IFAMay 12 2023

Just 16% of IFAs would turn away client with £20k

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Just 16% of IFAs would turn away client with £20k

Just 16 per cent of advice firms would turn away a client with £20,000 to invest, according to new research.

Some 45 per cent of advisers surveyed for the latest Lang Cat research said they would take the client on under certain conditions, with 39 per cent saying they have a specific service in place for clients with this level of assets.

The report showed some advisers took a long-term view, and hinted at the potential of a profitable relationship with the client.

“If the client was young and had the potential to become commercially viable over the long term, we would consider offering a service,” one adviser said.

Whether they are just starting out or enjoying retirement, we are here to helpMark Brown, Becketts FS Ltd

“A large proportion of our current higher net worth clients started as lower net worth with high incomes.”

Joshua Gerstler, chartered financial planner at The Orchard Practice, said: "We would love to be able to help everyone. 

“However, so that we are around for the long term and able to serve our clients, we need to ensure we run a profitable business.”

As long as the client is able to pay the company’s minimum fees, he said, and that the firm believes it is worth the client’s money to pay for advice, then they would help them.

“We do have clients with less than £20,000 however this is often children of existing clients who are starting to grow their own wealth,” he added.

Many IFAs highlighted that they would make sure it was in the clients’ best interests to pay for an adviser before taking them on as a client.

Mark Brown, IFA at Becketts FS, said his company assesses clients with less than £50,000 in investable assets on an individual basis to ensure they can be provided with valuable advice.

“At this level our charges are transactional or time-costed, keeping in mind the value we offer to clients under the Consumer Duty,” he said.

Brown said this client group includes young families who require protection, and ‘Henry’ clients (high earners, not rich yet).

Would look to point them in the right direction without advice being givenAnonymous IFA

These two groups have different needs, he said, for instance the former would face financial responsibilities like providing for their own and their childrens’ financial future, whereas the latter might be paying off student debts and saving for their first home.

“Whether they are just starting out or enjoying retirement, we are here to help.”

Samuel Mather-Holgate, IFA at Mather and Murray Financial, said: “Typically we don’t market our company at clients with this value of liquid assets to invest, however we don’t believe clients should be turned away of priced out of the market.”

He said he would be happy to sit down with any potential client to understand their circumstances and aims and objectives.

“Sometimes, after these discussions clients realise that they don’t require an adviser, sometimes they are signposted to somewhere more relevant,” he said.

“On other occasions we will work with the client to offer advice and the relationship can develop over many years into a valuable point of contact for the client and a network of introductions for the adviser.”

A number of respondents to the survey said that the bulk of their business exists due to referrals, and if the potential client came from an existing, trusted source, they would consider them.

“It still might not be cost effective for them or us at that level but if a [current client’s] family member [we] would accommodate them,” one said.

The “existing propositions” mentioned by 39 per cent of those surveyed mainly cover a pro-bono, educational role.

We are mindful of the fact that the paying a fee must be in the clients best interestsGary Boakes, Verve Financial

“We provide a brief conversation with educational information only and point the client in the right direction to be able to serve themselves,” one IFA said.

“Provided we had capacity, we would give them guidance as to the sort of solution they should be looking for, and enough information and education to allow them to self-service,” said another.

“Would look to point them in the right direction without advice being given,” said a third.

Gary Boakes, director at Verve Financial, said he believes in good financial well-being for everyone, regardless of the value of assets they have.

He used an example of a client he helped recently who had a very complicated Ssas which was costing him nearly £1,000 a year despite his investment value totalling £9,000. 

“We did give him the information he needed to go direct but he did not feel confident to do it on his own due to what he believed were mistakes he had made previously, for him paying our fee was worth the peace of mind and we were happy to help get him out of a bad situation with the Ssas provider.  

“We are mindful of the fact that the paying a fee must be in the clients best interests and with low value assets it may not always be right for them to pay for financial advice but for this particular client we could see clearly how our advice would benefit him and so could he."