Philip Scott, group executive director of Norwich Union's UK life business, has predicted that the m...
Philip Scott, group executive director of Norwich Union's UK life business, has predicted that the market share held by the IFA distribution channel is set to continue growing.
Speaking at the Aifa's first anniversary conference and exhibition, Scott said the IFA sector had seen an unprecedented rate of growth over the past five years with market share expected to rise from 53% in 1999 to 55.5% in 2000, with a further increase to 56.3% in 2001 and 57.4% in 2002.
Scott said IFA clients generally had a good understanding of the value of intermediary independence and place a high value on it.
"We have had some significant image factors affecting us in pensions, endowments and guaranteed annuity rates recently, but we need to build on the positive aspects of our industry," he said.
Scott said he believed the impact of a Government setting price caps for core products is going to be a permanent factor of the IFA landscape. He added that consolidation would continue to happen within the financial services industry.
"The increased pressure on margins and economies of scale will be of fundamental importance," he said, adding: "My advice to intermediaries is to be big or be very, very customer focused. The middle band is the one that will come under most pressure."
IFAs will need to use technology to reduce costs and improve added value services to customers, according to Scott.
They will also have to segment customers into those who appreciate and are willing to pay for a high value service.
"The days when you could provide exactly the same level of service to each customer irrespective of the value they bring to your business are gone," he said.
The industry will also need to develop new commission and charging structures to reflect the more integrated relationship between providers and IFAs.
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