Around 800,000 households to seek ‘ongoing advice’ post-RDR
JP Morgan report claims many will seek transactional advice with no ongoing service.
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.”