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Quarter of advisers struggle to manage younger clients

Quarter of advisers struggle to manage younger clients

A quarter of advisers (26 per cent) are struggling to come up with a profitable service model for their younger clients, a survey has found.

A survey by investment manager PortfolioMetrix, published today (June 9), found that adapting to managing the needs of younger clients was the biggest concern for the 150 advisers it polled.

Ben Peele, UK managing director of PortfolioMetrix, said that while much has been written about the need for younger people to have access to financial advice, it was still a significant issue for advisers.

Peele said: “While many people under the age of 30 may not have significant assets to invest right now, a Capgemini report last year highlighted that many advisers are not ready to manage intergenerational wealth transfer and that around four out of five beneficiaries will switch away from the original adviser.

“Clearly, finding a way to keep the surviving family of older clients with the firm is an issue that merits some careful thought by advisers.” 

But Tim Morris, independent financial adviser at Russell & Co, said managing younger clients was less of an issue for him.

However, he works in London and often gets high earning and relatively wealthy clients in their 30s. 

He also works with a few well-established business owners of a similar age.

Morris said: “I find it’s not much different dealing with them than many of my older clients. The main difference being the work is generally less involved than those at retirement, with complex affairs or large estates. 

“Although financial complexity can increase with age, it doesn’t  always, and I have some wealthy clients with relatively simple financial arrangements and needs.

“The main difference is that younger clients don’t have the same knowledge of financial advice – unless their parents have educated them.

“Yet, if they value the service they receive, they pay for this in the same manner as other clients. This can be a flat fee or percentage of assets.”

Meanwhile a similar number (24 per cent) of the advisers polled by PortfolioMetrix were concerned about compliance requirements and pressures, and 23 per cent were worried about unprofitable clients.

And although regulatory pressures, new clients and technology were of some concern to advisers, they fell below time management and succession as significant concerns.

Loss of clients (1 per cent), robo-advice (3 per cent) and retraining staff (7 per cent) were of little concern.

The survey also found that most advisers (34 per cent) felt they would improve their business if they were able to scale up without adding extra staff.

Another area which they felt could be done more efficiently was preparing client review reports, as mentioned by 31 per cent of advisers, while 28 per cent said finding new clients was an area in need of improvement.

Peele said: “Being busy with multiple tasks creates a tendency for adviser business owners to ‘paper over the cracks with people’ but scalability without extra staff is possible with the right technology.