'We want to capture clients earlier on': Charles Stanley on entering simplified advice

In its final results for the year to the end of March, released today (May 27), the firm said it prioritised providing advice to clients who are looking for a service which sits between full discretionary investment management and execution-only, and to this end has created a new division called Central Financial Services.

The service will include model portfolio services, foundation financial planning and execution-only services and follows Charles Stanley's reorganisation into three divisions in April: investment management services, financial planning services and central financial services.

Porteous, the group head of distribution at Charles Stanley, told FTAdviser the decision was taken as a result of a change in client demographics as well as an awareness of changing trends within asset management.

“[We wanted to] capture clients earlier on their wealth journey, recognising that if we didn't do something within pure XO, that could be commoditised out, so we had to value up,” he said.

“In asset management in particular, it was a direct result of trends that we could see in the intermediary marketplace, where [there was a focus on] sustainable, repeatable performance outcomes, real outcomes-focused sort of landing, [with] the regulatory value for money narrative driving that forward." 

Porteous added that although the downward pressure on fees in the industry was part of the decision, it wasn’t the main reason for the change. 

“We saw this as propositional first, and there is a cost aspect to that. But I wouldn't say cost was the principal driver.”

Explaining what the new division will provide, he said: “We’ve brought together our XO division and Charles Stanley direct brand with our asset management capabilities, and we've added to what we're calling our foundation range of services, which we see playing into two or three big trends that we're seeing in the marketplace, which were reflected in the FCA paper in December around the RDR FAMR review.

“So we see that as an exciting way to bring clients upstream from our execution only service.”

The Financial Conduct Authority had warned of "significant" price clustering in the advice market in its long-awaited review of the advice market post Retail Distribution Review and Financial Advice Market Review, out in December.

It also found the market was dominated by the bigger advice players, despite the sector consisting of a high number of smaller firms and called for more advice models and services which could serve more consumers at different stages of their lives.

Porteous added that the second reason for creating the new division was the evolving direct to consumer market (D2C).

“When you look at the growth in the D2C space, we think that the natural evolution of this is for people looking to take their first step into advice, but perhaps wanting to take a tentative step rather than a fully fledged step into financial planning.”

He added the firm does not think the growth in D2C is a blip, and was looking to tap into that growth.

“And thirdly, over time, [we want] the ability to structurally integrate both asset management and the foundation services into our execution-only brands. So we sort of see synergies and operational leverage as being a part of this new division.”

Porteous added that the firm thinks asset management has so far been under-sold in the intermediary space.

“We're excited about taking that externally, and as part of that offering, we're offering a new discretionary service, which is aimed at those intermediaries and will be rolled out over the next few months. “

The news comes a month after Aviva confirmed it was also looking to launch a simplified advice offering for a lower cost. 

At the time, Lindsey Rix, chief executive officer of UK Savings and Retirement at Aviva, told FTAdviser it would look to launch this offering over the course of 2021.

She said: “It’s still early days. I am pleased with how the team has transitioned and the early signs I am seeing on flows and the number of customers we are talking to.

“We have good plans for what we might want to do over the course of this year to help expand and offer broader wealth advice but I want to see that the proposition we have today and changes we made last year are working and delivering for our customers.”

sally.hickey@ft.com