A new survey by online platform rplan.co.uk out on Monday has further underlined how quickly that gap is widening. Rplan.co.uk surveyed 137 financial advisers and found that 13% have stopped offering services to more than 20% of their clients because they are, in a post-RDR world, ‘no longer commercially viable.’
Perhaps more concerning, is the way in which advisers are planning for the future as the survey also found 56% of advisers are planning to stop servicing some existing client accounts over the next 12 months.
From an adviser point of view, such a decision makes a lot of sense as, if clients are unwilling or unable to pay for the service offered, then it is unreasonable to expect advisers to do so at a loss.
And, as a result many advisers are targeting the higher end of the spectrum.
As Anthony Villis, partner at First Wealth told Portfolio Adviser explained as an example, First Wealth has taken the decision to do everything through professional introducers in order to ensure that the type of clients they get are able to pay for the services offered.
“We have moved away from direct marketing to clients in an effort to ensure, that those clients we take on are able to pay for the services and, I would imagine that there are many other advisers that would tell you the same thing,” he said.
Is there a solution?
According to Villis, a technology-based, non-advised process could solve a lot of the problem.
He points out, if all you are interested in is searching out the best fund in which to invest, you can do so pretty easily online yourself.
“Where we can add value is in building a proper financial plan,” he says, adding that many clients, especially the younger ones are increasingly tech savvy.
“In their thirties and forties, often what these clients are looking for is just an answer to the question: which fund should I choose?
“Ultimately the the solution is a technology-based, non-advised process, where clients can use the resource to research the options available to them, and then make a choice themselves. This solution is less expensive to deliver and for many clients this is a great solution.”
There is no doubt that that the internet provides a myriad of opportunities for individuals to research their own investments. Equally, there is likely to be certain individuals, for whom the internet is not the right answer and who will fall through the cracks. And, certainly, it is likely that execution-only offerings and platforms like Nutmeg and going to see a lot more business in the future. But, it also raises a number of other questions, prime among them, where are the big clients of the future going to come from, if not from the ranks of the current smaller clients?
If that is the case, while cutting off smaller clients now makes sense, it is important to marry that with a very good understanding of how the technology that these clients are going to head toward works. And, ideally have a presence within that realm as well if they want to succeed in re-attracting those clients who have had to fend for themselves digitally during much of their accumulation phase.
