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Ex-adviser offers D2C reviews to stem client attrition

Ex-adviser offers D2C reviews to stem client attrition

A former adviser has launched a new due diligence service reviewing direct-to-consumer platforms on behalf of advisers looking to offer alternatives to clients ahead of a sunset clause coming in April of next year which will switch off much legacy trail.

The currently unnamed D2C offer is being launched by Due Diligence Solutions, a company founded by former adviser Tony Peters which carries out due diligence on platforms, discretionary fund models and self invested personal pensions on behalf of advisers.

Its new service will offer thorough reviews of the current offerings in the consumer market paid for by advisers, producing a shortlist of three to five platforms from which they can select to offer clients they might otherwise lose contact with altogether. The one-off cost of the report is £1,500.

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There are 11 providers on Due Diligence’s database, including the likes of Fidelity, Share Centre, Aviva, Alliance Trust, Aegon, Charles Stanley, Tilney Best Invest, AJ Bell, Barclays, Axa, Hargreaves. A further two services are expected to join imminently, Mr Peters added.

The detailed fact-find asks just shy of 150 questions which “look under the bonnet” including product offerings, costs, risks, financial viability etc. The outcome of this is a 40-page colour coded report which Mr Peters said allows advisers to see how the due diligence has been carried out.

It is then up to the adviser to choose from the shortlist which offering would most suit his clients.

Speaking to FTAdviser, Mr Peters said the offering is partly driven by the ‘sunset clause’ set to come in from April 2016, which will mean all new and existing business will have to be charged on a platform charge basis, with only unit rebates to facilitate discounts permitted.

The removal of legacy rebates will also end much legacy trail commission, meaning clients will need to pay explicit adviser fees to receive ongoing service.

Mr Peters said: “Across the market place there will be thousands and thousands of clients that no longer generate income for advisory firms, so therefore will fall out of the system and won’t get advice whatsoever.

“If they ring their old firm for a cash Isa, the adviser will say to either sign up for an advice proposition or I can offer you a D2C and at least that way the adviser has an in-road to potentially get them as a client going forward.

“If they don’t have some kind of proposition for lower value clients, clients will go.”

Martin Evans, director of Prism, told FTAdviser that while the idea “sounds fantastic”, he questioned “how do you do due diligence on the person who does the due diligence”.

Chris Robertson, financial planner at Robertson and Donald, told FTAdviser that he probably would not use the service, largely due to concerns as to who the liability falls onto if something goes wrong in the D2C “recommendation”.

“There is a fine line between advice and [recommendations]. If something went wrong, would I be liable?