The RDR has meant many advisers dealing with the possibility they will lose clients who do not hold sufficient funds to make the fee-based model viable. Rather than dropping out of the profession altogether it might be worthwhile looking to new opportunities.
One potential channel of new income is to corporate advice. As well as traditional employee benefits like health insurance and life insurance, with the gradual implementation of auto-enrolment (AE) legislation, companies of all sizes will need to find solutions to these new requirements.
Small and medium-sized companies, who will be among the later businesses to bring it in, may be in need of financial advice on a scale they have not needed before. The market is therefore open to IFAs who want to turn their hand to corporate advice. The question is whether it is worth an adviser’s time, taking into consideration the different skills, experience and charging models needed to deal with the corporate field.
A new arena
David Thurlow, a corporate advice specialist from Newmarket-based financial advisers Atkinson Bolton, acknowledges a shift in thinking around corporate advice, and a new difficulty in explaining the charges to clients: “Historically, many financial advisers have operated on commission and so in a sense they have been advertising that they will provide corporate advice free of charge because it’s built into charges,” he says.
“The profession is moving away from that and we’re becoming much more like accountants or solicitors. A company would never dream of employing one of those professions without paying a fee.” The fact that commission is no longer an option makes it a more level playing field, but the advice is still needed and with AE it is needed more than ever.
How should advisers go about courting these clients? Some advocate changing tactics and using methods they don’t usually employ with individual clients to court corporate clients, while others believe strong word of mouth to be just as useful with corporate clients as with individuals. “Networking is the best way of getting your name out there,” says Roy McLoughlin, a partner at London-based IFA firm Master Adviser who has been dispensing corporate advice for 10 years.
“Using social media, websites, all the usual communication tools. But the best is always word of mouth, and the majority of good independent financial advisers are passed on through word of mouth, anyway.”
