Charles Stanley is weighing how it can provide its fund management and advice services to clients with smaller amounts to invest, Christopher Aldous has said.
Lower value clients – dropped by many financial firms as uneconomical in the face of the stricter rules around giving advice brought in by the Retail Distribution Review – are back on the agenda.
With initiatives such as the Financial Adviser Market Review, the government and the Financial Conduct Authority are seeking to help those who need advice but have savings too low to attract advisers now focused on the high-net worth.
“Many firms are casting them aside, but we are a firm which is still prepared to try and look after relatively small clients,” Mr Aldous said.
But unlike firms such as LV, which have deployed cheaper, algorithm-based robo-advice for those with less assets, Charles Stanley’s head of distribution and asset management said the firm would not necessarily use robo-advice, which is not something everyone wants.
“We are trying to work out how we can provide a good level of service with something which is a meaningful investment product - not everyone wants robo-advice,” he said.
Charles Stanley is trying to come up with a solution for clients with £50,000, which “will have to be more automated”, Mr Aldous revealed, but said he “wouldn’t call it robo-advice”.
“It all comes down to cost,” he admitted, adding the service could be tiered; one level for clients with £50,000 to £150,000, another level for those with less than £50,000.
For a smaller client a “personal service” is more appropriate than a more expensive individually constructed portfolio, Mr Aldous said.
“If someone comes with an £80,000 nest egg and just wants to try and make a little bit of return on it, there should be some simple questions to check they should be investing in something at all.
“They want a solution and they know what that’s going to be, they just need to figure out whether they are high risk or low risk,” he said.
Last month Charles Stanley’s distribution chief Mark Pittaccio said the adviser market is a “significant part” of the company’s growth strategy.
Mr Aldous echoed this, but said the firm is not looking to hire advisers or buy adviser firms.
“There is potential for working closely with advisers who don’t want to be acquired, but do want the comfort of being closely linked with a large company with a lot of resources,” he said.
In its results for the six months ending in September 2015, Charles Stanley reported profits before tax were up by 151 per cent to £2m, from a £3.9m loss in the previous six months.
Adviser View
Steve Carlson, a chartered financial adviser with Cardiff-based Carlson Wealth Management, said: “From an adviser’s point of view it is a difficult market to tap into cost effectively.
“Before RDR these people would have got face-to-face advice from the banks. But now trying to work out how to make it profitable is very difficult.”
