Spanish Financial Advice Market

Spanish Financial Advice Market published by Datamonitor in October, 2009. This report consists of 30 pages and the price starts from US $ 1695.

Introduction

Abstract

Introduction

The recession is causing investors to seek advice, and FS providers are focusing their attention on their advisory models.

Scope of this research

• Structure of the Spanish advisory market including distribution data.
• HNW investors' views of, and use of, financial advice based on Datamonitor' s proprietary survey
• Spanish consumers' trust in banks and independent financial advisors based on results from Datamonitor' s proprietary survey.
• Regulatory environment for financial advice in Spain.

Research and analysis highlights

The dominance of the banking sector can be explained by the strength of the branch networks built up by Spanish banks, which tend to be able to forge strong links with customers due to the fact that each branch serves relatively few clients.

Despite the high levels of switching behavior seen, it remains likely to be constrained by the general public' s slightly lower trust for financial advisors and brokers. Even after the establishment of MiFID in 2007, which was with the intention of increasing the quality of financial advice, consumers remain distrustful of financial advisors.

Over 40% of wealth managers believe that one of the most effective strategies to increase wallet share in Spain comes through increasing face-to-face contact. Through face-to-face interaction, financial advisors are able to suggest and promote other complementary financial packages and thus increase wallet share.

Key reasons to purchase this research

• Understand the structure of the Spanish financial advice market, and the broader financial services distribution channels.
• Gain an insight into what customers are demanding from their financial advisors, both now and in the future.
• Discover what impact regulation has had on the financial advice market landscape in Spain.

Table of Contents

OVERVIEW

• Catalyst
• Summary

EXECUTIVE SUMMARY

• Market structure
• Regulatory developments
• Customer demands
  • (Untitled sub-section)

MARKET STRUCTURE

• Spain' s financial intermediary market is relatively weak compared to its neighbors'
  • Spain has 20,000 financial intermediaries, mainly in banks, and 10,000 ancillary financial advisors
  • The Spanish banking sector remains the strongest distribution channel for financial products
  • Nearly a third of all financial products are sold through intermediaries in Spain
  • The Spanish financial advice market is dominated by tied advisors

REGULATORY DEVELOPMENTS

• The regulatory landscape: the Bank of Spain and the CNMV
• The AIF and ANAF have been actively promoting increased awareness of the advisory industry
  • The AIF has called for more regulation of issues related to financial advisors

• The European Commission has introduced a number of regulatory reforms affecting the financial advice distribution channel in Spain in recent years
  • (Untitled sub-section)
  • Financial advisors need to ensure that the right product reaches the right consumer as regulatory pressure mounts
  • MiFID may not have all the answers but is a step in the right direction for the financial advice market

• Financial advice qualifications are important for building investor trust in the sector
  • The creation of a financial advice certificate may go some way towards allaying investor trust issues
  • EFPA is active in setting high-quality standards for educational programs, examinations, certifications and ethical behavior in the Spanish market

SERVICING CUSTOMERS

• Spanish HNWs have a high appetite for risk but a fairly low level of financial knowledge, leading to a need for guidance by their financial advisor
  • Spain' s HNWs are risk-loving, fairly financially unsophisticated and at risk of ‘going it alone'
  • Spain' s HNWs want their advisors to have a view about how long the downturn will last, and to bring them investment opportunities to profit from it

• HNW demands for the future revolve around a mix of ‘safe' and higher risk investments
  • Foreign currency, private equity and property funds will be demanded by the majority of Spanish HNWs in two years
  • Spanish HNWs are not yet ready to embrace equities or mortgage financing, but will be in two years' time

• Leveraging HNW customers, and attracting new ones, relies on contact, pricing and proactive advice
  • Advice from wealth managers: face-to-face contact and preferential pricing are the keys to increasing wallet share in Spain
  • Advice from wealth managers: increased communication is the key to customer retention in Spain

• The downturn offers opportunities for financial advisors who are responsive to their clients
  • The majority of Spain' s retail customers seek advice before financial decisions, mainly from their primary bank
  • The Spanish advice market looks to remain depressed for primary banks over the next six months but offers opportunities for the more astute financial advisor
  • The downturn offers opportunities for financial advisors to gain custom

• The recession may call for a change to the traditional banking model within Spain
  • (Untitled sub-section)

APPENDIX

• Definitions
  • IFA
  • Tied agents

• Acronyms
• Methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Branches per thousand members of the population
• Table: Breakdown of financial intermediaries by type for select European countries

FIGURES

• Figure: Spain has 20,000 intermediaries with more than 10,000 other financial support intermediaries
• Figure: Nearly a third of life and pensions premiums are sold through intermediaries
• Figure: The vast majority of the Spanish financial advice market is made up of tied advisors
• Figure: Spanish HNWs reveal a strong appetite for risk coupled with a weaker knowledge of financial products compared to the global average
• Figure: Spanish HNWs are at risk of trying to manage their money on their own, relying on a good understanding of risk and return
• Figure: Spanish HNWs demand knowledge of the financial crisis and how it can be turned to their advantage
• Figure: Foreign currency, private equity and closed-ended property funds will be the main interest for Spanish HNWs in two years' time
• Figure: Spain' s HNWs aren' t showing as strong a taste for underpriced equities and mortgage finance deals as other HNWs
• Figure: Face-to-face contact is the best technique for increasing wallet share followed by preferential pricing, which is particularly effective in Spain.
• Figure: Over 40% of wealth managers believe increased interaction with HNWs is the key to client retention
• Figure: The majority of Spanish consumers would seek professional advice before making financial decisions
• Figure: Consumers reveal preferences for professional advice from their primary bank
• Figure: Spanish consumers are now prepared to shop around more and therefore will need professional advice
• Figure: Spanish consumers are more distrustful of financial advisors/brokers than the global average

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