50% drop in use of IFAs by those earning more than 100K: survey
From United Kingdom Feb 8 2012 BY: Helen Burggraf
, Contributing Editor
, International Adviser
Affluent Britons are increasingly choosing to manage their own finances rather than using the services of financial advisers to do so, a new survey, conducted by YouGov on behalf of AT Kearney, has found.
The findings are seen as having potentially major implications for independent financial advisers, who may, it is suggested, find it necessary to facilitate more hands-on management of clients' assets by the clients themselves if they are to keep them.
A “significant increase in high earners’ use of direct channels to manage their financial situation and investments, with an increase from 60% to 80% [of those who report] using the web, telephone or mobile devices regularly to keep track of their money, accounts and assets” were among the report's key findings.
For the purposes of the study, “high earners” was defined as those with salaries of more than £100,000.
Since 2008, when the global financial crisis began, there has been a 50% drop in the number of individuals opting to work through an independent financial adviser, according to the survey, which obtained the detailed responses of 2,073 adult Britons during a two day period in December.
The results were then compared with data compiled ahead of the financial crisis.
The survey’s authors noted that the shift towards greater use of direct channels of asset management occurred at the same time people were becoming more wary, in response to the economic downturn.
The trend towards more DIY wealth management was also found not to be limited to those at the higher end of the income scale.
The research revealed, for example, that there has been a 20% increase in the use of direct channels for personal wealth management among those earning between £60,000 and £99,999.
What is more, nearly 70% respondents earning less than £60,000 per annum said they were using direct channels to track their finances in the wake of the downturn.
“It is clear that since the recession, people are more careful about their money,” said AT Kearney principal Neil Dennington.
“However, rather than seeking out financial advice to protect and grow their wealth people are tending to make much greater use of direct channels to keep track of their accounts, manage their savings and expenditure and monitor their portfolios.”
Dennington noted that the “ever-increasing amount of information freely available on the internet” was also, in some cases, lessening the appeal of IFAs.
“ With the Retail Distribution Review set to transform the [UK’s] IFA industry, a legacy of [the] mis-selling of certain financial products [coupled with] a greater abundance of execution-only platforms” are contributing to a move away from the traditional client/IFA relationship model, Dennington went on.
“Astute IFAs have wisely recognised the client’s desire for more direct access to their portfolios as well as execution only platforms, and are developing these online portals to cater for this.”