‘Challenge is money conversation’: Yellowtail’s RDR plans
RDR will not herald a massive change for Yellowtail because it has been planning for almost a decade, says MD.
“There is always conversations talking about those fees. The easiest thing is just saying we will just charge you a percentage of the assets under management.
“They didn’t necessarily want to have a fees conversation. In the eyes of a client commission wasn’t such a bad thing it was just presented in a bad way.
“We have had a few people who didn’t pay. They are lessons we learn; we now charge money up front. Our first client came in and buggered off abroad.”
Instead of slogging through confusing contract terms, Mr Hall has found clients prefer to pay fees from within the investment portfolio itself.
“They want to see they get value for money but after that don’t want to be reminded of the most painful part of that. We have had unintended consequences about being too open and blunt about fees. It creates unnecessary worry and doubt in their minds.”
Any room for the small fry?
As cold as it may sound, Mr Hall maintains that Yellowtail’s business just cannot accommodate low-value clients. This is in part due to being based in the none-too-cheap London, and in part the high costs of maintaining an infrastructure.
“The moment we started charging fees we realised we couldn’t do it with these people. You have the conversation and realise they don’t want to pay. Our clients have to pay for infrastructure.
“Smaller clients rule themselves out. If you are out in the country or don’t have such high costs you can take on someone where you don’t earn so much because your business costs are low.”
Still, he comes across clients who think of advice as free.
“We have met some in our time who have been absolutely shocked when they found how much their adviser’s made in the past. They just can’t believe it. For all the commission disclosure we have clients who weren’t aware how much they pay.
“RDR isn’t driving any of the changes we are making in our business. We are trying to become more focused and drive our minimum up. We haven’t been worrying about RDR for the last two years and same with my peer group.
“We are more concerned about how we are going to stand out and make ourselves different. We will be out there just getting our marketing message better.”
“I don’t agree with everything the FSA does. They don’t listen to the industry much but a lot of people I talk to are in the same frame of mind which is trying to improve our business not get ready for RDR.”
What about an online, non-advised option that some other companies are looking into for an additional revenue stream? Mr Hall is not keen.