IFA PROMOTION GENERATES UP TO 23 MILLION FOR IFAs in 2002 AND AS MUCH AS 16.5 MILLION MARGINAL PROFIT FOR PRODUCT PROVIDERS, SAYS MERCER
[Chart of 1999-2002 income and value generated by IFAP attached].
A record 315,000 people contacted IFAP during 2002 to get the details of IFAs in their area, up 20% on the previous year. The Mercer research is based on 2,876 returned questionnaires sent to a sample of enquirers several months beyond first contact, to establish what action they took after using IFAPs Find an IFA services, and the end result. The findings of the survey show that 43% of hotline callers and 37% of online IFA searches went on to visit a member IFA.
The research also highlights that those people who go on to make a purchase buy an average of 1.4 products, each sale generating an average 500 total IFA commission. 77% of single premium sales were lump sum investment products, with the remainder personal pension business. In addition 89% of regular premium income is from personal pension business and the rest from protection.
Using the research Mercer has calculated the value of IFAPs activities to both member IFAs and sponsor product providers. It has based its calculations on two scenarios: a lower calculation assuming that non respondents to the survey are half as likely as respondents to have purchased a product and a higher calculation assuming non respondents are equally likely to have purchased a product.
Mercers figures demonstrate that the value added for product providers far exceeds the 2.7m they contribute to fund IFAP each year.
Additional value for product providers | Lower | Upper |
Total new premium income | 190m | 360m |
New annual premium equivalent | 30m | 56m |
New mortgage lending | 360m | 680m |
Marginal profit (embedded value basis) | 8.75m | 16.5m |
In addition Mercer calculates IFAPs activities will have generated as much as 23 million of initial and discounted renewal commission for member IFAs. IFAs pay a nominal one off membership fee to join IFAP, but no annual fee.
Additional value for IFAs | Lower | Upper |
Initial commission | 11.75m | 22m |
Discounted value of renewal commissions | 0.50m | 1.25m |
Total | 12.25m | 23.25m |
John Whitworth, of William M. Mercer, commented: This is our fourth annual report quantifying in concrete terms IFAPs contribution to the industry, and with each report this contribution becomes even greater in relation to the organisations running costs.
David Elms, Chief Executive of IFA Promotion, added: 2002 was a phenomenal year for IFAP, a year in which we generated 315,000 leads for our IFA members, translating into as much as 23 million in commission. In addition, in terms of new business generated, our sponsors have seen a return on sponsorship of up to six times. Naturally were delighted that, despite the downturn in the economy, we have managed to drive up value delivered to our members and sponsors substantially.
- ends -
[GRAPHIC OF YEAR-ON-YEAR IFA PROMOTION VALUE ATTACHED]
1.Below is a flowchart of the upper figures from the Mercer report:
Value Flowchart | Hotline | Online |
(A) Enquiries received | 80,207 | 236,537 |
(B) Prudent estimate of the number of enquiries per individual | 1.11 | 1.83 |
(C) Adjusted enquirer numbers | 72,300 | 129,300 |
(D) Proportion visiting an IFA | 43% | 37% |
(E) Number visiting an IFA | 31,100 | 47,800 |
(F) Average Cost per IFA Visit | 40 | 17 |
(G) Proportion purchasing a product | 41% | 43% |
(H) Number purchasing a product | 12,800 | 20,600 |
(I) Average number of sales per purchasing customer, adjusted so that "don't knows" are treated as non-purchasers. | 1.22 | 1.51 |
(J) Number of product sales | 15,600 | 31,100 |
(K) Average commission value per sale (including discounted value of renewal commission). | 510 | 490 |
(L) Subtotal of commission | 8.0m | 15.25m |
TOTAL VALUE OF COMMISSION | 23.25m | |
(M) Average product provider embedded value profit per sale | 390 | 340 |
(N) Total |
For further information, please contact:
David Elms Richard Winder John Whitworth
Chief Executive Lansons Communications Mercer Risk, Finance & Insurance Consulting
IFA Promotion 020 7490 8828 01372 389 617
020 7833 3131
For expert comment or case studies from over 160 media-friendly IFAs, journalists should call IFA Promotions Media Services hotline on 020 7294 3682 or search online in Media Services at www.unbiased.co.uk
2. Independent Financial Adviser Promotion
IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 10,000 firms of independent financial advisers across the
IFA Promotions believes Independent financial advice should be:
Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
Convenient. IFAs should be available in the location of the consumers choice, wherever they live in the
Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
- Independent Financial Adviser Promotions sponsors
AMP NPI | Old Mutual Asset Managers |
AXA | Prudential |
Barclays Global Investors Funds | Scottish Equitable Plc |
Bright Grey | Scottish Life |
BUPA | Scottish Mutual Assurance Plc |
Scottish Provident | |
Clerical Medical Investment Group | Scottish Widows Plc |
Eagle Star | Selestia |
Friends Provident | Standard Life Assurance Company |
GE Life | Swiss Life ( |
INVESCO Fund Managers Ltd | Skandia UK Group |
Legal & General | The Childrens Mutual |
National Savings & Investments | Winterthur Life UK Ltd |
Zurich Life Assurance Company |