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The savings gap

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A study of the differences between public perception of financial security and the reality, and the future role of IFAs. Looks into the reasons behind this disturbing yet growing phenomenon.

Published in: Economy & Finance, Business
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The savings gap

  1. 1. “You don’t know Andy Glazierwho’s swimming Head of Consensus Researchnaked until thetide goes out”Warren Buffett Ron Wheatcroft Technical Manager MRS Financial Services Conference, October 2010 Consensus Research Priory House / Cloisters Business Centre, 8 Battersea Park Road / London / SW8 4BG Tel: +44 (0)20 7627 7830 Fax: +44 (0)20 7627 7831 mail@consensus-research.com www.consensus-research.com
  2. 2. The cost of doing nothing
  3. 3. At least we’re in tune with the UK consumer …Financial planning for later life Main concerns for the future Consumers Industry 61% 45% 41% 32% 14% 10% 2% 2%Can’t afford to put Sorted out my Losing Noanything away at finances; think job financial the moment I’m well prepared worries
  4. 4. Everything’s fine then?In the event of your illness/disability/death,how would your family fare? Well/reasonably positioned Would 71% struggle 9%
  5. 5. Why do consumers think all is fine? 36% 33% 14% Adequate Adequate House is worth insurance savings enough
  6. 6. Well, everything’s not exactly ‘fine’ ...UK income protection gap 2009 = £190bn per annum 2002 = £130bn per annum
  7. 7. And on a continental scale … The European ‘mortality gap’ is estimated to be some €10,000bn
  8. 8. Why the disconnect? Deep-rooted lack of Price ofprotection engagement with the risks and consequences
  9. 9. Deep-rooted lack of engagement with the risks and consequences Life cover 48% 21%Don’t need it Haven’t thought about it
  10. 10. Why the disconnect? Price of protection 26% Can’t afford it
  11. 11. Why the disconnect? Lack of understanding
  12. 12. Lack of understanding “I’ve got income protection. The two times I’ve been made redundant, I’ve claimed on it.” Consumer, 45+
  13. 13. Lack of understanding The Post Age Concern Office Allied Dunbar Which?Baines & Ernst Martin Lewis Financial OmbudsmanLloyd’s of London Scottish Equity
  14. 14. Why the disconnect? Lack of trust
  15. 15. Lack of trust RW Lack of trust “Why should I bother [with CI]. If something really terrible happened then we couldnt get anything for it anyway because it wasnt bad enough.” Consumer, 35 – 44 “If I understand what I am buying it makes me trust them [insurance companies].” Consumer, 21- 34
  16. 16. Where to now?Fill in the gaps .......... Education Re-establish trust Regulation of distribution “The traditional model of the IFA looks to me like a doomed species. I think there will be a drift away from old fashioned financial advice. The regulatory requirements on IFAs are so great, the cost of giving advice is so great and I cannot imagine why anyone would want to do it” Lord Newby
  17. 17. Where to now? High street names moving into protection? B2C platforms into protection? Europe ................... The workplace?
  18. 18. “You don’t know Andy Glazierwho’s swimming Head of Consensus Researchnaked until thetide goes out”Warren Buffett Ron Wheatcroft Technical Manager MRS Financial Services Conference, October 2010 Consensus Research Priory House / Cloisters Business Centre, 8 Battersea Park Road / London / SW8 4BG Tel: +44 (0)20 7627 7830 Fax: +44 (0)20 7627 7831 mail@consensus-research.com www.consensus-research.com

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