The fall and rise of the direct investor - consensus at fs conference october 2011
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The Fall and Rise of the Direct Investor
Andy Glazier
Head of Consensus
Presented to the MRS Financial Services Conference 2011
Lucian Camp
Entire workforce
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2 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Who exactly, and direct to what?
OEICs
SICAVs Unit trusts
Approx. 6m active direct investors in the UK today
A D2C platform market of
£64.9b
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3 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
The abandoned customer
From a funds industry perspective, when I joined the company to
run the retail division, 20% of business was direct to consumers.
We had a hotline and crystal mark literature; none of this happens now however.
We’ve shifted our platform totally to business to business. We still love our direct
customers and give them great service … (BUT)…they have been left alone too
much. The flag that we very much put up is the B2B flag.
I think that there is a big direct to consumer marketplace. I think there is a
perfectly profitable sector which is under-broked at the moment.
MD, pre-eminent global money manager
It’s not in our plan however, to go back there.
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4 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
YEAR Users Population % Pop.
2000 15,400,000 58,789,194 26.2 %
2010 51,442,100 62,348,477 82.5 % Source: ITU
Why the interest in them now …. easy access ….
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5 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Why the interest in them now … familiarity …
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6 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Why the interest in them now … responsibility …
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7 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Why the interest in them now … regulatory pressure …
There will be a need for trusted advisers without a question in the future but RDR has shown that the IFA model is corrupt & what will spring up in its place is a new fee driven model for the mid-market.
Director of a market intelligence/ consultancy for the asset management industry
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8 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
0%
1%
2%
3%
4%
5%
6%
2006 2011 2009
Why the interest in them now … the market …
BoE Base Rate………..
Source: http://www.bankofengland.co.uk/statistics/rates/baserate.xls
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9 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Why the interest in them now … opportunity …
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10 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Late middle-aged Confident hobbyist
Affluent, upper middle class
Avid disciple of FT, Times, maybe even Mail on Sunday money sections
At least we know who we’re dealing with … don’t we?
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11 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Number of people with some savings or investments in the UK
People with savings/
investments 55%
People with no savings or
investments 45%
Number of people with risk-based investments in the UK
Deposit-based savings only
27%
Some risk-based investments
28%
No savings or investments
45%
The active investor market is substantial …
Source: IPSOS MORI Omnibus, November 2010. Unweighted base: 1965 adults. Weighted base: 1960 adults (all findings expressed from weighted base, and excluding don’t know/refused, which was never more than 5%)
Deposit-based savings only
27%
No savings or investments
45%
Involved with risk-based
investments 13%
Not involved with risk-based investments
15%
Number of people actively involved with risk-based investments in the UK
By our reckoning, this leaves us with c6 million people we can describe as active investors ….
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12 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Age Social grade Earnings Sex
Women 36%
Men 64%
£11,500-25,000
19%
<£11,500 - 10%
Over £25,000
71%
AB 50%
C1 30%
C2 12%
DE - 8%
65+ 22%
55-64 23%
45-54 26%
35-44 15%
Under 35 14%
… and represents a broad demographic canvas …
People actively involved with risk-based investments
Source: IPSOS MORI Omnibus, November 2010. Unweighted base: 1965 adults. Weighted base: 1960 adults (all findings expressed from weighted base, and excluding don’t know/refused, which was never more than 5%)
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13 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Rely on adviser but make final decision myself
34%
Consult an adviser but make final decision myself
26%
Take care of my own investments
40%
Which one of the following matches your approach to investing most closely?
Source: Consensus IFS Active Investors Report, April 2011
Active investors still need a helping hand …
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14 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
52%
36%
13%
65%
25%
9%
Interested in investing -happy to spend time on it
Get involved, but don'tget much pleasure from it
Find investing confusingand complicated
All Active Investors Take care of own investments
25% who take care of their own investments don’t really enjoy doing so
… and for many, investing is not much fun …
Source: Consensus IFS Active Investors Report, April 2011
Which one of the following most closely matches the way you think about investing?
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15 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Hargreaves Lansdown has c400,000 customers on the Vantage platform
As of Sept 2010, Hargreaves Lansdown had an impressive 45% awareness across the entire AI universe
So who’s looking after active investors now …?
IFA led platform 25%
Fund manager owned platform
15%
Stockbroker led platform
60%
D2C platform market by provider type and number of customer accounts
Source: IPSOS MORI Omnibus, November 2010. Unweighted base: 1965 adults. Weighted base: 1960 adults (all findings expressed from weighted base, and excluding don’t know/refused, which was never more than 5%)
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16 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
… and who in the future?
Stockbrokers Banks
Affinity groups And, of course ….
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17 MRS FS Conference October 2011 – The Fall and Rise of the Direct Investor
Recruit a new customer base from scratch
The challenges:
… if the gauntlet is taken up …
Target a platform-based investment service to the many investors who are not hobbyists
Key to future is understanding the market, segmenting it and targeting accordingly
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The Fall and Rise of the Direct Investor
Andy Glazier
Head of Consensus
+44 (0)20 7627 7830
www.consensus-research.com
Lucian Camp
Entire workforce
Presented to the MRS Financial Services Conference 2011