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Advocate: Minimum client asset levels

Advocate: Minimum client asset levels

This month's question: Are there renewed signs of advisers having to increase clients' minimum investable asset levels?


John Stirling, director at Walden Capital

It is very clear that for advisory firms to make money they have to have a strong market offering, and be able to service their market profitably – just like every other business.

But with Mifid II making it a requirement to document much of the ongoing review time that is currently often fairly informal, and the General Data Protection Regulation meaning that advisers need to have a robust data-retention strategy beyond ‘don’t lose it’, we are in a different world. 

Also, with the FCA increasingly treating small companies as small versions of large firms, it is incumbent upon those of us who run small businesses to be ever more vigilant, ever more prepared and to ensure our processes are strong, consistent and objectively effective.

All of this is good stuff, and in many respects simply good practice. However, the formalism that has come, in particular from Mifid II, means that the cost to provide basic services to simple customers has soared. I think it is clear that this is having a knock-on effect on traditional adviser businesses, and they are sadly having to withdraw from those clients with lower levels of assets who cannot be profitably serviced.

You may shout ‘technology’ as the answer, and perhaps it will be in time, but the regulatory landscape is not overly supportive of such developments yet, and few small advisory firms have the pockets to make a splash in that space: you need deep pockets indeed as Nutmeg has once again demonstrated in its annual results.



Fraser Glass, director at Fryer Glass

If advisers are, then this is just a further indication that they may be failing the needs of those who increasingly need their services.

What is so important about a person’s level of investable assets in deciding whether or not they are a ‘suitable’ client? We should try harder to provide imaginative, affordable financial advice, whether to penniless, in debt 21-year-olds (the parents pay?), or multimillionaires with all the financial problems that great wealth can bring.

If the level of investable assets is important, is this because such persons are more able to bear the cost of the charges, and/or that investment-orientated services can be more efficiently provided? If so, then this investable asset requirement may work to restrict the range of services and expertise that advisers provide.

If financial advisers are to meet the huge advice need, they may need to rethink their approach. Instead of increasing their minimum investable asset requirement, they may need to enhance their financial subject knowledge and review time management.

Clients need first of all to be given understanding by having their finances explained to them and their questions answered. They then need recommendations to take the right financial decisions and to stop taking the wrong ones.