adviser business planning & segmentation strategies for 2013
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Adviser Business Planning & Segmentation Strategies for 2013. 2011 RDR Survey. Survey ran for 2 weeks in December 2011 The survey saw some 740 respondents and the results, with comments, stretch to over 150 pages. The document makes for compelling reading. - PowerPoint PPT PresentationTRANSCRIPT
Adviser Business Planning & Segmentation Strategies for 2013
2011 RDR Survey• Survey ran for 2 weeks in December 2011
• The survey saw some 740 respondents and the results, with comments, stretch to over 150 pages. The document makes for compelling reading.
• We did it because nobody else had given it a thought
2012 RDR Survey
• In December 2012 we ran a second RDR Survey in association with research company - GfK NOP
• Together, we have been able to generate detailed insights into Adviser business planning and segmentation strategies for 2013
• Introducing Martin Grimwood, Divisional Director Financial Services, GfK NOP
4© GfK 2013
GfK FRS
Centres of Excellence:
• MOI (Innovation and NPD)
• BaCE (Brand & Customer Experience)
• Digital
• Qualitative & Ethnography
Infographics
Market Sciences & data modelling
GfK Financial specialities in both intermediary and consumer research for life, pensions and investments
Data Processing and analysis
Offline data collection
Onlinedata collection
Passive measurement
Data delivery
Longitudinal Consumer Panel
Communities
GfKTube
Mystery Shopping Consumer Trends
GfK Financial
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Understanding of the intermediary sector developed over nearly two decades
6© GfK 2013
Plenty of anger to RDR in the early years
Source: Panacea IFA (This is what my clients think about RDR Mr Sants – Survey): Q9. December 2011
Leavers comments- “I shall be leaving because my business will die”
- “I am winding up the business due to the excesses of RDR”- “Not sure what direction I want to go, retirement looks good at the moment”- “I plan to quit post 2012 as I don’t believe the industry is worth the personal risk given I am liable for every bit of advice until I die”“60% of my colleagues will leave the industry”
Will you and your business be RDR ready by the end of 2012?
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A cultural shift for most IFAs wishing to remain independent
Transactional Relationship (based on money capital)
Portfolio Relationship(based on relationship capital)
Migration to platforms and outsourcing investment
decisions
Challenge in 2-3 years will be to add value
Mike Godfrey – Director Cube Financial Planning
Mark Rodgers - MD Clay Rogers & Partners
‘The concept of “any business is good business” is so out of date, it is laughable,’ ……... ‘The main goal is to engage clients in long-term relationships that are very well remunerated. For this remuneration the client gets a first-class service and uncompromising advice.’
‘We have taken the commercial decision to only engage with clients who meet our minimum criteria from a potential remuneration perspective, as we wish to retain the ability to provide a bespoke personal service….As such, we have tended to deal with a smaller number of wealthier clients.’
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July 2012
Prudential distribution change director Russell Warwick
“Up to 30% of IFAs will become restricted
within the next three years”
However, restricted is now less stigmatised, and there is likely to be significant migration to restricted during 2013
Two definitions of 'restricted‘:
Holding onto trail commission
Retaining referrals
Deciding factors
An IFA who chooses to restrict activities
in some way
A tied agent (sell only own company's
products or funds) products.
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October 2012
October 2012
January 2012
The market is set to undergo a number of changes that will affect the entire industry
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Filling the knowledge gap
Integrating research amongst intermediaries with established proprietary consumer research to provide a 360 view
Intermediary behaviour Investor behaviour
• Understand how intermediaries plan to work in a post-RDR world
• Understand how investors react to the post-RDR world
• Accurate market sizing
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Adviser intentions for 2013
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2012
2011
0 10 20 30 40 50 60 70 80 90 100
20
22
68
66
13
12
Restricted Independent DK
Source: Panacea IFA (This is what my clients think about RDR Mr Sants – Survey): Q10. December 2011GfK / Panacea RDR Readiness Survey Q1a, Q1a2 and Q1e. December 2012
What are your business intentions for 2013? (%)
2011 2012
58%
67%
Are you ready for RDR? – Answering “yes”
Alternative plans for 2013: 17% selling the business 40% continue to operate but no longer offer advice
on investments 43% stating other plans including “will finalise my
exams”, “will be ready ASAP” and “retirement”
20% answering “no”
13% answering “Don’t know”
There has been little movement in IFA intentions since 2011, however, slightly more feel prepared
• 16% Restricted – specialising in a specific product area• 4% Restricted, as an appointed representative/tied agent
• Of those aged 60+, only 59% are ready for RDR with 26% saying “no” and 16% saying “I don’t know”
• Of the “no’s”, only 23% have obtained Level 4 qualification status
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Business Plan
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Polarisation between those IFAs who believe they can retain most clients and those who are targeting only the most profitable
Proportion of clients lost
32
16
15
11
7
5
7
6
More than 75%
50 - 75%
40 - 49%
30 - 39%
20 - 29%
10 - 19%
Up to 10% will be lost
I intend to service all of my existing clients post RDR
What proportion of your client base do you think you will be unable to service post RDR?
Source: GfK / Panacea RDR Readiness Survey Q5. December 2012
52% “I need to be ruthless and focus only on my most profitable clients”
55% “I will be able to retain most of my clients by offering different services to match their needs”
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18
16
31
20
12
2 1
How confident are you that you have adopted the correct segmentation model for your business?
1 Totally confident 2 3 4 5 6 7 Not at all confident
Majority of IFAs are segmenting, but many are late in doing so and there is considerable uncertainty whether they have got it right
Source: GfK / Panacea RDR Readiness Survey December 2012. Q3 / 6 Base: all intending to be Independent advisers post RDR
Only 27% of those planning to be independent next year have finalised their segmentation process ready for 2013 (another 27% are in the process of doing so)
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97 91 3 41Value of known assets
60 23 40 9Product portfolio composition
44 12 56 5No. of investments placed by you
62 28 38 11Life-stage
67 25 33 14Personal income
88 69 12 22Type of current relationship
YesYes
10%+ No Mean
50 16 50 12Paid for advice in the past
70 42 30 16Potential to pay for advice
% segmenting by the following parameters
AUM is the key parameter for advisers segmenting their clients, however relationship and future scope are also important factors
Source: GfK / Panacea RDR Readiness Survey December 2012. Q4b Base: All IFA intending to be Independent advisers post RDR and segmenting
Targeting profitable clients who have the affordability to pay for advice
Identifying likelihood to pay for on-going servicing (reflecting current relationship)
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I need to be ruthless and focus on my most profitable clients?
52% agree
£50k - £100k+ in AUM seems to be the benchmark at which advisers will begin to segment their client base
<£20k £20k – £49k £50k - £74k £75k - £99k £100k - £149k £150k – £249k £250k – £499k £500k+
4%
17%
34%
10%
20%
9%
4%2%
Minimum asset value needed to proactively service a client post RDR
Source: GfK / Panacea RDR Readiness Survey December 2012. Q2 / Q4e / Q5a Base: All IFA intending to be Independent advisers post RDR
43% of those planning to remain independent think that they will lose 10% or more of their client base post RDR
– meaning that there will be an inevitable fallout of orphaned clients through both segmentation and
preference. However, some are planning to offer a reactive, transactional proposition to meet most needs
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A typical differentiated service proposition, ranging from fully bespoke independent advice, through to a transactional service
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However, it is clear that most will offer a transactional service
20
21© GfK 2013Source: GfK / Panacea RDR Readiness Survey Q2. December 2012
Potential business sources in 2013
17% “I intend to diversify by handling wealthier clients’ GI needs” 17% “Workplace
marketing will be an important business stream
23% “Helping local business meet their
auto-enrolment requirements will be an
important source of business
39% “Receiving referrals from solicitors and accountants is very important to my business”
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Independent Restricted
4429
5671
Fee Commission
What proportion of your business is currently fee based vs. commission based? (%)
For IFAs wishing to remain independent, there is a huge gap for them to fill when commission is banned in 2013.
Commission is still a significant contributor to IFA income, and for many a shift to fee only remuneration will be a big bang in 2013
Source: GfK / Panacea RDR Readiness Survey December 2012. Q9
Base: All intending to be Independent advisers post RDR
For those moving to restricted advice the gap is even larger.
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Received in 2011
Expectattion by the end of 2013
0 10 20 30 40 50 60 70 80 90 100
42
38
58
62
30% or less More than 30%
Mean 40%
Proportion of individual turnover from trail commission (%) – all intending to be Independent in 2013
Mean 42%
Independent IFAs believe that their income from trail commission will be relatively unaffected by changes implemented by RDR
On average, surveyed IFAs believe that by the end of 2013, 42% of their individual turnover will still come from trail commission
Source: GfK / Panacea RDR Readiness Survey December 2012. Q8 Base: All intending to be Independent advisers post RDR
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Only a quarter planning on charging an hourly rate for advice, most preferring adviser charging through the product
Fee paid directly by client – hourly rate
Fee paid directly by client – task based
Fee paid directly by client - percentage of amount invested
Adviser charging through the product
Planned charging structures post-RDR
Source: GfK / Panacea RDR Readiness Survey December 2012. Q7 / 8 Base: All intending to be Independent advisers post RDR
Remuneration figure
IFAs will be offering charging solutions to match their differentiated service propositions
No differences by region
25%
42%
55%
72%
£168 p.h.
£219 p.h. (£245 IFA, £190 Retricted)
3-5% (majority)
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Product providers & choice criteria
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Source: GfK / Panacea RDR Readiness Survey Q2. December 2012
Definite trend towards platforms and away from direct interaction with providers
69% “Most of my client investments will be on platforms”
53% “I will have much less direct interaction with product providers in the future”
74% 54%
52%56%
Independent Restrictedvs.
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Panels will include fewer providers, however selection criteria will remain unchanged for now, with the focus being on adviser charging in the short term
Are you planning to increase or reduce the number of providers on your panels/best advice lists post RDR?
Increase Stay the same Reduce Don't know0
10
20
30
40
50
60
70
4
64
13
20
Will the criteria you use to choose providers change?
“Maybe. Greater reliance on platforms / wraps, so as to help cut down administration and time when undertaking reviews”
“I will if possible not use providers who also sell directly to the public”
“If they do not accommodate adviser charging it is unlikely I will use them”
“Must accommodate adviser charging”
Source: GfK / Panacea RDR Readiness Survey December 2012. Q11 & Q12Base: All intending to be Independent advisers post RDR
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Choice criteria won’t change in the immediate future
Only 71 mentioned a change
Q11 Will the criteria you use to choose providers change? If so, how?
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How important these services from product providers are to IFAs - % giving “9” or “10” on a ten point scale where “1” is “not important at all” and “10” is “extremely important”
Helping you target new valuable customers
Helping to develop strategies/activities to increase value from existing customers
Helping you to segment your existing client base
Providing information about your clients existing investments with them
0 10 20 30 40 50 60 70 80
20
13
3
68
Product provider
requirements
• Clear /simple / transparent
products• Products that can facilitate
adviser charging
• Clear information on what
charging models they can and
cannot support
• Guidance / information /
support
IFAs are seeking communication from product providers; information on products, information on commission, and information on clients
Source: GfK / Panacea RDR Readiness Survey December 2012. Q9Base: All intending to be Independent advisers post RDR
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A clear demand for support from providers in an uncertain world
591 individual suggestions
Q9a By way of support, what do you need from providers to support you in a post-RDR world?
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Very few advisers are sure about the future, however those who are put the client at the centre of their requirements
Only 149 individual suggestions“Q10 What new product or service propositions do you want providers to focus on post RDR?
32© GfK 2013
Filling the knowledge gap - 2013 research programme
Integrating research amongst intermediaries with GfK FRS consumer research to provide a 360 view
Intermediary behaviour Investor behaviour
• Understand how intermediaries plan to work in a post-RDR world
• Understand how investors react to the post-RDR world
• Accurate market sizing
Remember
• The biggest resource that Advisers have is their knowledge and experience
• Their biggest strength is the ability to survive despite all that regulation can throw at them
• And if it doesn’t work…as the FSA’s Peter Smith was quoted as saying “We will simply think of something else”!!!!
