IFA launches investment service for dormant clients

IFA launches investment service for dormant clients

A financial advice firm has launched a digital investment management service for people shut out of traditional financial advice.

IFA firm Symphony is offering a white-label version of provider FinchTech's non-advised robo-service to allow its clients to invest through its website without having to pay for advice.

For a platform fee of 0.25 per cent, investors are given access to four mainstream investment portfolios and four socially responsible investment portfolios via FinchTech, with equity/non-equity weightings ranging from a 'cautious' 35/65 split to the 'adventurous' 85/15.

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The plug-and-play solution is managed by discretionary portfolio manager Tam Asset Management, which charges an additional 0.65 per cent for its asset management.

Tam does not charge IFAs for the use of its plug-in service but advises them to pass on a platform fee of between 0.25 per cent and 0.50 per cent to their clients.

Ian Walmsley, director at Symphony, said: "We see the world of financial services changing dramatically and we are excited to use FinchTech for the various connections we deal with in the public and private sectors, where new clients of all ages seek financial services direct."

Mr Walmsley said the platform was targeted at clients left behind by the changes made following the Retail Distribution Review (RDR).

The regulatory review, which was implemented at the end of 2012, outlawed the use of commission on retail investment products, which meant advisers wishing to earn money from clients were forced to levy an adviser charge.

However, the regulator was clear whenever such fees were collected value for money needed to be adhered to, meaning charges had to be proportionate to the amount of money invested or the overall value of the service given.

This made it difficult for advisers to serve clients with lower amounts of money to invest.

Lester Petch, chief executive of FinchTech, pointed to a report from the Association of Professional Financial Advisers, published in 2016, which found two-thirds of advisers had turned away potential clients in the preceding 12 months because of the new rules.

The regulator itself pointed to the so-called advice gap in its Financial Advice Market Review out in early 2016, which found the Retail Distribution Review had created barriers to consumer access to advice.

The watchdog said at the time it was keen to explore whether low-cost technological solutions could fill that gap.

Mr Petch said: "Following RDR, financial advisers have been forced to consider the position of clients that fall below a particular investment threshold. 

"These clients either remain unserved or engage with robo-advisers with no long-term proven performance.

"Our white labelled platform can be rolled out in as little as two weeks and helps IFAs re-engage customers who have remained dormant since RDR, while fighting back against robo-creep."

FinchTech currently offers white labelled general investment and Isa products but plans to launch a pension product in 2018.

Darren Cooke, director at Red Circle Financial Planning, agreed the advice gap needed to be tackled but felt automated services, even those called robo-advisers, were not in fact giving advice.