The White Paper research study from 1st - The Exchange, entitled: ‘Gaps & Opportunities’, examined the effects of changing market and regulatory conditions in the UK advisory sector.
Key conclusions from the research include:
• a significant advice gap exists which is currently leaving millions of people without proper financial advice: recent research from Zurich shows that over half of the UK population aged 18 and over has never sought advice from a financial adviser, including 84% of 18 to 24 year olds
• many smaller advice firms are under-capitalised and whilst able to provide a good service to current clients, lack the scale and financial security to move beyond this
• the 8 million XY ‘surfers’, already using online banking services and readily open to similar offerings, represent a very powerful online high street for financial services providers
• the continuing regulatory evolution should force a rapid re-assessment of current distribution strategy.
• in the absence of commission, the providers’ relationships with their core distributor, the IFA, will be seriously under threat
• using a web-based distribution model, the astute provider and distributor should capitalise on the lower end ‘sales’ opportunities of direct internet customers and at the same time, use good ecommerce to manage the more advanced needs of distributors and their higher end fee-based clients
David Child, managing director of 1st – The Exchange, explained: “The continuing economic problems, together with the impact of RDR and regulatory change, will not disappear overnight. We believe that the secret to survival for many distributors will be in their ability to industrialise processes - stripping out unnecessary costs and providing efficient, streamlined services to the growing ‘virtual high street’ and internet-savvy population.
“Huge potential exists here for those organisations able to migrate to or launch parallel web-based distribution channels, servicing a new and expanding target market. It is clear that the FSA shares this desire with its comments on the new ‘guided sales’ principles which would ‘encourage customers to go through an automated process that then prompts them to decide what they want and helps them to buy a product.’ And, solutions are already being developed for organisations to take such technology and customise or white-label it to their own requirements - giving rapid entry to market.”
