IFAs should be wary of dropping their less profitable clients and should develop new business models to cater for them, according to Isis Asset Management.
It is telling intermediaries that they need to adapt their advice and charges and the way they do business with different clients.
It says advisers should resist the trend among firms to review and cut their client base to focus on core highprofit customers as that client bank can be repositioned to receive a lower level of service and still produce lucrative income.
Isis proposes a business model where the lowest grade of client is placed in a fee-basedonly category, with all their investment assets placed in a multi-manager fund.
Intermediaries are also encouraged to revise their investment proposition in light of the growth of multi-managers, funds of funds and wraps. Director (head of distribution) John Yule says firms are increasingly moving across to these new processes.
He says: “This could be ideal for the type of client that maybe only comes in a few times a year. Advisers that have done this find that it can bec-ome a very profitable alternative part of their business. This is a theme that we are really starting to see develop and one that I would encourage IFAs to look at as a new stream to their business.”
Hallmark-ifa managing director David Holbrook says: “Concentrating on a few important customers does come with a word of caution. You have to ensure that you can regularly refresh the people on your books because there will be some natural wastage. You also have to find a way to get business growth.”