UK IFAs, Investment Managers & Platforms 2017
January 2017
29
About the Report
About the Report
Independent financial advisors (IFAs) are a key distribution network for investors in the UK. Product providers will do well to understand the priorities and criteria advisors use in selecting their investment partners and platforms, particularly with a growing tendency to cooperate with discretionary fund managers (DFMs). As nearly all advisors in the UK use a platform (or multiple) to manage their clients' assets, understanding why certain platforms are favored above others remains crucial. Online access to platforms is important for IFAs, which will continue to leverage digital capabilities to remain relevant.
Key Findings
UK fund platforms continue to grow their market share by providing both advisors and direct investors with access to a range of products. In 2015 these platforms accounted for 52% of industry gross retail sales.
The attractiveness of products is driven by cost along with the quality of administrative and reporting functions. Beyond these two features, the investment fund range is also important to advisors.
Investment product providers are regularly assessed by IFAs, with 47.3% carrying out reviews more than once a year.
91% of advisors use platforms, with the majority relying on more than one. The three most widely used platforms are Old Mutual, Fidelity Funds Network, and Aviva.
There is increasing interest in the use of model portfolios and discretionary portfolio management, driven by clients' preference for a better investment range and less administration.
Cost is the main driver for switching platforms, highlighting the increasingly commoditized nature of the service.
Synopsis
GlobalData's "UK IFAs, Investment Managers & Platforms 2017" is a comprehensive analysis of the features and preferences of UK investors and IFA clients. Drawing from our proprietary IFA Survey, the report offers insight into platform characteristics, what drives IFAs when selecting platform providers, and demand for DFMs.
Specifically the report:
Examines the role IFAs have in providing financial services.
Details market developments and the evolving landscape of the UK market.
Analyzes the most important features IFAs consider when selecting platforms.
Identifies the companies that offer the most attractive platform packages.
Examines the criteria for selection of pension fund providers.
Reasons to Buy
Comprehensive overview of what investment product and platform features are of interest to IFAs.
Insight into the IFA market from our UK IFA Survey.
Identify how to remain competitive by understanding IFA preferences.
Products
Products
DFM, discretionary portfolio management, FCA, financial advisors, financial advice, financial planning, IFAs, investments, pensions, RDR, retirement, self-directed investors
Companies
Aberdeen Asset Management, Aegon, Aviva, Axa Elevate, Brewin Dolphin, Charles Stanley, City Asset Management, Cofunds, Cornelian Asset Managers, Fidelity, FNZ technology, Investec, Investment Association, Nucleus, Old Mutual, Premier, Quilter Cheviot, Rathbones, Seven Investment Management, Standard Life, Transact, True Potential, Verbatim, Vestra, Wealth Horizon, Zurich
Table of Contents
Table of Contents
EXECUTIVE SUMMARY
Key findings
Critical success factors
IFAS ARE A KEY DISTRIBUTION CHANNEL
Retail fund distribution increasingly occurs through platforms
Platforms represent a noticeable channel for retail fund sales
Platform consolidation in the UK will be a noticeable trend going forward
PLATFORMS REMAIN THE DOMINANT CHANNEL FOR ADVISORS
Low cost and administrative functions are IFAs' top considerations
Online interactions are important, with mobile connectivity less of a concern
The majority of IFAs rely on multiple platforms, especially those with larger businesses
Bigger firms are more able to absorb the costs that come with using multiple platforms
With the ability to achieve economies of scale, larger businesses split their client assets over multiple platforms
The majority of IFAs rely on multiple platforms
Fund supermarkets are rated as the most attractive platform packages
PRODUCT PROVIDERS ARE REGULARLY REVIEWED
Product providers should offer a consistently appealing service as they undergo regular scrutiny from IFAs
Cost sensitivity is the major factor that prompts IFAs to review their platforms
Low fees and administration functions are also significant for selection of pension fund providers
IFAS ARE INCEASINGLY INTERESTED IN USING DFMS
Advisors are focused on moving away from traditional fund selection
Over a third of advisors are using DFMs for client investments
AUM under third-party managers are on the rise, with ample room for growth
DFMs should ensure their products are competitive
Costs and a better investment track record are the top reasons advisors select their DFMs
Concerns over cost and control deter financial advisors from outsourcing to DFMs
APPENDIX
Abbreviations and acronyms
Definitions
IFAs
Methodology
GlobalData's 2016 IFA Survey
GlobalData's 2015 IFA Survey
Bibliography
Further reading
About GlobalData
Disclaimer
List of Figure
Figure 1: Platform sales contribute a growing percentage of gross retail fund sales
Figure 2: Platforms should ensure they offer quality administration and reporting functions at an attractive price
Figure 3: Many advisors have yet to introduce mobile capabilities for platform interaction
Figure 4: Over 70% of UK advisors are operating three or more platforms
Figure 5: Smaller businesses are more likely to work with fewer platform providers than larger businesses
Figure 6: Fund supermarkets dominate platform market share in the UK
Figure 7: Old Mutual remains the most attractive platform package in the UK market
Figure 8: Investment product providers need to be prepared for regular reviews
Figure 9: Cost and investment fund range are leading reasons IFAs consider new product partners
Figure 10: When it comes to pension fund providers, advisors look for low fees
Figure 11: More DFMs are offered off-platform
Figure 12: No single provider has a dominant share of the DFM market
Figure 13: Of the advisors using DFMs, many prefer to allocate a minor proportion of client portfolios to them
Figure 14: Better investment ranges and reduced administration drive the use of third-party asset management
Figure 15: IFAs seek low-cost, reputable DFMs
Figure 16: 47.3% of financial advisors review their DFM partners more than once a year
Figure 17: Most financial planners prefer to have control over costs and manage investments rather than outsourcing to a DFM
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