IFA: We could grow five-fold on advice gap left by peers

Advisers scrambling to move up-market in the wake of the Retail Distribution Review are neglecting a profitable and plentiful lower-value client base, which a Somerset adviser has claimed could fuel a five-fold expansion in the number of advisers he employs.

David Penny, managing director of IFA firm Invest Southwest, told FTAdviser in an interview to be published later today that his business is thriving despite his resolution to remain with “the man on the street”.

“We do not and will not brand ourselves as wealth managers seeking high net worth clients. The big need that exists in the marketplace now if you stop being a navel-gazing IFA it’s the man on the street.

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“All the advisers are scrambling to be wealth managers. Our demographic is relatively low, but we can make money.”

Invest Southwest generally serves clients with £50,000 to £100,000 investable assets if they are looking to invest, but will readily take on customers with less on the expectation of future business such as mortgages or will-writing.

“Sometimes you have to invest in the long-term and play the long game,” Mr Penny said.

He said demand is so strong he could expand his adviser team fivefold, from 10 to 50 IFAs, adding: “It’s like building motor lanes, they fill up with traffic. At the moment we are sort of dreading the phone ringing because we are so busy.”

After a general exodus of advisers from banks in the run-up to and aftermath of the RDR, Mr Penny’s expansion strategy has been to entice ex-bank advisers to his firm with prospects of training them into fully-fledged IFAs instead of bank “laptop operators”.

He said he had employed 8 such former bank advice staff in the past two years and would likely seek to employ from within these ranks in the future.

Mr Penny is also working on a strategy for coping with the “tidal wave” of demand accompanying auto-enrolment, which he predicts will also fuel business growth for adviser firms and is looking to develop an employee benefits specialsim within his business to tap this market.

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