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UK IFAs, Investment Managers, and Platforms

  • February 2016
  • -
  • Verdict Financial
  • -
  • 23 pages

Summary
Independent financial advisors (IFAs) are a key distribution network for investment managers, meaning that understanding IFAs' preferences is crucial for investment product providers seeking to succeed through this channel. Over the past decade platforms have emerged as the channel through which both advisors and direct retail investors increasingly access investment products: over half of gross retail sales were conducted through platforms in 2014. Most advisors rely on multiple platforms in serving their clients, reflecting the fact that platforms differ in terms of their pricing and service offering.

Key Findings
- The attractiveness of platforms is first and foremost driven by the investment fund range they offer. Another key consideration is investment fund returns. Beyond products and performance, low costs are important to advisors.

- Investment product providers are regularly reviewed by IFAs. 30% review their investment product providers quarterly and 45% do so annually.

- Platform sales account for a growing percentage of gross retail fund sales. 94% of advisors use platforms, with the majority relying on more than one. The three most widely used platforms are Old Mutual, Cofunds, and FundsNetwork.

- There is increasing interest in the use of model portfolios and discretionary portfolio management driven by clients' preference for specialist advice and the need for additional expertise where it is not available in-house.

- Online is the main channel of communication. Nearly three quarters of IFAs communicate with investment providers online on a weekly basis.

Synopsis
Verdict Financial's “UK IFAs, Investment Managers, and Platforms” is a comprehensive analysis of what UK IFAs value in their investment product providers and the platforms that they use. Drawing from our 2015 IFA Survey, the report offers insight into which platforms advisors use, the key features they value, and what motivates them to consider switching providers.

The report also offers insight into:

- The importance of IFAs as a distribution channel

- What motivates IFAs to rely on third-party asset managers

- How to cultivate relationships with advisors

Reasons To Buy
- Receive a comprehensive overview of what investment product and platform features IFAs look for.

- Get fact-based insight into the IFA market from our proprietary 2015 IFA Survey.

- Identify how to remain competitive by understanding IFA preferences.

Table Of Contents

UK IFAs, Investment Managers, and Platforms
Table of Contents
EXECUTIVE SUMMARY
Key findings
Critical success factors
IFAS ARE A KEY DISTRIBUTION CHANNEL
Retail fund distribution increasingly occurs through platforms
PLATFORMS ARE A SIGNIFICANT CHANNEL FOR ADVISORS
Key product features
Fund range and fund performance are IFAs' top considerations
Platforms should note IFAs' cost-conscious nature
Online access is a necessity for advisors
The majority of IFAs rely on multiple platforms
Fund supermarkets are the platforms used most widely and most often
Fund supermarkets are rated as the most attractive platform packages
PRODUCT PROVIDERS ARE REGULARLY REVIEWED
IFAs review providers on at least an annual basis
Shortcomings in fund ranges and performance prompt platform reviews
Keeping charges competitive is key to retention
IFAS ARE INCREASINGLY INTERESTED IN USING DISCRETIONARY FUND MANAGERS
Assets under management under third-party managers remain a fraction of advisors' total client assets
Asset managers should position themselves as offering strong specialist expertise
REGULAR TRAINING HELPS CEMENT ADVISOR RELATIONSHIPS
Staying informed is important to IFAs in a post-RDR world
MiFID II will still allow investment product providers to offer benefits to advisors
Online is the leading communication channel
APPENDIX
Abbreviations and acronyms
Definitions
IFA
Methodology
Verdict Financial's 2015 IFA Survey
Bibliography
Further reading
About Verdict Financial
Disclaimer

List of Figures
Figure 1: Platform sales contribute a growing percentage of gross retail fund sales
Figure 2: Platforms should ensure they offer an attractive fund range
Figure 3: Platforms should address advisors need for digital access
Figure 4: Fund supermarkets are the most widely used platforms
Figure 5: IFAs find the Skandia/Old Mutual platform package most attractive
Figure 6: Investment product providers should be prepared for regular reviews
Figure 7: The investment fund ranges and returns offered elsewhere are leading reasons to consider new product partners
Figure 8: The possibility of lower costs motivates IFAs to consider switching providers
Figure 9: Clients' preference for specialist advice drives the use of external experts
Figure 10: Training is key in building relationships between IFAs and investment product providers
Figure 11: Product providers should accommodate IFAs' need for regular communication

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