Rdr 2012 jb presentation jan 12 final

Building the client proposition –

some work in progress

January 2012

For professional advisers only – not for onward distribution

Navigating the RDR with J.P. Morgan Asset Management

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Surviving the Storm(August 2007) Opportunities for

investment advisory firms in a changing market

Putting TCF at the heart of the advisory

process: (September 2008)

10 considerations for advisory firms in Treating

Customers Fairly

Changing Fortunes(May 2008)

Setting guidelines for financial wellbeing in the

UK

Reaping Rewards: (August 2009)

Assessing, optimising and releasing the value of a financial advisory

business

Putting a price on financial advice:

(May 2011)Negotiating the transition

from a commission-based to a fee-based

proposition

The Retail Distribution Review:

(October 2010)The challenge and the opportunity for wealth

managers

Professional Connections:

(May 2010)Creating opportunities

between IFAs and other advisory professionals

2007 2008 2009 2010 2011 2012

The RDR ‘to do’ list

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Get all advisory staff to QCF Level

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Determine our charging structure

Decide if we will be independent

or restricted

Determine our client proposition

About our ‘advice users’

45 per cent are retired

Average household income is £25,001 - £50,000

72% claim to be using an IFA and 12% a stockbroker

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Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Q: How old were you when you started using your adviser?

Q: How long have you been using your current adviser?

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Client profile: middle aged – but can be very faithful

Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Scope of advice: consumers expect a pragmatic approach

A financial adviser should be able to provide advise on…

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Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Investment: cost weighed against customisation

Q: Which portfolio management service do you favour - bearing in mind the differing level of cost involved?

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Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Advisory vs DIY: Rich cross-over opportunities

Q: What would be your preferred approach for the following financial-planning activities?

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49% want a task-based service where they only use and pay for an adviser if and when they use them

46% want an ongoing service where they pay for continuous advice and support

Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Your biggest value-add: trusted advice…and superior returns

Q: Having used an adviser, what aspects of their service do you find most valuable/ useful?

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Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Ongoing service: the acceptable cost

Q: As a percentage of your investments what are you willing to pay your adviser?

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47% of clients think their adviser’s charges

are ‘just right’

41% believe they are ‘a bit too expensive’

..but only 4% believe they are ‘far too

expensive’

Don’t knows: I am currently willing to pay – 10.5%; In the future, I am willing to pay – 17.4% Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

Cost of advice: give the client some control

Q: How interested would you be in the following options in order to keep the costs of advice manageable?

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Source: J.P. Morgan Asset Management/Citywire Market Intelligence; Base: 86

8 things we are learning

1. Consumers are happy with a selective range of solutions BUT want an unrestricted range of providers within those solutions

2. Advisers need to have service models to accommodate both ad-hoc and ongoing advice needs

3. Advice needs to be shown to translate into superior returns

4. Funds are fine for portfolio management – so long as the client strategy is customised

5. ‘Advisory self-service’ could be a growing market

6. 0.5-1% seen as acceptable fee range for ongoing advice

7. Consumers are receptive to options to manage the cost of advice

8. When a consumer discovers their ‘Trusted Adviser’ – they stick with them

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Important information

For professional advisers only - not for onward distribution.

Please be aware that this material is produced for information purposes only and should not be taken as or construed as a recommendation or advice. The opinions and views expressed here are those held by J.P. Morgan Asset Management at the time of publication, which are subject to change. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material. JPMorgan Asset Management Marketing Limited is authorised and regulated in the UK by the Financial Services Authority. Registered in England No: 288553. Registered Office: 125 London Wall, London EC2Y 5AJ.

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