LONDON: J.P. Morgan Asset Management helps IFAs identify the attributes for success in a fee-based advisory world

Aug 20, 2012

  • The latest Retail Distribution Review (RDR) report outlines the key advice services for which consumers are most willing to pay for
  • £50,000 gross household income is the critical threshold for UK advice-users
  • Advice-users are most willing to pay for portfolio adjustment and for help avoiding losses
  • Download the report at jpmorgan.am/proposition

London, August 20 2012 - A new in-depth paper from J.P. Morgan Asset Management quantifies consumer appetite in the UK for fee-based advice, and identifies the different services and approaches that are likely to appeal to different types of consumers looking for advice.

“Winning Propositions: The consumer market post-RDR” is designed to help IFAs make the transition from commission to fee-based charging by analysing the triggers that are most likely to compel consumers to seek out advice in the first place, the attributes and marketing approaches that maximise a firm’s appeal to prospective clients and the services, approaches and characteristics that ultimately enable firms to secure their status as “trusted adviser” among fee-paying clients.

The J.P. Morgan Asset Management report draws on exclusive research across more than 2,000 mass affluent to high-net worth individuals1, as well as one-to-one interviews with advisory firms that have already successfully established fee-based propositions.

Jasper Berens Head of UK Funds at J.P. Morgan Asset Management commented: “J.P. Morgan Asset Management has dedicated much of the last six years to helping financial advisers navigate the challenges created by RDR through the J.P. Morgan Asset Management Academy and several white papers. For this, our latest RDR report, we had some simple goals: to assess the type of advice and services consumers are most willing to pay for; and, in turn, to identify the attributes that advisory firms will need to demonstrate – both to attract fee-paying clients initially and retain their business year-on-year.”

Key findings include:

Post-RDR advisory landscape - The report reveals that one in eight (13%) individuals from mass-affluent to high-net-worth households are specifically likely to seek out an ongoing fee-based service. However a further 40% are receptive to task-based advisory services. More than 80% will seek professional advice to some degree – with only 19% wanting to be fully self-directed. £50,000 gross household income is the critical threshold for the UK advice market and among this group, 75% had used an adviser in the past and 85% stated they were willing to use one in the future. Interest in using a professional adviser peaks among individuals with a household income of £150,000 to £250,000.

Key advice triggers - The need for expertise and lack of own knowledge was identified as the most common trigger for seeking out professional financial advice. Retirement concerns continue to dominate as the key area for seeking out advice, followed by investments and mortgages. Retirement planning is a concern for three-quarters (75%) of respondents and half of those said they would want a professional to research and/or set up an appropriate pension for them. Only a quarter stated they are confident enough to both research and set up a pension plan for themselves.

Winning attributes - A firm that can immediately grasp a prospect’s needs and demonstrate a clear track record of results for existing clients has the most appeal for prospective advice-users. Once using a service, advice-users will be most willing to pay a fee to an adviser that demonstrates proactivity in the shape of ongoing portfolio adjustments, regular reports and early warning of market volatility and financial events. The value of this increases as income and asset of advice-users rise: 24% of advice-users with assets of £500,000+ are “very willing” to pay for ongoing portfolio adjustments.

There is a strong appetite among consumers to pay for early warning of market volatility, while paying for new investment ideas scores lower, suggesting investors are more willing to pay to help avoid losses than to maximise potential gains.

Communication preferences - Overwhelmingly advice-users want to communicate with their adviser by email primarily, and face-to-face as a secondary preference. While social media and smartphone functionality are only preferred by a minority, but a sharply rising level of interest among under-35s suggest these may be important tools in the future.

Berens continued: “Our research reveals that the most sought-after client segment – those expressly seeking to pay for ongoing advice is relatively small – and firms seeking to service this segment really need to be on the ball in terms of the service and features they offer. However there is also a large proportion of mass affluent and high-net worth households seeking less conventional approaches to getting advice such as task-based and guided support. Firms that can think more creatively about how they can advise and service advice-seekers may discover a large and interested market out there.”

-Ends-

For further information please contact:
Media relations: Jane Drew/Ben Larter
Telephone: 020 7742 6326/2112
Email:
jane.e.drew@jpmorgan.com
benjamin.g.larter@jpmorgan.com

Lansons Communications
Katherine Hobby
Telephone : 0207 566 9704
Email: Katherineh@lansons.com

Notes to Editors

1 Winning Propositions: The consumer market post-RDR:

  • J.P. Morgan Asset Management enlisted Ledbury Research to survey over 2,000 (2,028) individuals with a gross household income in excess of £50,000 about their needs and preferences regarding financial advice. One-to-one interviews were also conducted with a number of advisory firms that have already successfully established fee-based propositions.
  • In a previous J.P. Morgan Asset Management report, we identified £55,000 gross household income as a tipping point where consumers become significantly more interested in seeking out professional financial advice. For the purposes of this report, we therefore only surveyed consumers with a gross household income of £50,000+ – rising to £500,000+.

About J.P. Morgan Asset Management

J.P. Morgan Asset Management is part of JPMorgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US $1.3 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at June 30 2012) and offices in 41 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

J.P. Morgan Asset Management is a trading name of J.P. Morgan Asset Management Marketing Limited, which has issued this material in the United Kingdom and which is authorised and regulated by the Financial Services Authority. Registered in England No. 288553. Registered office: 25 Bank Street, Canary Wharf, London E14 5JP.

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