It said there has been a notable change in the make up of the IFA community and the growth was an indication of how robust the sector was.
There have been over 600,000 searches (up 13% on last year) undertaken through IFAP over the last year, and consumer demand is having an impact on how IFAs, and the organisations that they work in, conduct their business.
Technology on the up
IFAs recognise that the web is the research tool of choice amongst consumers seeking financial advice and many are now embracing their online presence. Nearly two-thirds (63%) of IFAs have a website compared to just over half (54%) who did so 12 months ago. The number of IFAs with an email address has also increased by 16% in the last year, meaning that 96% of member firms are now contactable online, an important move according to IFAP as 92% of people requesting details of local IFAs through do so online.
The gender divide is slowly narrowing
Financial advice has traditionally been a male domain but now consumer demand and a shift in attitude has meant that more women are choosing to be IFAs. Over a quarter of firms (27%) now have a female IFA and over the last year there has been a 15% increase in women-only firms.
However, just as many enquirers search for a male IFA as they do a female, with almost 2,000 consumer searches having gender as a focus.
Incremental qualifications / designations over and above benchmark are now key
Whilst IFAs are required to hold minimum qualifications in order to provide financial advice, many are now choosing to study for additional exams. 52% of member firms now have IFAs with incremental qualifications / designations, and the 17,200 registered individuals on IFAP’s database currently hold over 20,000 verified incremental qualifications / designations between them.
Consumers understand that financial decisions can be tough and many are demanding that IFAs have the right qualifications to give them specialist advice. Gaining incremental qualifications in core subject areas is clearly seen as significant with over 5,343 IFAs (60% of members) holding a mortgage qualification, 26% up on last year.
Five years ago IFAP added a qualifications section into its ‘Find an IFA’ search and 25% of consumers are now using this search criteria to make sure that the IFA they are choosing has the right knowledge for them. This figure is likely to keep growing as consumers get savvier.
Fees
IFAs are required to offer customers a fee-payment option, although other advisers may choose to. Consumer demand however suggests that the transparency of paying a fee (or negotiating fee offset commission) for advice is proving to be a popular option.
According to IFAP, so far this year, 16% of consumers looking for an IFA have stipulated that they want a ‘fees only IFA’.
Advice drivers – how is consumer demand also affecting IFA businesses?
In the third quarter of 2006, IFAP handled 138,157 requests for details of local IFAs, a 13% rise on the same time last year. And it seems the appetite for retirement planning advice was a key driving force behind this increase, with over 40,000 of these requests (29%) searching for personal retirement planning advice. This suggests that A-Day is having a lasting affect.
David Elms, chief executive of IFA Promotion, commented: “Over the last few years, the advice industry has rapidly changed. Regulatory changes coupled with a more informed consumer, have led to IFA firms re-evaluating their business models. The client is king and IFAs are responding to consumer demand – but there is still more that they can do.
“Despite many IFAs adapting and enhancing their businesses, the fact that there is still some disparity between what IFAs are offering and what clients want shows that many IFAs still need to wake up and face this brave new world of fee based advice, new technology and incremental qualifications head on.”
