In May 2021, UK wealth manager Charles Stanley said it was setting up a central financial services (CFS) division to “address client needs for simplified advice as opposed to full service discretionary management”.
The division incorporates asset management services, foundation financial planning and execution-only services, and follows Charles Stanley’s April 2021 reorganisation, which saw the creation of three operating divisions: investment management services, financial planning services, and central financial services.
Charles Stanley will also be launching additional services under CFS in early 2022.
John Porteous, managing director of CFS at Charles Stanley, told International Adviser that its ‘foundation’ range will be the “logical first step out of DIY investing” and that its services are designed to provide an initial stepping-stone for those looking to plan for their financial future.
“We’ve got an established execution-only business and think a lot of clients are increasingly looking for something more than just self-selection,” he said. “This has been borne out by our client research.
“We see a bunch of submarkets and we would describe them under an umbrella of post-Google pre-planning. These are people interested enough to want to find out more but are a little hesitant about paying a substantial fee for a full financial plan.”
Target market
Charles Stanley’s foundation services seeks to help investors with a series of “light touch advice and guidance services” which will allow clients to access advice across mainstream planning topics on a fixed fee basis, the firm said.
The offering means that clients can access advice across mainstream planning topics on a fixed-fee basis.
Charles Stanley has identified several target markets that would benefit from the services:
- Non-advised clients under the age of 55;
- DIY investors who are not fully confident and need help;
- The segmented and disenfranchised;
- Those at an advice event crossroads who want to explore the topic in detail before deciding on how best to proceed; and
- Next generation of ‘developing’ professionals.
Porteous added: “Generally, as a first step to financial wellbeing, people need to understand three fundamental points; what do they need to know, what are their options, and what should they do next? Thinking about those who are taking their first step of the financial planning journey, these questions can seem overwhelming, so we have sought to offer an ‘advice plus’ package rather than an ongoing FP service from the outset.”
With its model, Charles Stanley aims to provide an offering through working in a ‘modular’ basis. To help set up the service modules for the division, Charles Stanley has hired Lisa Caplan, who used to run the advice arm at Nutmeg.
The modules available include a five-stage health check for clients, cash flow modelling, later life planning, intergenerational wealth transfer, inheritance tax planning, and risk profiling.
Porteous added: “We’ll take clients through subjects online and give them access to online tools, a follow up report, a value statement of all the things that we’ve taken them through, and then we’ll charge a flat fee. At the end of this, people will be in a position to say, ‘I know what to do next’.
“Where specialist financial advice may be required, we would make an onward referral through the organisation and deduct the cost of our services so investors will not be charged twice.”
Hybrid
Charles Stanley’s offering falls broadly under the umbrella of hybrid advice.
In June 2021, Terry Donohoe, chief executive of Europe at fintech firm Ignition Advice, told IA that hybrid advice was the “next evolution” for the wealth industry.
But Porteous doesn’t think that “wealth management is going to eat itself by digitising”.
“Hybrid is the future,” he said. “But what I think is going to happen is the digital channel, which a is largely an execution venue proposition currently, will develop to give clients more value add and engaging services online.
“I think the pandemic has made people think about how they want to access advice, consume content, and ultimately interact with their advisers. While many appreciate the convenience and connectivity of digital access, they ultimately still value the reassurance of speaking to qualified and professional advisers.
“Everybody has been saying the robo-advice was going take over the UK market. The reason that hasn’t happened is because everybody misjudged how much it was going to cost to win a client, as well as the importance of the human factor in delivering advice.
“Many people will probably go through all these journeys online, but never quite commit to pressing the final button. In my view, most of the proposition development needs to be directed toward getting people to make that final commitment.
“This comes back to those people who are hesitant from seeking financial advice because of the perceived expense. There is an advice gap where individuals, particularly from the younger generation, have too little wealth to access financial advice. Foundation services seeks to address this issue by breaking down barriers to entry for advice.
“By taking clients on a value-add journey for a fixed fee, we give investors all the facts, the knowledge and the opportunity to ask a qualified professional all the questions over a video call. This then helps give them a more informed choice about the next step they may or may not take.”
Connect through social media
Porteous says that the wealth manager is looking to become “much richer in digital content” as it wants the foundation services division to be a “way of engaging people through social media channels”
“People are increasingly consuming news and current affairs through social media channels and this is becoming much more influential in shaping opinion and in turn, behaviours right across the generations – not just the digital natives.
“By tapping into social sphere through content, we can disrupt and influence messages. It’s easy to connect that messaging with what we’re doing in the foundation marketplace.
“The thing about social media is that people think it’s a quick fix. It’s not. People will follow you over time, but I think conveying trust over these channels is about showing consistency, authenticity, and values.
“Are you consistently on message? Are you authentic? What’s your campaign? What are you trying to do? What social issue are you trying to solve? If you don’t have a campaign or a purpose, it’s difficult to gain the attention of social media, which comes in very short sound bites.”
Future
Porteous also spoke about Charles Stanley’s ambitions for the CFS division and how it can fit in the UK wealth industry.
“I would want to see Charles Stanley Direct to continue to punch above its weight, to grow and to be seen as genuinely innovative,” he added.
“I think it’s difficult to foresee anybody challenging the gap between Hargreaves, Barclays and Interactive Investor, which is pretty big. But there’s plenty of opportunity to be the best of that next tier.
“I see a convergence between our foundation services and Charles Stanley Direct, bringing our digital offering into a much more integrated service proposition.”
