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Half of advisers continue to serve clients with less than £50k

Almost half of advisers continue to service clients with less than £50,000 but many admit to doing so at a loss, new research suggests.

Aviva’s latest Adviser Barometer, which surveyed 1231 advisers in September, found that 46 per cent of advisers polled work with clients with less than £50,000, while 36 per cent have no minimum investment level. A further 19 per cent require clients to have a minimum of £50,000 to provide pension and investment advice.

Over 55 per cent of advisers said they had seen no significant change in the number of active clients post-RDR, with 28 per cent seeing an increase and 17 per cent seeing a decrease. 

When asked what was the main source of new clients, 52 per cent said it was due to new clients to the market, 29 per cent said it was due to picking up former clients of other advisers, and 20 per cent said it was due to picking up ex-bank and building society advice customers.

Some 59 per cent of advisers have adopted a combined charging structure based on initial and ongoing charges based on the level of investment, and 83 per cent of advisers polled have chosen to provide independent advice.

Some 48 per cent of those polled reporting concerns over regulatory levies, up from 44 per cent last year.

Skerrits head of investment Andy Merricks says: “The writing has been on the wall for quite a while for less wealthy clients and the RDR has finished off the idea of good advice for all. Those clients who can’t or won’t pay the fees will probably end up missing out.”

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  1. Very interesting and a couple of points come to mind. I see that nowhere does this research make mention of regular savings of any description. So in my view there is (and has been) a lot of business being done on a switch/re-reg basis so it is not exactly new business. It is old money on the churn machine (albeit in a clients interest mostly). According to research carried out by various providers and platforms the huge majority of investment business is being done with the AC being facilitated by the product so again the “results of this current pole is very misleading. Most clients whilst knowing we have to get paid for the advice we give and the sales made are happy that it is done in the age old way of being taken out of their investment and not having to write a cheque. It really is all smoke and mirrors out there and these bits of research are designed to elicite the response desired by the ones carrying out the research. It would be very interesting to see what would happen to the investment world if the FCA (God bless their cotton socks) stated that AC could no longer be provider facilitated. The vast majority of adviser sector would come to an abrupt halt at a pace that would make the US government shut down look like a snails pace. I hope to god this never happens and don’t think it will because even the FCA know what the outcome of this would be. The RDR has already effectively killed off regular pension, ISA, UT, Friendly Society savings policies a these people (who make up the vast majority of UK population who need advice) but are very unlikely to be able to pay what we would need to charge to make this profitable, and it doesn’t take rocket science or research to see that.
    Another point I note is the 83% who have still remained Independent. It will be interesting to see how many of these who claim to still be independent under the new rules still have the IFA badge in 2 or 3 years time. I would submit this number will have diminished hugely due to the requirements needed to demonstrate they meet the requirements being checked by the regulator who will look at the system in place and have a chuckle to themselves before telling these IFA’s to remove the “Independent” from their name.
    It would also be of interest (well to me anyway) to see how much investment business has been done by these so called IFA’s since the start of the year that is not Life/pension/ISA/OEIC. I don’t think the answer would be very much. I am not knocking these people for wanting to retain their “Independent” tag by any means I just think its only after they get their visits from FCA that it will be driven home to them that in most cases they are restricted whole of market advisers under the definitions now. It is likely to come to this realisation in due course that they are and it is not by any means a worse offering in 99.99% of the time than someone who does actually meet the IFA definition but has to jump through so many more hoops to show they are WILLING AND ABLE to advise on the entire market but in most cases still arrive at a conclusion that selling a pension/bond/ISA or OEIC is good for the client. It is a sad state of affairs that it has come to this but unfortunately it is a fact of our lives.

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