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Advice firms have ‘plenty of room’ to make a profit

 

There is still “plenty of room” for advice firms to make a profit despite ongoing fee pressure and increased regulation, according to an advice firm director.

Speaking on the FTAdviser podcast, Alistair Fullerton, adviser and director at Lathe and Co Wealth Advisers, accepted there was a downward pressure on advice fees and increasing regulatory costs but maintained there was ample space for profit in an advice firm.

He was discussing the future of advice fees with Simon Bussy, director of wealth at consultancy firm Altus.

Mr Bussy thought the pressure on costs stemmed from the fact there was more information readily available in the world.

He said: “There’s so much free information that consumers want to see value and transparency.

“From an adviser’s perspective, they need to create a model which reflects what the customer wants but also delivers profit for them.”

Mr Fullerton agreed. He said: “If you look back at the late 80s when retail investment products took hold, there was a lot less information available whereas now, in the digital era, people expect to understand what they’re paying and what they’re getting for that.”

Methods to improve profit, according to Mr Fullerton, included technology and the different ways it could be used to lower costs in order to deal with more clients.

Mr Fullerton and Mr Bussy also discussed the possible implications of Bancroft Wealth’s £500 advice offering as well as Vanguard’s entrance to the market, robo-advice and the beady eye of the City-watchdog on ‘value for money’.

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imogen.tew@ft.com

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