Consensus presentation to the 2011 FS Conference - October 13th 2011

1. The Fall and Rise of
the Direct Investor
Presented to the MRS Financial Services Conference 2011
Andy Glazier Lucian Camp
Head of Consensus Entire workforce

2. Who exactly, and direct to what?
Approx. 6m active direct investors in the UK today
OEICs A D2C
platform
market of
£64.9b
Unit trusts
SICAVs
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3. 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.
It’s not in our plan however,
to go back there.
MD, pre-eminent global money manager
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4. Why the interest in them now …. easy access ….
YEAR Users Population % Pop.
2000 15,400,000 58,789,194 26.2 %
2010 51,442,100 62,348,477 82.5 %
Source: ITU
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5. Why the interest in them now … familiarity …
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6. Why the interest in them now … responsibility …
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7. 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. Why the interest in them now … the market …
BoE Base Rate………..
6%
5%
4%
3%
2%
1%
0%
2006 2009 2011
Source: http://www.bankofengland.co.uk/statistics/rates/baserate.xls
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9. Why the interest in them now … opportunity …
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10. At least we know who we’re dealing with … don’t we?
Affluent, upper middle class
Confident hobbyist Late middle-aged
Avid disciple of FT, Times, maybe even Mail on Sunday money sections
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11. The active investor market is substantial …
Number of people with some savings Number of people with risk-based
or investments in the UK investments in the UK
No savings or Deposit-based
People with no People with investments savings only
savings or savings/ 45% 27%
investments investments
45% 55%
Some risk-based
investments
28%
Number of people actively involved with
risk-based investments in the UK
No savings or Deposit-based By our reckoning, this leaves us
investments savings only with c6 million people we can
45% 27%
describe as active investors ….
Involved with
risk-based
investments
13%
Not involved with
risk-based investments
15% 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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12. … and represents a broad demographic canvas …
People actively involved with risk-based investments
65+
22%
55-64 AB Men
23% 50% Over 64%
£25,000
71%
45-54
26%
C1
30%
35-44 £11,500-
15% 25,000 Women
C2 19% 36%
12%
Under 35
14% DE - 8% <£11,500 - 10%
Age Social grade Earnings Sex
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. Active investors still need a helping hand …
Which one of the following matches your approach to investing most closely?
Rely on adviser
but make final
Take care of my decision myself
own investments 34%
40%
Consult an adviser
but make final
decision myself
26%
Source: Consensus IFS Active Investors Report, April 2011
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14. … and for many, investing is not much fun …
Which one of the following most closely matches the way you think about investing?
All Active Investors Take care of own investments
52%
Interested in investing -
happy to spend time on it 65%
36%
Get involved, but don't
get much pleasure from it 25% 25% who take care of their
own investments don’t
really enjoy doing so
13%
Find investing confusing
and complicated 9%
Source: Consensus IFS Active Investors Report, April 2011
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15. So who’s looking after active investors now …?
D2C platform market by provider type and number of customer accounts
IFA led platform
Stockbroker led 25%
platform
60%
Fund manager
owned platform
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%)
15%
As of Sept 2010, Hargreaves Lansdown had an impressive 45%
awareness across the entire AI universe
Hargreaves Lansdown has c400,000 customers on the Vantage platform
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16. … and who in the future?
Banks Stockbrokers
Affinity groups And, of course ….
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17. … if the gauntlet is taken up …
The challenges:
 Recruit a new  Target a platform-based
customer base investment service to the many
from scratch investors who are not hobbyists
Key to future is understanding the market,
segmenting it and targeting accordingly
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18. The Fall and Rise of
the Direct Investor
Presented to the MRS Financial Services Conference 2011
Andy Glazier
Head of Consensus
+44 (0)20 7627 7830 Lucian Camp
www.consensus-research.com Entire workforce