Italian 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 Italian advisory market including distribution data.

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

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

*Regulatory environment for financial advice in Italy.

Highlights

The more traditional channels, such as banks and post offices, make up the most significant distribution of both mutual funds and life insurance/pension premiums. Banks account for 65% of the distribution of mutual funds in Italy and 68% of life insurance/pension premiums.

Consumers are beginning to see the peace of mind guaranteed by a financial advisor that has only the interests of his client in mind. Misaligned incentives provided through the kickback system lead to malcontent consumers holding unsuitable products.

Over 35% of wealth managers in Italy believe that talking to customers more is one of the best techniques of increasing client retention. Through increased interaction with clients, wealth managers can gain a better understanding of their specific clients' needs.

Reasons to Purchase

*Understand the structure of the Italian 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 Italy.


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market Structure 2
Regulatory Developments 2
Customer Demands 2
Table of Contents 3
Table of figures 4
Table of tables 5
Market structure 6
The financial advisory distribution channel in Italy is fairly large in comparison to other EU countries and is comprised of mainly non-independent financial advisors 6
Bancassurers are the most important channel for provision of advice in the Italian market 6
The Italian financial advice market has a unique shape compared to the rest of Europe 6
A promotore finanziario is the Italian equivalent of an independent advisor 6
SIMs are legally separated bank stockbroking arms 7
SGRs are banking arm fund managers 7
Italy's financial intermediary market is fairly developed but in the main controlled by banks and their intermediaries 7
Italy has a medium sized financial intermediary market, including 60,000 financial advisors 7
Traditional distribution channels are dominant in both mutual fund distribution and the life insurance market 8
Multi-tied advisors account for three quarters of financial advisors in Italy 10
Regulatory developments 12
Consob is the main body regulating financial advisors in the Italian market 12
Consob attempts to level the playing field between structured products and mutual funds 12
The Bank of Italy also has a role to play in regulation of the financial markets 13
ANASF is a professional association representing Italian financial advisors 13
NAFOP is Italy's national association representing "fee-only" advisors 13
ABI, Assogestioni & Assoreti are organizations also working to further promote the awareness of their members' practices in the Italian financial market 14
The numerous associations and overlapping roles of regulators have created a confusing regulatory environment in Italy 14
The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in Italy in recent years 14
IMD allows cross borders advice 14
MiFID increases the suitability of advice 15
Servicing customers 16
Italian HNWs have a higher than average appetite for risk and a weaker understanding of current market conditions 16
Italian consumers need guidance so as to better understand the market and to better align their risk appetites 16
Tax advice, simple transparent investments and asset preservation top the list of consumer demands today 18
HNW demands for the future revolve around a range of investments 19
Tax advice remains a priority, joined by foreign currency investments and capital protected funds 19
The competition between funds and structured products remains complicated 21
Increased communication and a holistic financial planning service are essential for increasing wallet share and customer retention 21
Increased face to face contact and financial planning provision drive customer wallet share 21
Advice from the wealth managers: communication and a selection of products are the most effective means of retaining clients 22
Italy's retail customers are unconvinced by professional financial advice 24
APPENDIX 29
Definitions 29
Methodology 29
Further reading 30
Ask the analyst 30
Datamonitor consulting 30
Disclaimer 30
List of Tables
Table 1: Market share breakdown by type of intermediary: Italy vs. European Average* 11
Table 2: Branches per thousand members of the population 25
List of Figures
Figure 1: Italy has 60,000 financial intermediaries with just over 2,000 other intermediaries 8
Figure 2: Traditional Channels like banking, post offices etc remain dominant in both mutual fund and life insurance distribution 9
Figure 3: The Italian financial intermediary market is dominated by multi-tied agents 10
Figure 4: Italian HNWs have a slightly higher than average appetite for risk , dangerously paired with a lower understanding of the effects of market conditions 17
Figure 5: Italian consumers are more interested in face to face relationship management than their European neighbors 18
Figure 6: Simple investments, asset preservation and tax advice are chief among HNW demands 19
Figure 7: Tax advice , foreign currency investments and capital protected funds will be the chief demands in two years time 20
Figure 8: Increased face to face contact and financial planning are crucial for increasing wallet share, both in Italy and abroad 22
Figure 9: Increased communication and expansion of product range are the keys to customer retention in the Italian advice market 23
Figure 10: Less than 30% of Italian consumers choose not to seek out professional advice before making financial decisions 24
Figure 11: 43% of consumers seek professional advice from their primary bank versus 24% who disagree 26
Figure 12: Italian investors follow the global average in seeking better options elsewhere 27
Figure 13: Italian consumers are more distrustful of financial advisors/brokers than the global average 28

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List of Tables
Table 1: Market share breakdown by type of intermediary: Italy vs. European Average* 11
Table 2: Branches per thousand members of the population 25

List of Figures
Figure 1: Italy has 60,000 financial intermediaries with just over 2,000 other intermediaries 8
Figure 2: Traditional Channels like banking, post offices etc remain dominant in both mutual fund and life insurance distribution 9
Figure 3: The Italian financial intermediary market is dominated by multi-tied agents 10
Figure 4: Italian HNWs have a slightly higher than average appetite for risk , dangerously paired with a lower understanding of the effects of market conditions 17
Figure 5: Italian consumers are more interested in face to face relationship management than their European neighbors 18
Figure 6: Simple investments, asset preservation and tax advice are chief among HNW demands 19
Figure 7: Tax advice , foreign currency investments and capital protected funds will be the chief demands in two years time 20
Figure 8: Increased face to face contact and financial planning are crucial for increasing wallet share, both in Italy and abroad 22
Figure 9: Increased communication and expansion of product range are the keys to customer retention in the Italian advice market 23
Figure 10: Less than 30% of Italian consumers choose not to seek out professional advice before making financial decisions 24
Figure 11: 43% of consumers seek professional advice from their primary bank versus 24% who disagree 26
Figure 12: Italian investors follow the global average in seeking better options elsewhere 27
Figure 13: Italian consumers are more distrustful of financial advisors/brokers than the global average 28
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