IFA: Sub-£150k bank orphans providing new business flow

Lancashire-based IFA Burton and Fisher Financial Services has seen a steady flow of new business in the early post-Retail Distribution Review weeks, in particular gaining a number of new clients with modest investment pots that have been abandoned by high street banks.

The firm is one of a number of advisers to state that they are taking on lower-value clients who have been left ‘orphaned’ by bank advice exits.

In an interview to be published later today, Lee Fisher, director at the firm, told FTAdviser that individuals with less than £150,000 to invest - many of which are predicted to fall into an ‘advice gap’ as banks and other financial advisers gravitate up the value chain post-RDR - can still be a profitable source of business for IFAs.

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Mr Fisher said the decision to pull out of the market or to scale down their offering would have been a “big decision” for banks, adding that despite the continuing profitability such business is likely to represent “a big compliance headache for them” in the new world.

He said: “The banks have stopped offering advice to people with less than £150,000 and we have picked up a bit of that.

“New clients have come to the firm because they can’t get advice from the branches. They have been to the branches with money to invest and there’s nobody there to advise them.

“We are more than happy to advise clients of that size and can still make money off it. So far [the year] we have picked up about five or 10.”

The firm is not the first to pick up clients the banks have left behind. Last week Stephen Harper, managing director at IFA Attivo Financial Planning, said the firm has picked up more business from banks and private banks in the past two years than he could have anticipated.

Similarly, London-based IFA SK Financial recently revealed it had taken on about 1,000 clients from private bank Kleinwort Benson which the bank felt it could no longer support.

This trend flies in the face of some predictions that advisers would also have to abandon lower-value clients or at least accept the damage they would do to profits.

The full interview with Mr Fisher will be published later today.