Figure 9: French HNWs are not looking for underpriced equities 24
Figure 10: French wealth managers see the provision of financial planning as the best technique for increasing share of wallet 25
Figure 11: French wealth managers see proactive investment suggestions as the best method of retaining customers 26
Figure 12: Around four in 10 respondents are likely to seek professional advice before making a financial decision 27
Figure 13: French consumers have a greater level of trust in the information provided by their primary bank should they be looking for professional advice 28
Figure 14: French consumers are slightly less likely than average to shop around for financial products than they were before the downturn 29
Figure 15: French respondents had slightly polarized views regarding the use of advice that they have to pay for up front 30
Figure 16: French consumers have a higher level of trust in banks than financial advisors or brokers 31
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