Robust IFA sector enters 'brave new world'
- New figures from unbiased.co.uk reveal the current ‘State of the IFA Nation’
- Almost a 10% rise in member firms since depolarisation
- Almost two thirds of IFAs now have an online presence
- 27% increase in IFAs offering fees-only advice
- Over half of firms now have IFAs with incremental qualifications / designations
New figures from unbiased.co.uk, the organisation promoting the benefits of independent financial advice, reveal that the world of the IFA is rapidly changing. Since depolarisation last year, when the new advice model was introduced, there has been a notable change in the make up of the IFA community, not least significant growth. In fact, the number of IFA firms has increased by almost 10%, a clear indication that the sector is more robust than ever.
There have been over 600,000 searches (up 13% on last year) undertaken through unbiased.co.uk over the last year, and consumer demand is now having a real 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 fully embracing their online presence. Nearly two thirds (63%) of IFAs now 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.
This is very significant as 92% of people requesting details of local IFAs through unbiased.co.uk now 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 than ever before. 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 unbiased.co.uk’s database currently hold over 20,000 verified incremental qualifications / designations between them.
Consumers understand that financial decisions can be tough and many are now 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. The increased desire for retirement planning has also meant that incremental pensions qualifications are also popular and are currently held by over half of IFAs (52%). This is a 57% increase on last year.
However, new areas of specialism and changing consumer demand have also led to IFAs seeking new qualifications. There has been a staggering 231% increase in IFAs holding qualifications in Long Term Care, and a 160% increase in IFAs qualified to give advice on tax planning.
Five years ago unbiased.co.uk 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 certainly proving to be a popular option.
According to unbiased.co.uk, 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, unbiased.co.uk handled 138,157 requests for details of local IFAs, a 13% rise on the same time last year. And it seems that 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, when the government brought in a new simplified set of pensions rules, is having a lasting affect.
Specialist advice
There is now increasing consumer demand for new areas of specialism and IFAs are certainly keeping up with this demand. Although investment and savings advice is still the most common competency for IFA firms to hold, there has suddenly been an increase in IFAs offering advice in specialist investments. In fact, the number of IFAs advising on ethical investment has increased by 56% with 734 firms now offering this advice compared to 471 firms who did so last year.
Consumer demand for ethical investment advice has actually increased by a staggering 100% in the last 12 months and IFAs are starting to respond to this increased demand.
Sep-05 | Sep-06 | Annual change | |
Email address | 7789 | 8553 | 10% increase |
Web address | 4823 | 5590 | 16% increase |
IFA top 8 product specialisms | Sep-05 | Sep-06 | Annual change |
Investment & Savings | 8201 | 8563 | 4% increase |
Personal Retirement Planning | 7967 | 8315 | 4% increase |
Personal Protection | 7651 | 7842 | 2% increase |
ISAs / Unit Trusts | 6180 | 6856 | 11% increase |
Mortgages | 5467 | 5650 | 3% increase |
Group Pensions / Stakeholder | 4344 | 4436 | 2% increase |
Taxation Planning | 3842 | 4197 | 9% increase |
Personal Stakeholder Pensions | 2622 | 3177 | 21% increase |
Payment method offered by IFA | Sep-05 | Sep-06 | Annual change |
Fees Only | 147 | 186 | 27% increase |
Commission or Fees | 8481 | 8718 | 3% increase |
Gender of IFA available | Sep-05 | Sep-06 | Annual change |
Male IFA Only | 6277 | 6247 | 0.5% increase |
Female IFA Only | 240 | 276 | 15% increase |
Both Male & Female | 2111 | 2381 | 13% increase |
Total IFAP membership | 8628 | 8904 | 3% increase |
Incremental qualifications / designations above benchmark held by IFA | Sep-05 | Sep-06 | Annual change |
General qualifications | 4300 | 4821 | 12% increase |
Mortgage qualifications | 4226 | 5343 | 26% increase |
Tax qualifications | 678 | 1766 | 160% increase |
Pension qualifications | 2952 | 4641 | 57% increase |
Long Term Care qualifications | 160 | 530 | 231% increase |
Saving and Investment qualifications | 1916 | 2301 | 20% increase |
Corporate qualifications | 136 | 396 | 191% increase |
David Elms, Chief Executive of unbiased.co.uk comments, “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.”
Consumers can obtain details of local IFAs by visiting www.unbiased.co.uk or by calling 0800 085 3250. To find an IFA who best matches their needs, consumers can tailor their search by selecting from a host of criteria including product specialisms, IFAs with additional qualifications, certain payment options, or they can state a preference to see a male or female IFA.
For monthly updated information on State of the IFA Nation, please visit http://www.unbiased.co.uk/ifa/resources/research/state-of-the-ifa-nation/
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For further information please contact:
David Elms | Laura Wood/Jonathon Grove |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3689 / 020 7294 3653 |
020 7833 3131 |
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For expert comment or case studies from over 200 media-friendly IFAs, journalists should call unbiased.co.uk’s Media Services hotline on 020 7294 3682 or search online at www.unbiased.co.uk/media
1. Independent Financial Adviser Promotion
Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 20,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice.
IFA Promotion is sponsored by 31 leading financial institutions, and in the past 12 months, over 600,000 consumers and businesses used unbiased.co.uk to find local independent financial advice.
IFA Promotion 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 consumer’s choice, wherever they live in the UK.
Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
2. Independent Financial Adviser Promotion’s sponsors
Aberdeen Asset Management | London Mortgage Company |
Abbey | Lincoln Financial Group |
AEGON Scottish Equitable Plc | Mortgage Express |
Alliance Trust | National Savings & Investments |
AXA Life | NatWest Business Banking |
Bright Grey | New Star Investment Funds |
BUPA Health Services | Norwich Union Life |
Canada Life Ltd | Prudential |
The Children’s Mutual | Scottish Life |
Clerical Medical Investment | Scottish Life International |
Defaqto | Scottish Widows Plc |
Friends Provident | Skandia UK Group |
GE Life | Standard Life Assurance Company |
INVESCO Fund Managers Ltd | UnumProvident |
Legal & General | Webline Limited |
Zurich Intermediary Group |
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