UK IFAs and their Clients; Identifying the IFA client base and how it can be grown.

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Looking forward, growing affluence and an aging population will increase the amount of those seeking advice and bring more potential customers to the IFA target pool. Older clients, particularly those approaching and in retirement, form the current core group of advisor customers. The typical UK IFA client is an older male investor, reflecting the fact that older men tend to be the most affluent demographic group. Consumers who choose professional advice do so in order to receive strategic advice and access to the better range of investments available through professional advisors. The pension freedoms have created a new market for investment advice, as retirees and those approaching retirement assess the wider range of options available. Life events prompt customers to seek out financial advice: the leading motivations among UK consumers are retirement, inheritance, and property purchase-related issues.

Scope

Verdict Financial’s UK IFAs and their Clients report is a comprehensive analysis of the demographics and preferences of UK investors and IFA clients, covering both advised and unadvised investors. Drawing from our 2015 IFA Survey and 2015 Retail Banking Insight Survey, the report offers insight into what characterizes UK investors, what drives investors to seek professional advice, and how to target them. Specifically, the report:

• Analyzes how the changing UK demographics and pensions freedoms have impacted the advice market.

• Examines the demographics and wealth of the UK consumer base, and which segments offer the greatest opportunities for advisors.

• Analyzes how investors have arranged their investments; whether they are advised or unadvised; and through which types of institution they have been arranged.

• Identifies the key drivers and events that prompt investors to seek advice and why some prefer to direct their investments themselves.

• Examines how advisors’ client base is sourced and how to acquire further clients.

• Offers competitive insight into client targeting and digital services.

Reasons to Buy

Identify which client segments offer the greatest opportunity in terms of unadvised wealth.

Understand how to appeal to self-directed investors versus those who are already advised.

Identify how to remain competitive by understanding investors’ motivations and preferences regarding financial advice.

Develop your client targeting strategy by understanding the drivers for seeking investment advice.

Echelon Wealthcare
FCA
Intelliflo
Navigator Financial Planning
PensionBee
Pensions and Lifetime Savings Association
Parmenion
Pension Wise
Postcard Planning
Saga Investment Services
Saunderson House
Scottish Widows
Wealth Wizards.

Table of Contents

EXECUTIVE SUMMARY

Key findings

Critical success factors

THE INVESTMENT ADVICE MARKET IN CONTEXT

The Retail Distribution Review created a gap in the advice market

Simplified advice services address the advice gap

Consumers now have more control over their retirement finances

Many have chosen to access their pensions without professional advice

Not all pension "freedomers" share the same level of financial literacy

Shifting demographics and increasing affluence will grow the potential market

An aging population brings more consumers into the IFA market

THE IFA CLIENT BASE IN FOCUS

Understanding client preferences

Half of UK investors arrange investments directly with providers

Older clients form the core of the IFA market

The advised client base is skewed towards men

Mass affluent investors are a key target demographic

Widowed investors are most likely to rely on advice

Understanding the drivers for seeking financial advice

Clients go to advisors for investment strategy and range of investments

Retirement considerations and life events prompt clients to seek professional financial advice

Securing retirement income motivates investors

HOW TO GROW THE ADVISOR CLIENT BASE

Self-directed investors offer a good client acquisition opportunity

Client prospecting is still very much a traditional affair

Clients are largely sourced through non-digital channels

Most clients are sourced by referrals, meaning that advisors should continue to impress the existing client base

While most advisors now offer digital access, mobile capabilities are lagging

Robo-advisors are an increasingly popular channel

Social media can be an efficient client communication and prospecting tool

APPENDIX

Abbreviations and acronyms

Definitions

IFA/financial advisor

A firm or individual whose primary line of business is providing financial planning and investment advice to customers.

Emerging affluent

Mass affluent

Retail market

Methodology

Verdict Financial's 2015 Independent Financial Advisor Survey

Verdict Financial's 2015 Retail Banking Insight Survey

Bibliography

Further reading

About Verdict Financial

Disclaimer

Table

N/A

Figures

Figure 1: Advisors were most commonly used by consumers opting for drawdown in Q3 2015

Figure 2: The UK affluent population is growing steadily

Figure 3: Growth in the 65+ age segment means more customers in the prime advice-seeking demographic

Figure 4 The majority of UK investors prefer to arrange their investments directly with a provider

Figure 5: There is a large pool of udvised investments among the older generations

Figure 6: Saga Investment Services offers advice for clients at different stages of retirement preparation

Figure 7: Saunderson House caters to the needs of busy professiols

Figure 8: The advised client base is skewed towards men, but only because a far larger share of them are investors

Figure 9: Mass affluent investors have the largest share of udvised investments

Figure 10: Widowed clients have the largest share of advised relationships

Figure 11: The need for an investment strategy draws clients to advisors

Figure 12: Specialist knowledge is the main consideration for consumers in choosing an advisor

Figure 13: Retirement is the leading driver for UK clients to seek professiol advice

Figure 14: Long-term investments are directed towards retirement goals

Figure 15: PensionBee combines clients' pensions pots under a single view

Figure 16: Wealth Wizards offers online retirement and pensions advice

Figure 17: Preference to mage simple investments themselves and the cost of advice drive consumers to self-direct

Figure 18: Client referrals are the leading source of new clients

Figure 19: Telephone calls remain the most common form of client communication

Figure 20: Nutmeg has a straightforward sign-up process

Frequently asked questions

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