It has continued to be parroted with such regularity that it is now accepted unquestioningly as the truth.
On top of this exodus of those unwilling to pay fees, the RDR created tranches of individuals who were no longer viable business propositions for the advisers who had previously served them. This was also reported as fact and repeated so often that it too became received wisdom. You will have heard £50,000 being liberally waved around as some sort of benchmark or tipping point – the amount at which individual savers became worthwhile.
I know I’m not telling you anything you don’t know. The advice gap was widely predicted before the RDR’s implementation and is now officially a thing that can be quantified with increasingly eye-watering numbers. And ever so frequently is.
The solutions for these unloved swathes of the public are similarly well documented and wheeled out so often that they have a comforting familiarity. Direct-to-consumer, do-it-yourself investment platforms have proliferated along with simple online financial planning tools which are often free and are designed to allow amateur investors to do a bit of simple financial planning for themselves.
And now Cofunds has just announced the launch of a tool specifically to cater for non-advised clients. The platform, rightly wary of appearing to undermine its adviser customer base, was at pains to point out it is not trying to join the stampede towards direct-to-consumer offerings. It would not be looking to replace advisers in the way Nutmeg and its peers are. Instead Cofunds’ tool will be targeted at those individuals who were previously receiving advice.
Show a client enough value to justify a fee and they will pay it.The idea is that advisers should recommend the tool to those clients they no longer deem worthwhile, perhaps to help soften the blow of being dumped.
This ‘hug-and-roll’ treatment from advisers is already just what is expected. It is so entrenched as a behaviour that product providers are offering tools specifically to help them with the process.
I’ve got a different, potentially radical idea: why not keep advising them? Show a client enough value to justify a fee and they will pay it. If they don’t want to, they won’t but it should be the client’s decision and the adviser should at least try to keep a client base.
If the problem with old-style advisers was that they were salesmen rather than genuine advisers, then why not put a bit of that sales acumen to good use and sell your service. Or do advisers themselves not believe in their own worth to anyone with less than £50,000 to invest?
If you do ditch your clients, might you not be storing up problems for the future? Say these people do turn to self-service tools because advisers can’t be bothered, and then those tools get them to the mystical £50,000 mark, what then?
It is not going to be easy to prise them back again from a simple-to-use tool that has served them well. People will stick with what they perceive to work. If a human relationship has increased their wealth to the magic £50,000 mark, they will probably stick with that human relationship to get them further; if they’ve done it with the help of some free, one-size-fits-all software, they will stick with that.
It worries me how easily the advice gap has been accepted without any in the advice community wanting to challenge the public’s drift away from advice. Everybody seems to be accepting now that these people have gone and won’t be coming back
The introduction of guidance or advice (I don’t imagine for one minute the general public will bother to differentiate according to semantics) at retirement is a big step towards ensuring everybody has a relationship with an adviser, but it goes without saying that it would be much more beneficial if that relationship existed throughout the individual’s working – and earning – life and was already established at the point of retirement.
The trouble is, the government is not going to legislate for that; it is down to advisers to make it happen. But instead many have accepted that all but those who are already wealthy are not an option.
Advisers should not get bogged down in whether clients are viable and worthwhile for them, but focus on how they can prove themselves viable and worthwhile for clients, irrespective of their net worth.
