UK bancassurers will not pose a threat to IFAs over the next five years, research published by consultant Datamonitor suggests.
Despite three years of growth into the distribution space, banks still play second fiddle to independent distributors, and few are putting any serious effort into taking market share especially in the area of life and pensions.
Datamonitor estimates that share will remain almost unchanged by 2010, topping 18.5% by then. In 2001 the share was estimated at 12.5% - expected to be given a sharp boost by depolarisation.
That has not really happened, the consultant says, while apart from the bancassurers, multi-tie advisers are estimated to have taken 2% of the IFA market.
Banks continue to increase sales of life products, but pensions business “is stagnating”, the research suggests.
Those banks that have already adopted a multi-tie approach are expected to be followed in future. Business model change have been slight, but should alter over time as the full options opened up by depolarisation become evident, Datamonitor says.
Distribution examples in other European markets suggest banks are able to take a significant share of distribution. However, this is unlikely to be replicated here anytime soon. The reason is for bancassurance to make business sense, banks in the UK must focus on selling cheap product in high volumes. Larger organisations such as HBOS can do this, but it is more difficult for smaller competitors to follow suit, Datamonitor says.
UK life and pensions sales forecasts, 2006f-2010f (£mAPE)
|Multi-tie (non bancassurance)||283||741||27.2%|
|Single-tie (non bancassurance)||371||342||-2.0%|
|% share||2006f||2010f||Change in %|
|Multi-tie (non bancassurance)||4.0%||8.5%||4.6%|
|Single-tie (non bancassurance)||5.2%||3.9%||-1.3%|
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