Tim Sargisson, chief executive of Sandringham, has said that in 2016 he will ensure the business is best placed to capitalise on the growing number of advisers looking to migrate from full IFA to restricted advice.
The last two years have also seen a marked increase in advisers making such a move and Mr Sargisson said he expects this trend to continue in 2016.
Pointing to a 2013 Cass Business School report, entitled ‘Challenge & Opportunity – The Impact of the RDR on the UK Market for Financial Advice’, he said the challenges outlined by the academics for independent advisers remain.
According to the research, the average adviser expects to garner £1,500 from each of their supposed 150 clients, in order to sustain the £220,000 per year of gross revenue required to function profitably, given all the regulatory and administrative costs and normal business operational expenses they must cover.
With fees averaging roughly 1 per cent of assets, Mr Sargisson said that implies that the average IFA client will need £150,000 or more of investable assets.
“Their research highlights there are just over 850,000 people living in the UK with this amount at their disposal for investment,” he stated, adding that “in short, there are not enough clients with the right asset profile to go round.”
Mr Sargisson went on to note that there are a further 5.5 million people with investable assets, employed and of working age in the UK, but without access to advice or unable to afford an adviser.
“Sandringham aims to be the leading restricted advice firm in the UK and to help advisers tap into this market by providing a more cost-effective solution in terms of the services it offers, the advisers it works with and delivering good solid customer outcomes.
“This will be delivered through robust end-to-end IT and we expect to make significant improvements to our IT in 2016 to further reduce the costs of delivery for advisers.”
Reflecting on the end of 2015 and the arrival of ‘Workie’ - the government’s monster mascot for their automatic enrolment advertising campaign - Mr Sargisson said that love him or hate him, the Department for Work and Pensions’ push has driven a 350 per cent increase in visits to The Pension Regulator’s website.
He said Sandringham would build on its auto-enrolment service in 2016 as small and micro employers begin to stage in 2016.
“We believe that companies and their advisers will need considerable help and support in this area. Since 2012, 5.4 million employees have been enrolled into workplace pension by almost 61,000 employers and now it is the turn of 1.8 million small and micro employers.
“The findings of TPR confirmed that more small and micro firms intend to use the services of an accountant (28 per cent and 38 per cent respectively) and according to their research around 18,000 employers will have turned to their accountant for auto-enrolment advice in 2015.”
emma.hughes@ft.com
