Selling financial services to under 35s

Content

• Overview
• Catalyst
• Summary
• Executive Summary
• Market Context
• Most surveyed advisors are independent sole traders with a low average case size
• The majority expect that product sales will remain the same over the next six months
• Distribution Dynamics
• Almost half the advisors have some concerns over the potential of a recession occurring in the next 12 months although a significant number are unconcerned
• 81% of advisors do not actively target the under 35s
• 69% of advisors feel that the under 35s are very important for the future of the financial services market
• market context
• The majority of respondents are sole traders
• The financial advisor market remains dominated by independent advisors
• Most advisors in this survey deal with an average business case size of less than 5,000
• The majority of business is conducted in pensions, life based investments and protection products
• Advisors have lowered their expectations for growth in the future
• The majority expect that product sales will remain the same over the next six months
• The majority of advisors expect life products sales to remain static
• ISAs remain the most likely products to increase their sales over the next six months
• Two-thirds of advisors expect protection product sales to remain static in the near future
• Some advisors predict pension product sales to increase
• Financial advisors have very positive attitudes towards Standard Life, Skandia and Legal and General
• Attitudes have remained similar to those in Q3 2007
• Financial advisors are positive about Invesco Perpetual, Fidelity and Jupiter
• Data
• distribution dynamics
• Almost half the advisors have some concerns over a possible recession occurring in the next 12 months although a significant number are unconcerned
• Advisors expect clients to save more money in a recession while their long term personal finances are likely to be unaffected
• Service and financial stability are considered the most important qualities of a provider in a market downturn
• Having an attractive introductory offer and price were considered to be the least important qualities of a provider in a market downturn
• The majority of advisors have a plan in place in the event of a market downturn
• Income protection, guaranteed equity bonds and capital protected products are the most likely products to become popular if a significant market slowdown occurred
• The majority of advisors feel that providers will not support them adequately in a market downturn
• The majority of advisors claim their average client is over 35
• 81% of advisors do not actively target under 35s
• Most advisors claim they do not target the under 35s because they do not have any marketing strategy
• The majority of advisors target under the 35s with mortgage products
• Most claim that only a small proportion of business comes from the under 35s
• Most of the under 35s business is in mortgages
• Insurance based investment bonds and mutual funds are the least popular products for the under 35s
• Financial obligations and immediate spending are limiting the savings of young clients
• Most advisors have no interest in targeting young clients
• 87% of respondents believe that young people are not adequately educated about their finances
• It is a combined responsibility of schools/government, families and financial advisory industry to educate these young clients
• Media campaigns promoting the need to save and targeted marketing are viewed as the best methods to attract young people as clients
• 69% of advisors feel that under 35s are very important for the future of the financial services market
• Data
• APPENDIX
  • Definitions
  • Pension product definitions
  • Personal Pensions
  • Stakeholder Pensions
  • Group Self-Invested Personal Pensions (Group SIPPs)
  • Employer Sponsored Stakeholder pension (ESS)
  • SIPPs (Self Invested Personal Pensions)
  • Definitions of distribution channels
  • Independent Financial Advisors (IFAs)
  • Tied agents
  • Multi-tied agents
  • Matrix Definitions
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
• List of Tables
  • Table 1: What percentage of your business is conducted in each of the following areas?
  • Table 2: Over the next six months how do you expect sales in each of the following products to change?
  • Table 3: Which of these statements best describes your attitude to these insurers? (Q4 2007)
  • Table 4: Which of these statements best describes your attitude to these insurers? (Q3 2007)
  • Table 5: Which of these statements best describes your attitude to these mutual fund providers? (Q3 2007)
  • Table 6: Which of these best describes your company?
  • Table 7: Under what business model do you operate?
  • Table 8: What is the average case size of the business you deal with?
  • Table 9: What percentage of your business is conducted in each of the following areas?
  • Table 10: What do you expect for the UK financial advice market over the next six months?
  • Table 11: Over the next six months how do you expect sales in each of the following products to change?
  • Table 12: How do you feel about the following insurers?
  • Table 13: How do you feel about the following mutual fund providers?
  • Table 14: To what extent do you agree with the following statements on your clients reactions to their personal finances in a recession?
  • Table 15: How concerned are you about the potential for a recession in the next year?
  • Table 16: To what extent do you agree with the following statements regarding your clients' reactions to their personal finances during a recession?
  • Table 17: Which of the following provider qualities would be more or less important during a market downturn than now?
  • Table 18: Do you have a strategy in place to sustain your business if there is a market downturn in 2008?
  • Table 19: Which of the following products will you see an increase in demand for if there is a significant market slowdown?
  • Table 20: What is the average age of your customer base?
  • Table 21: Do you actively target the under 35 age group?
  • Table 22: What proportion of your business is conducted with those under 35?
  • Table 23: Which savings and investment products are commonly purchased by those under 35?
  • Table 24: What factors limit the attractiveness of saving for younger clients?
  • Table 25: What are the biggest challenges you face in expanding your client base to younger clients?
  • Table 26: Do younger customers receive adequate education about their finances?
  • Table 27: Whose responsibility is it to educate younger people about their finances?
  • Table 28: What could providers do to help you expand your client base to these younger clients?
  • Table 29: How important do you see the under 35 age group being to the future of the financial services market?
• List of Figures
  • Figure 1: The majority of respondents deal with an average case size of less than 5,000
  • Figure 2: Only 15% of advisors claim that they actively target the under 35s
  • Figure 3: 39% of respondents operate as sole traders
  • Figure 4: Over three-quarters of respondents have an independent business model
  • Figure 5: The majority of respondents deal with an average case size of less than 5,000
  • Figure 6: The majority of business is conducted in pension products
  • Figure 7: 70% of respondents expect static or limited growth over the next six months
  • Figure 8: The majority expect the sales of life products to remain the same over the next six months
  • Figure 9: ISA sales are the most likely to increase over the next six months
  • Figure 10: Protection products are expected to have static sales over the next six months
  • Figure 11: Advisors are most upbeat about the sales growth of personal pensions and SIPPs
  • Figure 12: Standard Life remains the most popular insurer in Q4 2007
  • Figure 13: Fidelity is the most popular mutual fund provider in Q4 2007
  • Figure 14: 18% of advisors are very concerned over the potential of a recession occurring in the next 12 months
  • Figure 15: Almost half of the respondents feel that the service of a provider will be much more important in a market downturn than now
  • Figure 16: Having an attractive introductory offer is considered the least important quality of a provider in a market downturn
  • Figure 17: Price is considered to be one of the least important qualities of a provider in a market downturn
  • Figure 18: Most respondents have a strategy in place or plan to react as the market conditions change
  • Figure 19: Advisors are expecting demand for most products to remain the same in a market slowdown
  • Figure 20: 95% of advisors claim their client base has an average age of over 35
  • Figure 21: Only 15% of advisors actively target under 35s
  • Figure 22: 78% of advisors feel that only 0-20% of business comes from the under 35s group
  • Figure 23: Mortgages are the most popular products purchased by clients under the age of 35
  • Figure 24: Young clients lack savings because of financial obligations and immediate spending habits
  • Figure 25: While many advisors are not interested in targeting younger clients, it appears that these clients do not want financial advice and are unwilling to pay for the service
  • Figure 26: Most advisors do not believe that young people receive adequate education about their finances
  • Figure 27: A combined effort from schools, families and the financial advice industry is required to educate young people about their finances
  • Figure 28: Targeted marketing and media campaigns promoting saving are seen as the best strategies for targeting young clients
  • Figure 29: Over two-thirds of advisors believe that under 35s are very important for the future of the financial services market