Advisers that say they cannot service lower-value clients post-2012 are actually making a value choice over the type of client they wish to work with as there are a number of tools now in the market that enable advisers to profitably service clients of all wealth levels, according to one IFA.
In an interview with FTAdviser, to be published later today (23 August), Mark Hibbitt, director of Bristol-based Sovereign Independent Financial Advisers, said his firm has a maximum of 100 ‘lower-value’ clients with investable assets of less than £50,000 in its ‘legacy’ book.
These clients are serviced using a discretionary model portfolio service offered by Parmenion and they do not have formal annual reviews. In addition and the firm has around 150 ‘premium clients’ who have annual reviews.
Mr Hibbitt said he believes ‘where there is a will, there is a way’, stating that advisers who say they can’t service lower-value clients are making a choice not to serve them, in the same way that some advisers refuse to deal with clients who have less than £100,000.
Last month, data from adviser review website VouchedFor.co.uk revealed that of 903 active member advisers, 46 per cent stated that they will deal with any level of wealth, while a further 23 per cent apply a floor of £50,000 of investible assets.
This leaves 31 per cent that set a floor level of £100,000 of investible assets, a level often cited as a key threshold over which clients become viable. Of these, 8 per cent focus only on those with £250,000 to invest - officially ‘high net worth’ individuals - and 1 per cent set the floor at £500,000.
Mr Hibbert said: “What you tend to find is... if you are lucky enough where you’ve got a niche or a particular route to market that means you can sort of specialise and not deal with that level of client. That is more about adviser choice not to rather than it not being possible.”
Mr Hibbitt said that using platform Parmenion has enabled the firm to service lower-value clients profitably, largely crediting the platform’s efficient IT system.
He said: “You can deal with someone very efficiently and can get them from the stage of coming in, after doing a fact find, and can get them to research illustrations and report on applications very swiftly, so it does work for the lower value.”
However, Mr Hibbitt said that although the firm plans to look after the ‘legacy’ book “as we are not going to sack clients”, the firm may shut its doors in terms of new clients.
He said: “We may not take any clients with less than £100,000... but that would be our choice to. I know there are businesses already that do that.”
