An IFA is launching a web-based proposition to offer a simple solution to clients at the lower end of the serviceable spectrum in order to address the oft-cited advice gap brought on by the Retail Distribution Review.
Monibox is launching on 6 January and, according to the advisers behind it, is aimed at people who are new to investing or existing investors who have pensions, Isa and bonds, and who need advice but cannot afford the fees charged by advisers.
Monibox is an appointed representative of Proactive Financial Management Ltd, run by James Williams. The FCA register lists the firm as being authorised from August 2013. The website is set to launch on 6 January.
Clients will pay a flat rate of £300 a year, with no upfront fees, and will have access to an adviser team via a range of online channels including Skype, email and live chat.
They will complete a risk-profile questionnaire through the website and then their adviser will conduct an initial review of their current financial position as well as a health check of any current investments.
Investors will receive a quarterly email newsletter and have access to online tools including a document store and investment tracking, while advisers will conduct virtual annual investment reviews and regular rebalancing.
Mr Williams said the service is aimed at clients who want quick and smooth advice and they would always advise clients who want more in-depth advice to seek bespoke advice Proactive.
Speaking to FTAdviser, Mr Williams said: “After embracing RDR within Proactive Financial some two years ago now, it was obvious the commission models operated by larger and in many cases national bank/building societies would be under strain.
“More importantly, though the clients of this country are not fully aware that many of their own banks do not offer new or continued advice, if they do there is often a ‘less than’ rule. For example, one client called in off the street to say the had an existing Isa pot of £44,000 with a well known bank, they were told no one could see them because it was less than £100,000.
“Apart from being cut adrift the front-end staff. These organisations do not know what the full client wealth is so may be offending or losing clients.”
He added: “We have put together a site which other platforms and tech systems bolt on or work with, which has enabled us to streamline the process, compliance and more importantly the running costs.
“That way we can pass on the savings for the benefit of the client in the form of a no upfront and low annual service fee, the client gets rebalancing advice and the invitation to fine tune their tolerance to risk and capacity for loss.
“All in all there is an advice gap albeit I believe it is still too early into RDR to see it’s true size and potential market. That will happen when people realise they need advice and there is somewhere affordable, easy and carries a proven value.”
Last month, the latest ‘adviser snapshot’, publishing by Action Consulting, revealed that a third of advisers surveyed said they have clients whom they will no longer actively service on “economic grounds” as they are of little or no value and “may cost more... than they contribute in income”.
In the same month, the Association of Professional Advisers released research which purported to show that 60,000 lower-value clients had been priced out of the advice market as a result of the RDR.
However, in response, the Financial Conduct Authority told FTAdviser it “did not recognise the industry that Apfa is describing”.
A FCA spokesperson said: “We know that adviser numbers have actually risen since RDR came into effect. Recent research from NMG has shown that advisers have seen, on average, a 5 per cent increase in income in 2013.”
