UK IFAs, Investment Managers & Platforms 2017

Independent financial advisors (IFAs) are a key distribution network for investors in the UK. Product providers will do well to understand the priorities and criteria advisors use in selecting their investment partners and platforms, particularly with a growing tendency to cooperate with discretionary fund managers (DFMs). As nearly all advisors in the UK use a platform (or multiple) to manage their clients’ assets, understanding why certain platforms are favored above others remains crucial. Online access to platforms is important for IFAs, which will continue to leverage digital capabilities to remain relevant.

GlobalData’s “UK IFAs, Investment Managers & Platforms 2017” is a comprehensive analysis of the features and preferences of UK investors and IFA clients. Drawing from our proprietary IFA Survey, the report offers insight into platform characteristics, what drives IFAs when selecting platform providers, and demand for DFMs.

Specifically the report:

- Examines the role IFAs have in providing financial services.

- Details market developments and the evolving landscape of the UK market.

- Analyzes the most important features IFAs consider when selecting platforms.

- Identifies the companies that offer the most attractive platform packages.

- Examines the criteria for selection of pension fund providers.

Scope

- UK fund platforms continue to grow their market share by providing both advisors and direct investors with access to a range of products. In 2015 these platforms accounted for 52% of industry gross retail sales.

- The attractiveness of products is driven by cost along with the quality of administrative and reporting functions. Beyond these two features, the investment fund range is also important to advisors.

- Investment product providers are regularly assessed by IFAs, with 47.3% carrying out reviews more than once a year.

- 91% of advisors use platforms, with the majority relying on more than one. The three most widely used platforms are Old Mutual, Fidelity Funds Network, and Aviva.

- There is increasing interest in the use of model portfolios and discretionary portfolio management, driven by clients’ preference for a better investment range and less administration.

- Cost is the main driver for switching platforms, highlighting the increasingly commoditized nature of the service.

Reasons to buy

- Comprehensive overview of what investment product and platform features are of interest to IFAs.

- Insight into the IFA market from our UK IFA Survey.

- Identify how to remain competitive by understanding IFA preferences.

Companies mentioned

Aberdeen Asset Management

Aegon

Aviva

Axa Elevate

Brewin Dolphin

Charles Stanley

City Asset Management

Cofunds

Cornelian Asset Managers

Fidelity

FNZ technology

Investec

Investment Association

Nucleus ...

Aberdeen Asset Management

Aegon

Aviva

Axa Elevate

Brewin Dolphin

Charles Stanley

City Asset Management

Cofunds

Cornelian Asset Managers

Fidelity

FNZ technology

Investec

Investment Association

Nucleus

Old Mutual

Premier

Quilter Cheviot

Rathbones

Seven Investment Management

Standard Life

Transact

True Potential

Verbatim

Vestra

Wealth Horizon

Zurich

Table of Contents

EXECUTIVE SUMMARY

Key findings

Critical success factors

IFAS ARE A KEY DISTRIBUTION CHANNEL

Retail fund distribution increasingly occurs through platforms

Platforms represent a noticeable channel ...

EXECUTIVE SUMMARY

Key findings

Critical success factors

IFAS ARE A KEY DISTRIBUTION CHANNEL

Retail fund distribution increasingly occurs through platforms

Platforms represent a noticeable channel for retail fund sales

Platform consolidation in the UK will be a noticeable trend going forward

PLATFORMS REMAIN THE DOMINANT CHANNEL FOR ADVISORS

Low cost and administrative functions are IFAs' top considerations

Online interactions are important, with mobile connectivity less of a concern

The majority of IFAs rely on multiple platforms, especially those with larger businesses

Bigger firms are more able to absorb the costs that come with using multiple platforms

With the ability to achieve economies of scale, larger businesses split their client assets over multiple platforms

The majority of IFAs rely on multiple platforms

Fund supermarkets are rated as the most attractive platform packages

PRODUCT PROVIDERS ARE REGULARLY REVIEWED

Product providers should offer a consistently appealing service as they undergo regular scrutiny from IFAs

Cost sensitivity is the major factor that prompts IFAs to review their platforms

Low fees and administration functions are also significant for selection of pension fund providers

IFAS ARE INCEASINGLY INTERESTED IN USING DFMS

Advisors are focused on moving away from traditional fund selection

Over a third of advisors are using DFMs for client investments

AUM under third-party managers are on the rise, with ample room for growth

DFMs should ensure their products are competitive

Costs and a better investment track record are the top reasons advisors select their DFMs

Concerns over cost and control deter financial advisors from outsourcing to DFMs

APPENDIX

Abbreviations and acronyms

Definitions

IFAs

Methodology

GlobalData's 2016 IFA Survey

GlobalData's 2015 IFA Survey

Bibliography

Further reading

About GlobalData

Disclaimer

List of figures

Figure 1: Platform sales contribute a growing percentage of gross retail fund sales

Figure 2: Platforms should ensure they offer quality administration and reporting functions ...

Figure 1: Platform sales contribute a growing percentage of gross retail fund sales

Figure 2: Platforms should ensure they offer quality administration and reporting functions at an attractive price

Figure 3: Many advisors have yet to introduce mobile capabilities for platform interaction

Figure 4: Over 70% of UK advisors are operating three or more platforms

Figure 5: Smaller businesses are more likely to work with fewer platform providers than larger businesses

Figure 6: Fund supermarkets dominate platform market share in the UK

Figure 7: Old Mutual remains the most attractive platform package in the UK market

Figure 8: Investment product providers need to be prepared for regular reviews

Figure 9: Cost and investment fund range are leading reasons IFAs consider new product partners

Figure 10: When it comes to pension fund providers, advisors look for low fees

Figure 11: More DFMs are offered off-platform

Figure 12: No single provider has a dominant share of the DFM market

Figure 13: Of the advisors using DFMs, many prefer to allocate a minor proportion of client portfolios to them

Figure 14: Better investment ranges and reduced administration drive the use of third-party asset management

Figure 15: IFAs seek low-cost, reputable DFMs

Figure 16: 47.3% of financial advisors review their DFM partners more than once a year

Figure 17: Most financial planners prefer to have control over costs and manage investments rather than outsourcing to a DFM

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