Julie Hepworth, group regulatory manager, Perspective Financial Group
There has been much written about the predicted ‘advice gaps’ that RDR will create. One of the views is that ‘Middle England’ will lose out because RDR will leave only high net worth clients able to afford advice.
But those in a younger age bracket are not well-served by advisers, either. Younger clients often do not have investable assets from which remuneration can be drawn to cover the adviser’s costs, so this client base can become forgotten. This is likely to remain post-RDR unless the potential future value of this demographic is recognised and solutions are designed to engage with the high net worth clients of tomorrow.
The perception that younger people have insufficient assets to merit advice is often false. There are numerous advice opportunities, for example when assets are passed down or inherited and when careers accelerate.
So how can financial planning be made attainable for younger clients and profitable for firms?
I’m a great believer in nurturing young talent and there has never been a more important time to nurture than now, with the prospect of a significant reduction in the number of advisers post-RDR. Our industry needs to attract new talent to replace lost experience. This is an opportunity to get involved with universities
that offer financial planning degrees. Trainee advisers often present a dilemma – what type of clients should they see to gain experience? Are young, non-high net worth clients an ideal fit? This is the perfect chance for firms to secure their next generation of clients. A trainee adviser provides an opportunity to attract clients of a similar age and for the adviser to ‘grow up’ with those clients while building trust.
The quandary of how to engage effectively at a profit does persist though. One solution could be to offer a monthly low-cost retainer service which gives the client access to the adviser on a limited range of financial planning matters such as mortgage advice, protection needs, setting up a pension and regular savings. This lends itself nicely to the client then progressing onto an increased level of service when a higher level of assets has been accumulated.
It is important for firms to recognise everyone starts somewhere and the chances are younger clients will continue with their adviser throughout their lives. This is an important sector of clients that should not be forgotten.