The annual report from the Financial Services Consumer Panel in March proved it really is an independent voice. The report supplies telling research for IFAs to use in their dayto-day business.
The report states “Consumers in general are not proactive in their approach to their finances. As a result, they rely heavily on advisers and tend to discover problems only after they have bought.”
Consumers' reliance on advisers shows a continuing need for regulation to address the quality and integrity of advice and all of us must strive to improve service and clarity of information and to continue to build confidence.
The proportion of adults holding pensions (company and personal) is still only 30 per cent and the proportion holding stocks and shares is unchanged from 1999 at 23 per cent.
Just over two-thirds of respondents thought it essential to get advice from a financial adviser but, when it comes to reviewing their fin-ances, people are less inclined to seek advice and two-thirds carry out reviews themselves.
People aged 55 to 64 and 25 to 34 are more likely than the average to review their finances regularly – 41 per cent and 37 per cent respectively.
Growth in the IFA market continued in 2000 and, for individual life and pension products, the IFA channel generated new premiums of around £4,670m, an increase of 6.1 per cent.
The IFA channel represents just under two-thirds of total individual and group life and pension premiums.
This strength is built on several key competencies – independence from any one provider or product, added-value independent advice, strong client relationships and resilience in times of adversity.
The overall product mix continues to be dominated by individual life business although individual pensions have seen a 6 per cent increase in sales since 1999 and are a close second. This increase is due to the introduction of “stakeholder-friendly” pensions with deadlines and greater consumer awareness.
Group pension sales were down but IFAs took 57 per cent of the market share, an increase of about 5 per cent from 1999.
The IFA channel represents 62 per cent of the total single premium business, an increase of 2 per cent over 1999.
Of the annual-premium business in 2000, the majority was individual pensions and the IFA channel has increased market share by 7.4 per cent to 67 per cent. In group pensions, IFAs increased business share by 10 per cent to 77 per cent.
Many of these sales have been in “non-pension” business such as group life, group critical illness and group income protection. This is a great reflection on IFAs embracing stakeholder and the employee benefit sides of this marketing opportunity.
IFAs carried out over 78 per cent of all individual pension business in 2000, increasing by over 6 per cent on 1999 and also show dominance in annuity sales, taking two-thirds of the market in.
What does all this mean?It clearly shows IFAs are the key distribution channel within the UK marketplace and increasing that dominance.
It is strange that the greatest threat to the consumer is the potential reforms to the polarisation rules and the introduction of multi-tied adviser arrangements.
Will this add any greater protection or benefit to the consumer? Will it encourage more foreign competition to come into the market? These are issues that need debating now, in full, and both IFAs and consumers have a big role to play over the next 12 months or so.
I urge everyone to get a copy of the consumer panel's report by emailing firstname.lastname@example.org or tel: 020 7676 9346.
Andrew Bedford is head of marketing at Misys IFA Services