debating the ifa business model - morningstar,...
TRANSCRIPT
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Debating the IFA Business Model
× Nigel Whittingham, Joint Managing Director, OBSR, a Morningstar
company
× Rob Stevenson, Kingmakers
×Jasper Berens, Head of UK Retail, JP Morgan Asset Management
×Gary Shaughnessy, Managing Director, UK Retail, Fidelity
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Key areas for Debate
×
Independent vs. Restricted Advice
×
Value of advice vs. asset management
×
Passive vs. active asset management
×
Use of risk based solutions and model portfolios
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Setting the Scene
Rob Stevenson
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Today’s Math Lesson
×
Cheap credit + rocket scientists / inept credit
ratings agencies x world wide banking industry = credit crunch
×
Credit crunch –
any reasonable plan B = world-wide recession
×
Recession + credit rating agencies looking to get back on front foot = global austerity
×
Austerity + commodity price inflation = interest rate hike?
×
Royal wedding + 4 extra days off x USA getting their man x Man Utd
in the final of the Champions League = who can tell why the markets react the way they do.
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RDR –
nice idea, but…
×
Where are we right now?
×
Many of the key final rules now published
×
Issues remain (cash rebates etc…)
×
Major challenges thrown up by RDR
×
Scope of advice required for ‘independent’
label
×
Commission ban (and its many consequences)
×
Increased level of qualifications
×
Many others, intended and unintended…
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The UK IFA market
×
Circa 7,500 IFA firms, 30,000 RI’s
×
Figure for firms has fluctuated with light M&A activity, consolidators actually aggregating and some post-credit crunch start-ups
×
Strong anecdotal evidence that many advisers expect to obtain qualifications and sort gap fill in time
×
Networks lead the way on ‘introducer’
deals
×
Many IFA firms claim to have a service proposition
×
So, what’s going to happen next then?
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Crystal ball gazing
×
Banks will go ‘restricted’
–
but not because they cannot compete with IFAs!×
Traditional product Providers will once again go d2c×
A great many IFA’s
will find it impossible to offer ‘independent’
advice and join most DFM’s
as ‘restricted’
×
IFA’s
(or whatever they are called) will compete with other IFA’s
(and DFMs, Private Banks etc…) for the first time and post-2012, consolidation will happen
×
The notion that a client must pay 250bps per annum on a retail investment will be challenged…
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Opportunities for IFAs
×
You own the last mile to the client
×
You can determine the suppliers who will bid to provide the various elements of the proposition
×
You can set the price…
×
But you absolutely must deliver!
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Key areas for Debate
Independent vs. Restricted Advice
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Key areas for Debate
Value of advice vs. asset management
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Key areas for Debate
Passive vs. active asset management
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OBSR Ratings Performance UK All Companies Sector
Source: Morningstar Direct. 31/03/2011
January 2002 – March 2011
Past performance is not an indicator of future performance.
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OBSR Ratings Performance Global Growth Sector
Source: Morningstar Direct. 31/03/2011
January 2002 – March 2011
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OBSR Ratings Performance Europe ex UK Sector
Source: Morningstar Direct. 31/03/2011
January 2002 – March 2011
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OBSR Ratings Performance Asia Pacific ex Japan Sector
Source: Morningstar Direct. 31/03/2011
January 2002 – March 2011
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OBSR Ratings Performance North America Sector
Source: Morningstar Direct. 31/03/2011
January 2002 – March 2011
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Key areas for Debate
Use of risk based solutions and model portfolios
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