Impact and unintended
consequences of RDR on
the UK
Bella Caridade-Ferreira, MD, Fundscape
Financial-Clarity Seminar, London, 31st October 2013
Pre-RDR predictions
Advice will become the preserve of the wealthy. A
significant advice gap will open up.

Advisers will prune their businesses of
unprofitable clients (or those unwilling to pay).

Even a proportion of mass-affluent /affluent are
expected to be unwilling to pay for advice.

As a result of the three points above, direct-toconsumer (D2C) business will explode.

Charges will be driven down for fund managers
and platforms.

Investment solutions will expand and passive
business (trackers, ETFs) will grow exponentially.

Increased use of packaged solutions (DFMs, model
portfolios, FoFs)

The jury is still out, but in Q1…
Q1 2013 gross sales marginally higher than Q1 2012: +
Aggregation: platforms
+12%, L&P: -5.2%, FMG: +7%
Direct-to-consumer business up by
Bank business down by
IFA business down by
32%
19%
5%
IFA numbers down from just over
to
+1%
26,563 in July 2013
Source: Matrix Solutions Financial-Clarity database
30,000 in July 2012
…However, H1 is looking better
+28%
Aggregation: platforms +34%, L&P: +40%, FMG: +18%
H1 2013 gross sales considerably higher than H1 2012:
Direct-to-consumer business up by
Bank business up by
IFA business up by
68%
5%
20%
Employee benefit consultants up
80%
Adviser numbers starting to creep up and are
Sept 2013
Source: Matrix Solutions Financial-Clarity database
27,607 in
…Context
100%
80%
FM
39.4%
Platform
46.6%
60%
40%
20%
L&P
14.0%
0%
2011
2012
Direct
L&P
YTD 2013
Platform
£25,000
£20,000
2012
2013
33.4%
£15,000
£10,000
14.6%
£5,000
5.4%
£0
IFA
Source: Matrix Solutions Financial-Clarity database
WM
D2C
1.3%
Bank
2.3%
EBC
Q3 - hot of the press!
Platforms account for 54% of gross flows in Q313
Gross new sales for Financial Advisers, WMs, and EBC
Source: Matrix Solutions Financial-Clarity database
Q3 - hot of the press!
Another strong quarter for advised retail.
Gross new sales for Financial Advisers, WMs, and EBC
Source: Matrix Solutions Financial-Clarity database
Q3 - hot of the press!
YTD numbers for customer-facing channels are all up… but some are
more up than others
Gross new sales for FAs, WMs, EBCs comparing Jan-Sept 2012 to Jan-Sept 2013
Source: Matrix Solutions Financial-Clarity database
…Context
100%
80%
FM
39.4%
Platform
46.6%
60%
40%
20%
L&P
14.0%
0%
2011
2012
Direct
L&P
YTD 2013
Platform
£25,000
£20,000
2012
2013
33.4%
£15,000
£10,000
14.6%
£5,000
5.4%
£0
IFA
Source: Matrix Solutions Financial-Clarity database
WM
D2C
1.3%
Bank
2.3%
EBC
What’s changed?
OR
There may be trouble ahead…
Advice in the UK
Pre-RDR advice model
HNW
Post-RDR advice model
WM
Private banks
High-end IFAs
HNW
~10-15% of WMs
IFAs
population* Banks
WM
Mass
~5-10%
of banks
Private
Affluent
UK
High-end IFAs
population*
Mass
UK
affluent
Retail
IFAs
Banks
Retail
Retail
Retail
* Fundscape estimates
WM
Private banks
High-end IFAs
IFAs
Banks
Zilch
Future of retail?
OR
Known and unknown unknowns
The clean and superclean share-class debate
Aggregation and/or distribution
Simplified and/or retail advice – the advice gap?
Investment propositions and fund concentration
Passive v actives
Competing products
Q3 – hot off the press!
Passives are up 42% on like-for-like sales in 2012.
Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS
Source: Matrix Solutions Financial-Clarity database
Q3 – hot off the press!
ETFs are starting to make a come back - flows are 17% higher than 2012
Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS
Source: Matrix Solutions Financial-Clarity database
Q3 – hot off the press!
But active funds are also kicking butt – sales are up 54% YOY.
Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS
Source: Matrix Solutions Financial-Clarity database
Q3 – hot off the press!
Multi-manager funds are growing more slowly: up 27% YoY
Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS
Source: Matrix Solutions Financial-Clarity database
Q3 – hot off the press!
ITs the largest gainers: up 93% YOY
Gross new sales for Financial Advisers, WMs, EBCs, D2C and Banks/BS
Source: Matrix Solutions Financial-Clarity database
Thank you
Bella Caridade-Ferreira, MD
bella@fundscape.co.uk
+ 44 (0)20 7720 1183