Days are numbered for long-term advice: HL

Daniel Liberto

Danny Cox, head of financial planning at the Bristol-based investment service, said that clients today were principally interested in one-off advice and were reluctant to pay for annual reviews because they felt competent to check on their investments themselves.

The growth of the internet over the last five years has accelerated this trend, which has been pushed further along following the implementation of RDR, which has required that all fees be paid upfront.

He added: “What we are seeing is more and more people saying they do not want advisory relations to be long term. More than 90 per cent of clients do not want a review service, just one-off advice.

Article continues after advert

“For the last 10 years advisers have structured their service over the long term.

“IFAs were thinking information is power, but now with the internet and direct to consumer services, information is readily available for free.”

Mr Cox said that when he first started out in the late 1980s getting any type of investment valuation was very difficult and required making numerous phone calls, which would often lead nowhere. However, with technology having evolved since then, he added that information was now so easy to access that it had subsequently undermined the benefits of regularly consulting with a financial expert.

Even though investment portfolios required close monitoring, Mr Cox said that the internet presented investors with so much information that they now felt confident enough to analyse and keep tabs on advised products without the need for ongoing professional assistance.

Whereas Hargreaves Lansdown used to build long-term financial planning relationships with its clients, Mr Cox added that his colleagues were now resigned to this change in attitude and had adapted their services accordingly.

He said this change of circumstance had robbed financial advisers of one of their main selling points; their unique access to information, and therefore represented a massive challenge to the future of the profession. He added: “Advice still has an important role but the attitude from clients is now: ‘I can see how my investments are doing so I do not need to pay for an annual review’.

“Client attitudes are changing and information is now so much more accessible.”

Adviser comment:

Carole Nicholls, managing director of Bristol-based Nicholls Stevens, said: “Hargreaves Lansdown must have the wrong clients. I want and have clients who require a relationship. The younger generation may want to go on the internet but even then they still want to talk to someone. It is very difficult to reach out to young people and it usually has to involve some sort of internet based outreach. The young perhaps need internet stuff to take them up to their mid 40s and from then on require financial planning. Eventually everybody needs professional help.”