Practical Intelligence Barometer Summer 2012

Christopher Ambler Managing Director 91-93 Farringdon Road London EC1M 3LN

[email protected] +44 (0)7890 992785

www.fundamentals.co.uk

About the Barometer • Intelligent independent insight • A joint initiative – Fundamentals and Broadgate Mainland • Our commitment to the industry we serve

Fundamentals • Bringing fresh thinking to communication in the investment market through: • Insight • Intelligence • Inspiration

Topics • Major issues • The RDR • Which investment model? • Best Investment Houses • Views on DFMs • Best platforms • Marketing communications insights

IFA issues • RDR still top of mind • Concern about “a combative regulator” • Continuing lack of clarity • Fear of loss of confidence by investors • How to deal with lower value clients • Sheer volume of changes and issues • Finding income for clients

RDR readiness • Most are ready • Acceptance that the quality of advice will improve but... • Corporate culture more important than regulation • Clients have no interest, and... • Trust and service more relevant to clients than Independent or Restricted titles

“Clients don’t care, look at St James’s Place... they want people that can build relationships”

“The banks seem hell bent on destroying any vestige of trust in financial services”

“You have to earn client’s trust...they expect you to lead... that’s why they pay us”

“The issue is, can I afford the client?”

Investment selection models chosen 45%   40%  

Investment  selec+on  models  chosen  -­‐  %  

35%   30%   25%   20%   15%   10%   5%   0%  

Con,nue  to   Using  model   provide  whole   por>olio   of  market   solu,ons   advice  through   pla>orms  

Partnering   with  DFMs  

Using  one  of   the  growing   number  of   mul,-­‐asset   funds  

A  variety  of   the  above/ other  ideas  

Other  

“Using a model portfolio solution takes us away from choosing funds and, generally speaking, IFAS are not good at fund selection. They rely too heavily on one factor – past performance”

“We use multi asset funds for lower end clients”

“I think model portfolios are totally unjustified because everyone is an individual”

“Some allocation to multi asset but as DFMs, it seems like dilution and duplication”

Attitude to DFMs • Focused on HNW clients • IFAs find it difficult to articulate how they evaluate DFMs • Relationship • Track record (concern about start ups) • Investment process/solutions • Duplication of process

• Some see DFMs as a problem “I will still be blamed” • VAT issue • Costs in general – impact on client and themselves

Best platforms • No platforms seem to stand out • Most use a variety • Consensus that there will be consolidation post RDR • Service and flexibility important e.g. “in species transfers” • Some still doing business direct

“We use AXA Elevate due to lower charges and more flexibility on switching”

“The obvious ones are Skandia, Cofunds and Fidelity Funds Network”

“We like Transact but they may get squeezed out”

“In my opinion the next storm will be about how the platforms attract business, and TCF”

“Vast majority of our new business is on Nexus because it offers open market access”

Business model impact Component buyer Decision maker

Continuing interest in investment houses and their propositions Need for a deep relationship with top companies

Segmented service

Solutions buyer

Decision maker and influencer

Influencer

Continuing interest in investment houses and their propositions

Declining interest in investment houses and individual fund propositions

Need for a deep relationship with top companies

Focus on brand and category expertise – Indirect relationship

Business model impact Solutions buyer

Component buyer

Segmented service

Decision maker

Decision maker and influencer

Continuing interest in investment houses and their propositions

Continuing interest in investment houses and Declining their propositions

Need for a deep relationship with top companies

Need for a deep relationship with top companies

Influencer

interest in investment houses and individual fund propositions Focus on brand and category expertise – Indirect relationship

Business model impact Component buyer Decision maker

Continuing interest in investment houses and their propositions Need for a deep relationship with top companies

Segmented service Decision maker and influencer Continuing interest in investment houses and their propositions Need for a deep relationship with top companies

Solutions buyer Influencer

Declining interest in investment houses and individual fund propositions Focus on brand and category expertise – Indirect relationship

Business model impact Component buyer

Segmented service

Solutions buyer

Decision maker

Decision maker and influencer

Influencer

Continuing interest in investment houses and their propositions

Continuing interest in investment houses and their propositions

Declining interest in investment houses and individual fund propositions

Need for a deep relationship with top companies

Need for a deep relationship with top companies

Focus on brand and category expertise – Indirect relationship

BRAND, REPUTATION AND CATEGORY EXPERTISE RELEVANT TO ALL

More distant relationship developing between some advisers and investment houses

rp et ua Ne M il  W   l   & oo  G df   o Ju rd   pi te Di Fid r   m eli en ty sio   In nal He vest   nd ec e   Ab rso er n   de Sk en   a Bl ndi ac a   k Sc roc St hro k   an d da ers rd   Ne  Life pt   u Ar ne   te m L Th ion is   re tr ad us n t   JP eed  M le or   ga n  

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Spontaneous mentions of Investment Houses Spontaneous  men,ons  of  Investment  Houses  

12%  

10%  

8%  

6%  

4%  

2%  

0%  

M   o   Pe &  G rp   et ua Fid l   el it Ju y   pi t In er   v He este nd c   er Sc son hr od   e Ne rs   w Ab ton er   d Fir een st  St   a Ne te   p JP tun e   Th Mo   re rga ad n ne   e Lio dle   nt ru Sk st   an di a   Av iva   AX A   sc

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Total mentions 40%  

35%  

%  

30%  

25%  

20%  

15%  

10%  

5%  

0%  

Which campaigns stand out? • Move away from component investment advice makes product advertising and PR less relevant • Most have problems recalling campaigns, even when prompted However... • Strong campaigns with distinctive identity the exception • Agreement that brands are most important to them and their clients

Which campaigns stand out?

Henderson

Schroders

How do they like to receive propositions? • Email favoured by majority • Subject line is key, • Accessibility of content • Knowledge based communications favoured • Products propositions need a strong and relevant story

• Need to build a dialogue

Stepping stones Marketing Communications Sales

Attraction

Engagement

Dialogue

Investment

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Frequency of visits to investment house websites 35%  

30%  

25%  

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Reasons for visits

80%   70%   60%   50%   40%   30%   20%   10%   0%  

et Fid ual   el it M y   & Ju G   pi I n St v ter an es   da te c JP rd  L    M ife Sc org   hr an Ab ode   e r He rde s   nd en er   Ne son w   Ne to Le pt n   gg un  M e   as Ot on   he rs  

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Which websites? 80%  

70%  

60%  

50%  

40%  

30%   Visited  

20%   Most  useful  

10%  

0%  

   

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Reason to attend seminars %  

90%   80%   70%   60%   50%   40%   30%   20%   10%   0%   %  

Most useful publications 0-­‐10   6.2   6.0   5.8   5.6   5.4  

0-­‐10  

5.2   5.0   4.8  

Financial   Adviser  

Money   Marke9ng  

On  or  off  line  versions  

Investment   New  Model   Investment   Week   Adviser   Adviser  

Most useful on line sources Score  0-­‐10   8.0   7.0   6.0   5.0   4.0  

0-­‐10  

3.0   2.0   1.0   0.0  

City  Wire  

Fundweb  

Trustnet  

Morningstar  

Eq u e   pr in t  

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Readership in 2 years time %  

70%   60%   50%   40%   30%   20%   10%   0%   %  

Conclusions Continuing sense of embattlement and need for support and ideas

RDR is having a major impact on the way IFAs relate to Investment Houses therefore...

The importance of brand and reputation is growing

Quality of data and segmentation will become increasingly important, and...

Conclusions Continuing sense of embattlement and need for support and ideas

RDR is having a major impact on the way IFAs relate to Investment Houses therefore...

The importance of brand and reputation is growing

Quality of data and segmentation will become increasingly important, and...

Conclusions Continuing sense of embattlement and need for support and ideas

RDR is having a major impact on the way IFAs relate to Investment Houses therefore...

The importance of brand and reputation is growing

Quality of data and segmentation will become increasingly important, and...

Conclusions Continuing sense of embattlement and need for support and ideas

RDR is having a major impact on the way IFAs relate to Investment Houses therefore...

The importance of brand and reputation is growing

Quality of data and segmentation will become increasingly important, and...

Conclusions Increasing need to communicate knowledge and expertise rather than just products

Shift from off to on line channels accelerating

Increasing need for a B2C presence

Important to use different channels and disciplines to build a dialogue

Conclusions Increasing need to communicate knowledge and expertise rather than just products

Shift from off to on line channels accelerating

Increasing need for a B2C presence

Important to use different channels and disciplines to build a dialogue

Conclusions Increasing need to communicate knowledge and expertise rather than just products

Shift from off to on line channels accelerating

Increasing need for a B2C presence

Important to use different channels and disciplines to build a dialogue

Conclusions Increasing need to communicate knowledge and expertise rather than just products

Shift from off to on line channels accelerating

Increasing need for a B2C presence

Important to use different channels and disciplines to build a dialogue

About Opinium • Opinium Research is a leading B2B & B2C market research agency based in London • We work with organisations to define and resolve commercial issues, using consumers to generate and deliver actionable and innovative insights to help them make accurate and strategic business decisions • We match our approach, and custom build research solutions to the specific requirements of each assignment both in the UK and across multiple geographies. We make sure we understand our clients objectives in order to deliver a solution that precisely fits their needs • Opinium operates a high quality UK consumer panel and various specialist consumer and B2B panels including a small business owners and IFA panel • Opinium regularly conducts research amongst general consumers, high net worths, c-class executives and IFAs • Some of our clients include:

Contact us For further information contact Alastair Waldron on 07831 480 543. [email protected]