Around 800,000 households to seek ‘ongoing advice’ post-RDR
Some 800,000 UK households could seek “ongoing advice” after the implementation of the Retail Distribution Review, while a further 2.4m may be interested in more ‘task-by-task’ advice with no ongoing service, according to research produced by JP Morgan.
According to the survey of 2,028 individuals that the firm refers to as high-net worth and mass affluent consumers, JP Morgan found that 13 per cent overall said they are likely to seek out ongoing fee-based advice services.
While this may appear low for a study based on wealthier individuals, the study focused on those with total household income as low as £50,000.
In fact, 65 per cent of respondents reported a gross household income of less than £100,000, while more than a quarter of those surveyed - the largest grouping - had less than £30,000 in investable assets.
Despite this, the survey results suggest that 81 per cent would seek some sort of advice post-Retail Distribution Review, with 13 per cent stating a preference for a full ongoing advice service, 29 per cent choosing ‘guided advice’ on key areas such as pensions, and 40 per cent choosing ‘tasked-based’ transactional advice only.
An ongoing advice service appeals primarily to those with assets of at least £250,000 and to males at least 51 years old.
Based on these results, JP Morgan predicts firms will be most successful if they have a strong focus on pensions and an active approach to portfolio management.
Other factors contributing to a firm’s success include demonstrating an immediate and deep understanding of client needs, measurable results and client benefits and offering fixed fees or at least a clear and finite cost system.
Jasper Berens, head of UK funds at JP Morgan Asset Management, said that the research suggests the most sought-after type of client - those seeking ongoing advice - is “relatively small”.
He said: “Firms seeking to service this segment really need to be on the ball in terms of the service and features they offer.
“However there is also a large proportion of mass affluent and high-net-worth households seeking less conventional approaches to getting advice such as task-based and guided support.
“Firms that can think more creatively about how they can advise and service advice-seekers may discover a large and interested market out there.”