In an interview with FTAdviser, Gareth Nelson, managing director and IFA at Allen Charlton, said clients cut adrift by banks after the Retail Distribution Review should not be ignored by IFAs even if they are lower-value. He said his firm plans to offer simple transactional services to such clients, many of which many turn into more lucrative customers in the longer-term.
Mr Nelson said that by taking such clients on a lower-cost, transactional basis an adviser will not only supplement his or her income but foster a young client base that could in time develop into higher net worth individuals as their assets grow.
As part of this drive, Mr Nelson said he plans to double the number of advisers at Allen Charlton to four and correspondingly double the number of clients, with about a quarter to a third using the firm’s transactional service rather than full advice.
He said: “There’s money to be made in transactional. You’ve got banks pulling out of the market and although you might not net anything every year there is still money to be made.”
Mr Nelson hopes to structure Allen Charlton, which he bought six months ago, in such a way that new clients join in their 30s and early 40s for the simple transactional service and then move over to the financial planning service as they gain wealth.
Finally, clients will be able to move to the firm’s wealth management service in the run-up to retirement and beyond, when the adviser’s job will be to manage existing wealth rather than build assets.
The full interview with Mr Nelson, part of FTAdviser’s series on advisers’ RDR readiness, will be published later today.