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Retail Financial Advisors Market Trends Report 2018

  • ID: 4662596
  • Report
  • October 2018
  • Region: Global, Global, United Kingdom
  • 61 Pages
  • IRN Research
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Advisors and Intermediaries Selling Retail Investments are of Increasing Importance to the Retail Investment Product Market

In 2017, financial advisory and intermediary firms generated total revenues of just over £22 billion, of which around £4 billion was generated from advice on and intermediation of retail investment products. The total market rose by 11% in 2017 and further growth of 8% is expected in 2018. Between 2013 and 2017, revenues from all financial advisory and intermediary firms grew by 26%, with the fastest growth coming from mortgage business (103%), then retail investment business (52%) and finally non-investment insurance business (19%).

Advisors and intermediaries selling retail investment are of increasing importance to the retail investment product market.  Retail investment advice has undergone radical change in recent years. While in 2018 around 80% of revenue was generated by charges and fees, less than 40% was in 2013. Revenues from on-going advice and facilitated revenues have also grown in importance recently.

This report considers the retail financial advice and intermediary market, covering regulated and unregulated advice offered to consumers when buying financial products or organising their financial affairs. It also considers intermediary non-advised product sales.  The central focus of this report is the retail investment market, but it also covers the intermediary markets for mortgages and non-investment insurance. This report considers the size of the market, recent trends, forecast for the future and sets out the environmental framework in which advice and guidance are offered today.

Note: Product cover images may vary from those shown
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Executive Summary

  • Around 12,000, mostly small-scale firms
  • Employing over 30,000 advisors
  • The operation of the advisor market is defined by RDR
  • But it is recognised that this has not solved the advice gap
  • So FAMR was undertaken
  • And a review of fund platforms
  • A diverse market
  • A £22 billion market
  • Growth expected in the future, but Brexit is the big unknown
  • Introduction
  • Definition
  • Abbreviations

Market Structure

  • Around 12,000 private advice providers
  • Almost 150,000 registered individuals
  • Most advisory and intermediary firms are small scale operations
  • However, many are part of networks or groups
  • Independent vs restricted advice
  • Fund platforms crucial for the execution-only, non-advised market
  • Publicly funded guidance

Market Developments and Drivers

  • RDR shapes the market
  • Financial Advice Market Review (FAMR)
  • FCA promotes Robo-advice to plug the advice gap
  • Consumers would certainly benefit from advice and guidance…
  • But they continue to handle their financial affairs by themselves
  • Because many have simple financial needs or feel they can do it by themselves
  • And many feel financial advice is too expensive
  • Consumers don’t always act in their own best interests
  • IFAs the main source of regulated advice
  • FCA Fund platform study

The Key Players

  • St James’s Place by far the largest network
  • But the market is very diverse
  • And don’t forget the fund platforms
  • Profiles of selected players

Market Size and Trends

  • Advisors and intermediaries generate over £22 billion in revenue
  • Fees replace commission in the retail investment sector
  • Retail Investment advisors of growing importance to the investment market
  • Facilitated and on-going revenues the growth areas for retail investments
  • Almost 3 million clients receive ongoing advice on retail investments
  • Intermediaries dominate the flow of funds into investment funds
  • Fees and charges the main growth segment for mortgage business
  • Commission the prime source of income for insurance brokers

The Future

  • The Brexit unknown
  • Robo-advice, the great disruptor
  • Human advisors are likely to shift upmarket
  • Forecasts
  • Associations

List of Figures
Figure 1 The number of retail advisory firms*, end 2017
Figure 2 The breakdown of financial intermediary business revenue* by product sold and/or advised on, 2017
Figure 3 The number of retail advisory firms receiving revenue from intermediary activities, 2013-2017
Figure 4 The size analysis of financial advisory firms and mortgage brokers, 2017
Figure 5 The size analysis of insurance brokers, 2017
Figure 6 Breakdown* of retail investment advisory firms by type of advice offered, 2017
Figure 7 UK adult’s knowledgeability with regards to financial matters and products, 2017
Figure 8 UK adults who have had advice in the last 12 months, 2017
Figure 9 The largest financial advice networks (% of investment AR firms as members), 2017
Figure 10 The biggest advisory firms/networks by % of investment CF30 staff employed, 2017
Figure 11 The advice and intermediary revenue of financial intermediaries (£m), 2013-18
Figure 12 Composition of revenue from retail investment business, 2013-18
Figure 13 Retail investment volume product sales by advisors and intermediaries
Figure 14 The percentage of volume product sales made by advisors and intermediaries, 2017
Figure 15 Total advisor charge revenue by method of advisor payment*, 2015-2017
Figure 16 The types of charges imposed by firms advising on retail investments*, 2017
Figure 17 The number of clients/advice services offered by firms advising on retail investments, 2016-17
Figure 18 The source of gross retail sales of investment funds (% of value), 2015-2018
Figure 19 Composition of revenue from mortgage business, 2013-18
Figure 20 Composition of revenue from non-investment insurance business, 2013-18
Figure 21 How advice regulations could apply in the future
Figure 22 Forecast of financial advisor revenue 2017-2022
Figure 23 Forecast of retail investment financial advisor revenue 2017-2022

Note: Product cover images may vary from those shown
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