Spanish 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 Spanish advisory market including distribution data.

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

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

*Regulatory environment for financial advice in Spain.

Highlights

The dominance of the banking sector can be explained by the strength of the branch networks built up by Spanish banks, which tend to be able to forge strong links with customers due to the fact that each branch serves relatively few clients.

Despite the high levels of switching behavior seen, it remains likely to be constrained by the general public's slightly lower trust for financial advisors and brokers. Even after the establishment of MiFID in 2007, which was with the intention of increasing the quality of financial advice, consumers remain distrustful of financial advisors.

Over 40% of wealth managers believe that one of the most effective strategies to increase wallet share in Spain comes through increasing face-to-face contact. Through face-to-face interaction, financial advisors are able to suggest and promote other complementary financial packages and thus increase wallet share.

Reasons to Purchase

*Understand the structure of the Spanish 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.

*Discover what impact regulation has had on the financial advice market landscape in Spain.


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market structure 2
Regulatory developments 2
Customer demands 3
HNWs 3
Retail customers 3
Table of Contents 4
Table of figures 5
Table of tables 6
Market Structure 7
Spain's financial intermediary market is relatively weak compared to its neighbors' 7
Spain has 20,000 financial intermediaries, mainly in banks, and 10,000 ancillary financial advisors 7
The Spanish banking sector remains the strongest distribution channel for financial products 8
Nearly a third of all financial products are sold through intermediaries in Spain 9
The Spanish financial advice market is dominated by tied advisors 9
Regulatory Developments 10
The regulatory landscape: the Bank of Spain and the CNMV 11
The AIF and ANAF have been actively promoting increased awareness of the advisory industry 11
The AIF has called for more regulation of issues related to financial advisors 12
The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in Spain in recent years 13
Insurance Mediation Directive allows cross-border advice 13
Markets in Financial Instruments Directive increases the suitability of advice 13
Financial advisors need to ensure that the right product reaches the right consumer as regulatory pressure mounts 14
MiFID may not have all the answers but is a step in the right direction for the financial advice market 14
Financial advice qualifications are important for building investor trust in the sector 15
The creation of a financial advice certificate may go some way towards allaying investor trust issues 15
EFPA is active in setting high-quality standards for educational programs, examinations, certifications and ethical behavior in the Spanish market 15
Servicing Customers 17
Spanish HNWs have a high appetite for risk but a fairly low level of financial knowledge, leading to a need for guidance by their financial advisor 17
Spain's HNWs are risk-loving, fairly financially unsophisticated and at risk of 'going it alone' 17
Spain's HNWs want their advisors to have a view about how long the downturn will last, and to bring them investment opportunities to profit from it 18
HNW demands for the future revolve around a mix of 'safe' and higher risk investments 20
Foreign currency, private equity and property funds will be demanded by the majority of Spanish HNWs in two years 20
Spanish HNWs are not yet ready to embrace equities or mortgage financing, but will be in two years' time 21
Leveraging HNW customers, and attracting new ones, relies on contact, pricing and proactive advice 22
Advice from wealth managers: face-to-face contact and preferential pricing are the keys to increasing wallet share in Spain 22
Advice from wealth managers: increased communication is the key to customer retention in Spain 23
The downturn offers opportunities for financial advisors who are responsive to their clients 23
The majority of Spain's retail customers seek advice before financial decisions, mainly from their primary bank 23
The Spanish advice market looks to remain depressed for primary banks over the next six months but offers opportunities for the more astute financial advisor 25
The downturn offers opportunities for financial advisors to gain custom 25
The recession may call for a change to the traditional banking model within Spain 27
The recession may weaken the primary banks' traditional position of power 27
APPENDIX 28
Definitions 28
IFA 28
Tied agents 28
Acronyms 28
Methodology 29
Further reading 30
Ask the analyst 30
Datamonitor consulting 30
Disclaimer 30
List of Tables
Table 1: Branches per thousand members of the population 8
Table 2: Breakdown of financial intermediaries by type for select European countries 10
List of Figures
Figure 1: Spain has 20,000 intermediaries with more than 10,000 other financial support intermediaries 7
Figure 2: Nearly a third of life and pensions premiums are sold through intermediaries 9
Figure 3: The vast majority of the Spanish financial advice market is made up of tied advisors 10
Figure 4: Spanish HNWs reveal a strong appetite for risk coupled with a weaker knowledge of financial products compared to the global average 17
Figure 5: Spanish HNWs are at risk of trying to manage their money on their own, relying on a good understanding of risk and return 18
Figure 6: Spanish HNWs demand knowledge of the financial crisis and how it can be turned to their advantage 19
Figure 7: Foreign currency, private equity and closed-ended property funds will be the main interest for Spanish HNWs in two years' time 20
Figure 8: Spain's HNWs aren't showing as strong a taste for underpriced equities and mortgage finance deals as other HNWs 21
Figure 9: Face-to-face contact is the best technique for increasing wallet share followed by preferential pricing, which is particularly effective in Spain. 22
Figure 10: Over 40% of wealth managers believe increased interaction with HNWs is the key to client retention 23
Figure 11: The majority of Spanish consumers would seek professional advice before making financial decisions 24
Figure 12: Consumers reveal preferences for professional advice from their primary bank 25
Figure 13: Spanish consumers are now prepared to shop around more and therefore will need professional advice 26
Figure 14: Spanish consumers are more distrustful of financial advisors/brokers than the global average 27

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List of Tables
Table 1: Branches per thousand members of the population 8
Table 2: Breakdown of financial intermediaries by type for select European countries 10

List of Figures
Figure 1: Spain has 20,000 intermediaries with more than 10,000 other financial support intermediaries 7
Figure 2: Nearly a third of life and pensions premiums are sold through intermediaries 9
Figure 3: The vast majority of the Spanish financial advice market is made up of tied advisors 10
Figure 4: Spanish HNWs reveal a strong appetite for risk coupled with a weaker knowledge of financial products compared to the global average 17
Figure 5: Spanish HNWs are at risk of trying to manage their money on their own, relying on a good understanding of risk and return 18
Figure 6: Spanish HNWs demand knowledge of the financial crisis and how it can be turned to their advantage 19
Figure 7: Foreign currency, private equity and closed-ended property funds will be the main interest for Spanish HNWs in two years' time 20
Figure 8: Spain's HNWs aren't showing as strong a taste for underpriced equities and mortgage finance deals as other HNWs 21
Figure 9: Face-to-face contact is the best technique for increasing wallet share followed by preferential pricing, which is particularly effective in Spain. 22
Figure 10: Over 40% of wealth managers believe increased interaction with HNWs is the key to client retention 23
Figure 11: The majority of Spanish consumers would seek professional advice before making financial decisions 24
Figure 12: Consumers reveal preferences for professional advice from their primary bank 25
Figure 13: Spanish consumers are now prepared to shop around more and therefore will need professional advice 26
Figure 14: Spanish consumers are more distrustful of financial advisors/brokers than the global average 27
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