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One in five clients keep investing ‘side-hustles’

One in five clients keep investing ‘side-hustles’

One in five advised clients are investing in ‘side-hustle’ accounts alongside their main portfolio, according to research from Boring Money.

A survey of 6,500 UK adults showed that 19 per cent of advised clients also hold an account with one of the top five DIY investing platforms.

Some even hold positions in speculative and illiquid assets: 9 per cent hold cryptocurrency assets, while 4 per cent said they hold a peer-to-peer or crowdfunding platform account.

Boring Money said the findings suggested that a significant minority of clients were holding assets outside the scope of their relationship with their adviser but this did not mean the relationship with their adviser was bad.

Rather, investors used the accounts to experiment in speculative assets and dabble in riskier assets alongside their advised portfolio, it said.

Boring Money research manager Jessica Galletley said: “A significant minority of advised investors seem to want the comfort of knowing their core portfolio is overseen by a qualified financial professional, while also running a pot of money themselves as an investing side-hustle.

“Our findings indicate that advisers still retain remarkably high customer satisfaction rates, and we think that in most cases clients are just indulging in some investments they can experiment with outside the scope of the advised relationship.

“Nonetheless, it is important that the financial planning industry is alert to the fact some clients are dabbling in other assets, and will have a foot in both camps – advised and DIY investing.”

Ben Hammond, platforms director at Altus Consulting, said although DIY platforms could encourage people to invest sooner, there was a risk they could encourage clients to drop their adviser.

He said: “Where it can become a little bit more difficult is where an advisor is already advising a customer, they've been there for a number of years, and the client feels everything's a little bit stale, and then they think, well actually, you know, I don't need my ongoing advice.

“For an adviser there’s a risk that you’re educating your clients to a certain degree and they go off and do it themselves, and you lose that business.”

New advice models

The Financial Conduct Authority is keen for more diverse models of advice to emerge which could serve people at different stages of their lives, such as simplified and one-off advice.

In March it sounded alarm bells after it found young investors were taking on too much risk when investing, with investment apps, social media and cryptocurrencies behind the greater risk exposure.

What's more, it found that investors often had high confidence and claimed knowledge but in reality exhibited a lack of awareness of the risks of investing.

The FCA said in December in its review of the advice market post Retail Distribution Review and the Financial Advice Market Review the sector needed more innovation to be able to serve more people earlier on in their lives.