Bella Caridade-Ferreira, MD, Fundscape Financial-Clarity Seminar, London, 31st October 2013

Bella Caridade-Ferreira, MD, FundscapeFinancial-Clarity Seminar, London, 31st October 2013

Impact and unintended consequences of RDR on the UK

Pre-RDR predictionsAdvice will become the preserve of the wealthy. A significant advice gap will open up.

Advisers will prune their businesses of unprofitable clients (or those unwilling to pay).

Even a proportion of mass-affluent /affluent are expected to be unwilling to pay for advice.

As a result of the three points above, direct-to-consumer (D2C) business will explode.

Charges will be driven down for fund managers and platforms.

Investment solutions will expand and passive business (trackers, ETFs) will grow exponentially.

Increased use of packaged solutions (DFMs, model portfolios, FoFs)

Q1 2013 gross sales marginally higher than Q1 2012: + +1%Aggregation: platforms +12%, L&P: -5.2%, FMG: +7% Direct-to-consumer business up by 32%

Bank business down by 19%IFA business down by 5%IFA numbers down from just over 30,000 in July 2012

to 26,563 in July 2013

The jury is still out, but in Q1…

Source: Matrix Solutions Financial-Clarity database

H1 2013 gross sales considerably higher than H1 2012: +28%Aggregation: platforms +34%, L&P: +40%, FMG: +18% Direct-to-consumer business up by 68%

Bank business up by 5%IFA business up by 20%Employee benefit consultants up 80%Adviser numbers starting to creep up and are 27,607 in Sept 2013

…However, H1 is looking better


…Context


FM39.4%

L&P14.0%

Platform46.6%

0%

20%

40%

60%

80%

100%

2011 2012 YTD 2013

Direct L&P Platform

Q3 - hot of the press!


Platforms account for 54% of gross flows in Q313

Gross new sales for Financial Advisers, WMs, and EBC



Another strong quarter for advised retail.

Gross new sales for Financial Advisers, WMs, and EBC



YTD numbers for customer-facing channels are all up… but some are more up than others

Gross new sales for FAs, WMs, EBCs comparing Jan-Sept 2012 to Jan-Sept 2013

…Context


FM39.4%

L&P14.0%

Platform46.6%

0%

20%

40%

60%

80%

100%

2011 2012 YTD 2013

Direct L&P Platform

What’s changed?

OR

There may be trouble ahead…

Advice in the UKPre-RDR advice model

WMPrivate banksHigh-end IFAs

Mass affluent

WMsIFAs

Banks

RetailIFAsBanks

* Fundscape estimates

Post-RDR advice model

HNWWMPrivate banksHigh-end IFAs

Retail

HNW

WMPrivate banksHigh-end IFAs

MassAffluent

IFAsBanksRetail

Retail Zilch

~5-10% of UK

population*

~10-15% of UK

population*

Future of retail?

OR

Known and unknown unknowns

The clean and superclean share-class debate

Aggregation and/or distribution

Simplified and/or retail advice – the advice gap?

Investment propositions and fund concentration

Passive v actives

Competing products

Q3 – hot off the press!

Passives are up 42% on like-for-like sales in 2012.

Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS



ETFs are starting to make a come back - flows are 17% higher than 2012




But active funds are also kicking butt – sales are up 54% YOY.





Multi-manager funds are growing more slowly: up 27% YoY




ITs the largest gainers: up 93% YOY


Thank you

Bella Caridade-Ferreira, [email protected]+ 44 (0)20 7720 1183

mailto:[email protected]

Documents

Bella Caridade-Ferreira, MD, Fundscape Financial-Clarity Seminar, London, 31st October 2013