A Meeting of Minds Winning Advisers 17 October 2017, Pennyhill Park. The Scene Setter Results

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1 A Meeting of Minds Winning Advisers 17 October 2017, Pennyhill Park The Scene Setter Results

2 Scene Setter Research Winning Advisers October 2017 How do you define your business (please tick the description you feel is most relevant) Clearly the term IFA is still very much alive and kicking! 19% 19% 62% Chartered Financial Planner Independent Financial Adviser (IFA) Wealth Manager

3 Regulation Achieving greater productivity People - finding and keeping them Innovation - keeping up Cost/income pressures Changing client demographics Geopolitics - market volatility Cyber attack Reputational threat Sourcing new clients Disruptive new entrants to the industry As business leaders you regularly cite the following areas as being of concern to you. We asked you to prioritise them. The responses are weighted. The impact of Brexit

4 How do you feel about the year ahead? IFAs Advisory Distributors Wealth Managers & Private Banks Spring 2015 Autumn 2015 Spring 2016 Autumn 2016 Spring 2017 Well if you think you are less than joyous at least spare a thought for the poor old wealth managers drowning under the pressures of MiFID II!

5 How did your business numbers change over the past year in terms of the number of clients % 94% 93% 88% 75% 22% 13% 6% 3% 4% 3% 3% 4% More Same Fewer Oct-15 Apr-16 Oct-16 Apr-17 Oct-17

6 How did your business numbers change over the past year in terms of the number of client facing employees % 41% 38% 63% 58% 58% 53% 39% Oct-15 Apr-16 Is this because you can t find them? % 29% 13% 6% 6% 4% More Same Fewer Oct-16 Apr-17 Oct-17

7 How did your business numbers change over the past year in terms of your back office headcount? % 62% 56% 52% 5 46% 42% 32% 32% 23% 15% 9% 6% 3% More Same Fewer 4% Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Bearing in mind that the October dates are the southern IFAs then one might conclude they are beginning to take on more back office people but it s not clear.

8 How did you do in terms of assets under management over the past year? 12 Bullish! % 96% 93% 9 89% 11% 6% 3% 4% 4% 4% 6% 4% More Same Fewer Oct-15 Apr-16 Oct-16 Apr-17 Oct-17

9 How did your business numbers change over the past year in terms of revenues? % 97% 96% 85% 81% Oct-15 Apr-16 Oct-16 Apr % 11% 3% 4% 3% 3% 1% More Same Fewer Oct-17

10 How did your business numbers change over the last year in terms of costs 10 Looks like they have definitely increased % 83% 71% 67% 64% Oct-15 Apr % 28% 24% 16% 13% 6% 8% 3% More Same Fewer 4% Oct-16 Apr-17 Oct-17

11 How do you think your business numbers will change over the next year in terms of clients % 89% 89% 83% 83% Oct-15 Apr % 14% 11% 6% 7% 4% 3% More Same Fewer Oct-16 Apr-17 Oct-17

12 How do you think your business numbers will change over the next year in terms of your client facing employees? % 63% 54% 46% 38% 58% 54% 43% 38% 33% Oct-15 Apr-16 Oct-16 The more numbers are definitely slowing. Could this be that it is just too hard to find them? 2 Apr % 3% More Same Fewer 4% Oct-17

13 How do you expect your business numbers to change over the next year in terms of your back office headcount? % 5 47% 45% 46% 43% 4 38% 32% 31% 3% 3% More Same Fewer 4% Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Well half of you are taking on more back office staff slightly more than a year ago.

14 How do you expect your business numbers to change over the next year in terms of assets under management? % 96% 91% 9% 3% 4% More Same Fewer Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 No doubt in which direction you are going when it comes to more assets under management.

15 How do you expect your business numbers to change over the next year in terms of revenues 12 And there is another positive % 93% 96% 86% 11% 6% 7% 4% 3% More Same Fewer Oct-15 Apr-16 Oct-16 Apr-17 Oct-17

16 How do you expect your business numbers to change over the next year in terms of your costs? 10 92% Costs definitely on the way up % 68% 7 54% 31% 24% 26% 21% 14% 4% 6% 4% 4% More Same Fewer Oct-15 Apr-16 Oct-16 Apr-17 Oct-17

17 We asked if you felt you might like any support from your strategic partners? 3% 7% 3% 3% 3% 3% 3% 24% None Training Marketing Support Full Service Technology (back end) Apart from those of you who said no thanks, the majority of support sought was around training and marketing. 7% 7% 1 21% Technology (front end) Asset Allocation Expertise Products Risk Analytics Recruitment and induction Technical & Compliance support

18 The average age of your clients The average age of your clients is 56. And you have on average 1,445 (to be precise).

19 How many advisers do you employ? On average slightly more than 5! 5.45 to be precise

20 And of the 83% of you who employ paraplanners You employ 3.26 ish.

21 We asked you which platforms you use? The following shows the percentage of respondents using the different platforms. Old Mutual Wealth (Skandia) Transact FundsNetwork (Fidelity) AJ Bell James Hay Aviva Standard Life/AXA Elevate Novia ARC (AEGON)/Cofunds Nucleus 7IM SEI Parmenion Ascentric Zurich True Potential Pershing Hargreaves Lansdown Vantage Adam & Co

22 We asked about your use of products in house versus outsourced 27% 63% In house Outsourced

23 We asked you about your use of active versus passive funds? % 74% 77% 62% 67% Oct-15 Apr-16 Comparing this year with last year, there is a decrease in active investing as reported for the northern iteration % 26% 23% 38% 33% Oct-16 Apr-17 Oct-17 Active Passive

24 We asked you about your funds under management? 29% 4% 4% 50M- 100M 13% 100M- 150M 13% 150M- 200M 200M- 250M 17% 250M- 300M 13% 8% 300M- 400M 400M- 500M 500M - 750M On average firms represented at this Meeting have 291M under management and if you multiply that by the number of firms represented, the total FUM in the room is about 16bn!

25 We asked you to describe the sort of service you offer 10 No change clearly focused on offering financial advice % 8 82% 85% 83% Advisory Discretionary 2 23% 2 17% 15% 17% Oct-15 Apr-16 Oct-16 Apr-17 Oct-17

26 We asked you which approach you use for investment portfolios? 21% 17% 13% 4% 71% Centralised Investment Proposition - in house Centralised Investment Proposition - third party Centralised Retirement Proposition - in house Centralised Retirement Proposition - third party The establishment of an in house CRP is a new trend. 33% 38% Discretionary Fund Management - in house Discretionary Fund Management - third party Fully Bespoke Investment Service - in house Fully Bespoke Investment Service - third party

27 We asked you how much you charged per hour? 9% 27% < 200 It would seem that the majority of you who do charge hourly, do so somewhere between 200 and %

28 We asked you how you typically charge for providing investment advice to your clients? 35% 26% A fixed fee 39% A percentage of investment A combination

29 If you were in charge of the Regulator what would you be focusing on? Clear costs in actual fund management. Ensuring that products do not end up as a selling scandal later down the line. Ensuring that the flow of new regulation is better paced and can be incorporated into businesses in an effective manner Financial education for the masses - from primary level. Advice gap being dealt with coupled with robo advice that works for all. Fixing the broken FSCS & PI cover model Getting rid of all percentage based charges Getting rid of 'high risk' advisers High risk investment areas of market and companies deviating from the main stream Improving transparency of investment charges Increasing training and the importance of qualifications.

30 If you were in charge of the Regulator what would you be focusing on? Part 2. Decreasing regulation for the sake of regulation. Also less use of jargon. Making life simpler. More practical ways of implementing genuine client protection and not tick-box overkill. Policing rather than policy writing Promoting new entrants Public awareness of advice model Quality of advice Reducing bureaucracy so advice and barriers to entry will result in future advice availability. Joined up approach with the FOS Reducing the burden of regulation, which causes increased costs to the end client Value for money for retail investors

31 We hope you found this research of interest. If you would like to discuss any aspect of it, do please call Evie Owen at Owen James on or her at