Use self-directed to catch potential HNW clients: Cofunds

Offering self-directed services should be seen as a route to new clients rather than a way to lose them, according to Cofunds.

Andy Coleman, director of distribution at the platform, told Money Management that advisers can use self-directed services to bring in clients further down the line.

“Most adviser firms provide a recognised, valuable offer to high net worth clients,” he said. “But ask yourself this: where are the high net worth clients of the future going to come from?”

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Mr Coleman said that he did not imagine services such as Nutmeg and Hargreaves working in this context, but that self-directed services that complement the existing high net worth model, such as using the adviser’s own branding, could work.

“This self-directed model enables advisers to maintain a relationship and a value exchange with clients with more modest portfolios but, crucially, provides the means to cultivate the high net worth clients of the future.”

A self-directed model keeps the adviser firm at the front of the mind for the client when they reach a life event needing advice or their portfolio grows to the necessary size, he added.

“Rather than running the risk of losing business by embracing self-directed, they will be helping to build long-term value in their firm by cost-effectively tending to the clients of the future,” Mr Coleman said.

The upcoming MM platform survey, to be included in the special report in the August issue, shows that of 20 participating platforms, seven advised platforms offer direct client access.

While interest in offering self-directed services is growing, with names such as Informed Choice launching IC direct in recent months, many advisers are still reticent to operate this model. According to research by Cofunds, 53 per cent of advisers said they will not offer self-directed services. However, this is down from the 69 per cent reported in the same survey last year.

“There is a global trend towards self-serve both in our industry and more generally,” Mr Coleman said. “I see nothing to suggest that it’s going to abate any time soon for financial services. The good news is that the trend can be beneficial to end investors and advisers. It’s just a matter of harnessing the self-directed services that provide long-term value to your business.”