CompaniesMay 28 2013

IFA: Lower value clients to go direct to funds

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ByDonia O’Loughlin

Although more people will choose to self-invest to avoid paying for advice, advisers will still be able to interact with them albeit on a less frequent basis, an IFA has predicted.

Chris Robertson, IFA at Dundee-based Findlay and Co Financial Services, has predicted a rise in self-investors, particularly in those that have smaller amounts to invest, as they cannot afford an adviser’s services.

However, he said that advisers could still offer them reviews, for example, on a triennial basis, to help make it more affordable.

Mr Robertson told FTAdviser that for lower-value clients, choosing their providers and their funds and dealing direct with fund providers may be a way for them moving forward.

He said: “People talk about a certain section of society not being able to get advice as it’s too expensive, and I think because of this there will be a move back to direct dealing with funds groups and providers. It will be far lower costs.”

Mr Robertson also highlighted that advisers can still be offering them a service on this level and he is currently doing this for example with relatives of existing clients.

He said: “If people want a review then we can negotiate to have one, say on a triennial basis. That’s a road we might have to do down and for children and grandchildren of existing clients we are already doing that for some of them.

“We haven’t lost any clients yet due to adviser charging but there are a lot of advisers who can’t afford to deal with lower value clients. We have been disciplined and we have to say no, if they don’t want to pay, whereas pre-RDR we might have negotiated the commission.”

Paul Harrison, head of business consultancy at Prudential, previously told FTAdviser that simpler clients wanting, for example, advice on Isa investments may not be willing to pay a standard 3 per cent charge but that moving to a model of three-yearly reviews and using online services to maintain contact in between could allow advisers to profitably reduce costs.

Mr Robertson doesn’t think the move to self-investing is entirely due to adviser fees, but also thinks adviser’s lack of transparency about what they actually do to earn the fee is to blame as well as some holding the view that in the UK that financial advisers “are not professional”.

He said: “People also have an issue with the cost as they don’t know exactly what we do. They do not realise that good financial planning can take 12 hours and, if we tell them that, they will say what the hell have you been doing.