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

Impact and unintended consequences of RDR on the UK. Bella Caridade-Ferreira, MD, Fundscape Financial-Clarity Seminar, London, 31st October 2013. Pre-RDR predictions. . Advice will become the preserve of the wealthy. A significant advice gap will open up.

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

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  1. Impact and unintended consequences of RDR on the UK Bella Caridade-Ferreira, MD, FundscapeFinancial-Clarity Seminar, London, 31st October 2013

  2. Pre-RDR predictions  • Advice 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)      

  3. The jury is still out, but in Q1… • 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 Source: Matrix Solutions Financial-Clarity database

  4. …However, H1 is looking better • 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 Source: Matrix Solutions Financial-Clarity database

  5. …Context Source: Matrix Solutions Financial-Clarity database

  6. Q3 - hot of the press! Platforms account for 54% of gross flows in Q313 Gross new sales for Financial Advisers, WMs, and EBC Source: Matrix Solutions Financial-Clarity database

  7. Q3 - hot of the press! Another strong quarter for advised retail. Gross new sales for Financial Advisers, WMs, and EBC Source: Matrix Solutions Financial-Clarity database

  8. Q3 - hot of the press! 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 Source: Matrix Solutions Financial-Clarity database

  9. …Context Source: Matrix Solutions Financial-Clarity database

  10. What’s changed? OR

  11. There may be trouble ahead…

  12. Advice in the UK Pre-RDR advice model Post-RDR advice model WMPrivate banks High-end IFAs WMPrivate banks High-end IFAs HNW HNW ~10-15% of UK population* ~5-10% of UK population* WMs IFAs Banks WMPrivate banks High-end IFAs Mass affluent Mass Affluent IFAs Banks IFAs Banks Retail Retail Retail Zilch Retail * Fundscape estimates

  13. Future of retail? OR

  14. 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

  15. 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 Source: Matrix Solutions Financial-Clarity database

  16. Q3 – hot off the press! ETFs are starting to make a come back - flows are 17% higher than 2012 Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS Source: Matrix Solutions Financial-Clarity database

  17. Q3 – hot off the press! But active funds are also kicking butt – sales are up 54% YOY. Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS Source: Matrix Solutions Financial-Clarity database

  18. Q3 – hot off the press! Multi-manager funds are growing more slowly: up 27% YoY Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS Source: Matrix Solutions Financial-Clarity database

  19. Q3 – hot off the press! ITs the largest gainers: up 93% YOY Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS Source: Matrix Solutions Financial-Clarity database

  20. Thank youBella Caridade-Ferreira, MDbella@fundscape.co.uk+ 44 (0)20 7720 1183

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