Advisory Distributors Tuesday 4 July 2017 SCENE SETTER RESEARCH FINDINGS

Transcription

1 Advisory Distributors Tuesday 4 July 217 Pennyhill Park Hotel, London Road, Bagshot GU19 5EU SCENE SETTER RESEARCH FINDINGS In the run up to A Meeting of Minds Advisory Distributors, we asked you to answer some questions our goal being to capture your thinking at a moment in time. The following are your aggregated responses. We hope you find this snapshot interesting as well as reassuring in other words your peers are experiencing the same challenges and excitements as you are! Due to the demands we are making on you all in connection with the Financial Adviser marketplace, this is a pared down Scene Setter. To give the data more meaning, we have introduced data from previous iterations and from the latest Meeting of Minds Winning Advisers - these are the owner managers of firms which typically have 2M FUM and on average 6 advisers. Contents 1. We started by asking our participants to prioritise the areas that concern them at this moment in time Each six months, we ask your peer group how they feel about the year ahead Before getting to the nitty gritty, lets start by analysing how they all define their businesses We asked respondents for their views on how the numbers have stacked up over the past year and how they predict the numbers are stacking up in the year ahead We then asked how many clients they work with We then asked respondents how they typically charge for financial advice We asked about their percentage use of in-house products versus externally sourced We asked about their percentage use of active versus passive We asked about the offering and the split between discretionary, advisory, execution only and other And what sort of approach they are typically adopting Funds under management In terms of network usage, 71% of our participants do use some network services The combined influence of this group over the world of financial advice We asked how many firms employ paraplanners and if yes how many? We asked firms whether or not they outsource certain aspects of their business We asked participants what support are they looking for from a strategic partner All about platforms The average age of your client base is We asked them how much of their business was pension based And finally what is the split of that pension business between corporate and private P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

2 1. We started by asking our participants to prioritise the areas that concern them at this moment in time. As you can see there isn t much between the top 5 answers, it seems they concern you in equal measure the disruptive new entrants to the industry, the impact of Brexit, geopolitics - market volatility, reputational threat and changing clients demographics. While the Winning Advisers are most concerned about regulation, costs and people. It s obvious that this group is more about the bigger picture issues. Disruptive new entrants to the industry The impact of Brexit Geopolitics - market volatility Reputational threat Changing clients demographics Cyber attack Achieving greater productivity Cost/income pressures Regulation Innovation - keeping up People - finding them/keeping them % 2% 6% 8% 1% 12% 1 2. Each six months, we ask your peer group how they feel about the year ahead. There is nothing particularly scientific about the exercise but the results are remarkably consistent which would indicate some sort of validity. Winning Advisers North Apr Advisory Distributors Jun Winning Advisers South Oct Advisory Distributors 8. Winning Advisers North Apr Advisory Distributors 7.73 Winning Advisers South Oct Advisory Distributors 7.59 Winning Advisers South Apr Advisory Distributors July P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

3 3. Before getting to the nitty gritty, let us start by analysing how they all define their businesses. Please note, participants were able to select more than one definition. Wealth Manager Independent Financial Adviser (IFA) Financial Advisory Distribution Group Chartered Financial Planner Discretionary Fund Manager Retirement/Pensions Specialist Network Employee Benefits Consultancy Other Investment Manager Service Provider Investment Research House Execution Only Investment Service Provider Building Society Trade Association/Body % 2% 6% 8% 1% 12% 1 16% 4. We asked respondents for their views on how the numbers have stacked up over the past year and how they predict the numbers are stacking up in the year ahead. We have drawn a comparison with sentiment expressed at the two Meetings held last year plus the Meeting held the prior November. In terms of clients: Past year Year ahead In terms of headcount - client facing: Past year Year ahead P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

4 In terms of headcount - back office: Past year Year ahead In terms of assets under management: Past year Year ahead In terms of revenues: Past year Year ahead In terms of costs: Past year Year ahead P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

5 5. We then asked how many clients they worked with. Perhaps a little arbitrary we added them all together and came up with averages: Corporate clients Individual clients - 42,18 So, as a group let s say: Corporate clients - 2,52 Individual clients - 1,684,32 6. We then asked respondents how they typically charge for financial advice. This question provided interesting results which can be seen below. It seems the biggest percentage of respondents charge as a combined charging structure. At the last Winning Advisers Meeting the delegates discussed how the vast majority of the market charges % based fees and whether they should stop charging this way and start charging by the hour for the work that has been done? Or could the % base be based on hourly rate? When charging a % based fee on the investment - what happens if the market goes down? Also, many are working with clients in the decumulation phase so the money is going down. Maybe they should have a look at their strategy and follow a combined structure instead. 6% 5% 3% 2% 1% % % Adviser charge per hour ( ) 4 Adviser charge as a percentage of investment (%) 6% Adviser charge as a fixed fee ( ) 5% Adviser charge as a combined charging structure ( ) And the median rate charged per hour looks something like: 1% 3% < per hour 3-4 per hour 4-5 per hour > 5 per hour 6% 5 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

6 7. We asked about their percentage use of in-house products versus externally sourced. The graph is self explanatory, internally sourced products appear to be on the up. 9% 8% 78% 81% 75% 7% 6% 61% 5% 3% 2% 28% 19% 25% 39% Internally sourced Externally sourced 1% % 8. We asked about their percentage use of active versus passive. While last year the direction of travel was clearly away from passive, it seems things are changing. Passive is gaining momentum. 6% 25% 28% 75% 72% Active Passive 28% 72% % 2% 6% 8% And to support that, we thought you might like to see the trend reflected in the Winning Adviser data collected earlier this year. Apr-17 Oct-16 Apr-16 Active Pasive Oct-15 % 2% 6% 8% 1% 6 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

7 9. We asked about the offering and the split between discretionary, advisory, execution only and other. Not surprisingly, discretionary is growing albeit slightly. 8% 7% 6% 5% 3% 2% 1% % 68% 7% 6 57% 3 28% 25% 2% 16% 9% 3% 5% (%) Discretionary (%) Advisory (%) Execution only (%) Other While the Winning Advisers are sticking to advisory Oct-15 Apr-16 Oct-16 Apr-17 1 (%) Discretionary (%) Advisory (%) Execution only (%) Other 7 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

8 1. And what sort of approach they are typically adopting. This is how things have gone for the last 3 years. It seems model allocation is growing versus model portfolios. 45% 35% 3% 25% 2% 15% 1% 5% 19% 16% 15% 22% 2% 31% 39% 36% 23% 16% 26% 27% 7% Jun-15 % (%) Fully Bespoke (%) Model Allocation with minimun tailoring (%) Model portfolios (%) Fund solutions (%) Other 11. Funds under management. 1% 1% 1% 1 < 5M 5M - 75M 75M - 1BN 1BN - 2.5BN 2.5BN - 5BN > 5BN 1 The average company at A Meeting of Minds Advisory Distributors has 1.3BN funds under influence. 12. In terms of network usage, 71% of our participants do use some network services. 13. The combined influence of this group over the world of financial advice. We came up with a number of 19,68 appointed representatives and 3,147 directly authorised 91% of the industry influenced by the August body present at A Meeting of Minds Advisory Distributors! 8 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

9 14. We asked how many firms employ paraplanners and if yes how many? While there seems to be less companies hiring paraplanners, those that have them are hiring more of them each year. 1% 9% 8% 7% 9% 81% 81% 71% 6% 5% 3% 2% 1% 1% 19% 19% 29% Employs paraplanners Doesn t employ paraplanners % In terms of how many paraplanners per firm the average is: P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

10 The Winning Advisers firms on average appear to be using more paraplanners, but hiring less of them per company. There s been a decline from an average of almost 5 to just over 2 paraplanners per firm. Could this change be due to the advances in technology? 9% 8% 7% 6% 5% 3% 2% 1% % 78% 8% 63% 6 Oct-15 Apr-16 Oct-16 Apr Oct-15 Apr-16 Oct-16 Apr-17 Average number of paraplanners per firm 15. We asked firms whether or not they outsource certain aspects of their business. As you can see from the graph below, those that outsource certain aspects of the business, risk profiling has the highest percentage across the industry. 1% 9% 8% 7% 6% 5% 3% 2% 1% % 5 63% Discretionary Fund Management 66% 82% Fund Research 7 9% Risk Profiling WINNING ADVISERS Apr- 17 ADVISORY DISTRIBUTORS July P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

11 Risk profiling - outsourced to: Bordier Cazenove Brooks Macdonald Fusion Wealth Investec Charles Stanley Fund research - outsourced to: Morningstar Square Mile (twice mentioned) RSMR Synaptics Cormorant Capita Strategies Morningstar for SAA Mercer for TAA Martin Churchill (EIS &VCT) DP DFM - outsourced to: Defacto Enable Oxford Risk Evalue (twice mentioned) AON DP FinaMetrica 16. We asked participants what support are they looking for from a strategic partner. 18% 16% 1 12% 1% 8% 6% 2% % 11 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

12 While this is what the Wealth Managers and Private Banks replied last month All about platforms. Maybe there is too much information in this graph, but the idea is to show you in a broad brush way how the platforms are doing in terms of looking after the needs of this cohort. FundsNetwork is in the lead, closely followed by Old Mutual Wealth, Ascentric and Transact. 7IM A J Bell Amber AEGON / Cofunds Ascentric Aviva FundsNetwork (Fidelity) Hargreaves Lansdown Vantage James Hay Novia Nucleus Old Mutual Wealth (Skandia) Pershing Praemium SEI Standard Life / AXA Elevate Transact True Potential Zurich 3% 6% % 9% % 12% 9% 5% 9% 5% % 2% 6% 8% 1% 12% 1 16% 9% 8% 1% 3% % 12 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.

13 18. The average age of your client base is 55. So we were surprised that there was not more interest on sessions around pension freedom. 19. We asked them how much of their business was pensions. 18% 1% 38% 3% % 21% 6% -1% 11-2% 21-3% % 51-6% 61-7% 71-8% 81-9% 91-1% 2. And finally what is the split of pension business between corporate and private. Are we taking advantage of workplace pensions? It seems the number of corporate clients are going down. 1% 9% 8% 7% 6% 5% 3% 2% 1% % 83% 86% 77% 23% 17% 13% Corporate Private We very much hope you have found this profile of your industry of interest and broadly in line with what you would expect. If you have any questions about any aspect of the research do please call Owen James at and speak to Evie Owen or James Goad. Thank you. 13 P a g e Do please call us on +44 () or evieowen@owenjamesgroup.com. Thank you for reading.