Opinion differs as to what has caused the advice gap. Some believe the move from commission to fees has made advice unaffordable for the mass market, with advisers having to focus on wealthier clients for commercial reasons, while others say the trend was happening anyway, regardless of the RDR.
For Simplified Money director Lesley James, various things – including the RDR, developments in technology and the increased need for advice following pension freedoms – have come together to create the perfect opportunity for a simple, low-cost remote advice business aimed at those who have been left behind.
“The market is crying out for what we want to do. Our business is not pay too much money,” she says.
James is at pains to draw a distinction between the firm she launched with her husband Mark early last year and robo-advisers: “Simplified Money is much more than a service offering risk assessment online and then driving people into a risk assessed portfolio.”
That said, she does not see robo-advice as a bad thing, particularly for DIY investors who need a nudge into a portfolio with the right level of risk.
“It’s still planning and harnessing risk for that market. And I think it gives us all a bit of a kick, keeping us on our toes. Even high net worth advisers.”
Simplified Money focuses on clients who have savings and investments below £200,000 or an annual income below £100,000, charging fees from £25 a month.
However, the firm looked different at launch early last year, offering an independent “VIP” service for clients who exceeded those limits. James now refers such clients to a local face to face adviser if deemed appropriate. Why the change?
“I’ve looked after a couple of people on an individual and fully bespoke basis but I’ve begun to pass on those earning more than £100,000 a year. They have more sophisticated needs compared to other people; they need face-to-face advice. If we can pass on those clients, we can concentrate on our market.
“Also, as of 3 January under Mifid II, I personally cannot be restricted and independent. I’ve chosen to focus on restricted advice and it wouldn’t be fair to look after VIP clients on that basis,” she says.
For Simplified Money’s mass market target, the purpose is not to tell clients they need a pension or Isa from a certain provider, but more about helping them decide what they really need in their lives on an ad hoc basis.
“We can do this profitably but we have to do things differently. Big advice businesses are able to spend a lot of time on someone. I’m not going to spend as much time on them but the time I have with them will be spent talking and listening to them. We need to be efficient,” says James.
Simplified Money relies heavily on technology for a lot of the tasks that traditionally would have been done manually by an adviser and paid for by the client because of the time taken.
“Technology has taken a lot of the hard work away from us. We can get technology to do the data gathering, fill in forms, risk assessment report writing, note taking. Anything technology allows us to do we will do it. We’re not spending the time we spend on clients filling in forms, so we don’t need to ask them to pay for that.”
The firm is also built on personal coaching. “I use the term coaching in the sense of education and motivation, which is at the core of what we do. It’s not only in face-to-face advice that you need to communicate to keep people engaged,” says James.
James joined the industry as an actuarial assistant at Manulife Financial in 1988. “When I started in financial services, it had only just stopped allowing 25-year endowments to be sold at the bottom of the escalator in tube stations,” she says.
She qualified as an adviser early in her career but spent most of it in product research and marketing. More recently, she set up her own consultancy to help advisers and other small business with their marketing needs.
Having this experience on tap helps Simplified Money’s business model in ensuring marketing costs are minimal but James is willing to spend when necessary.
She says: “I do most of the social media and advertising. I enjoy marketing. It’s about customer awareness, being in their place, and thinking about how they think.
“I believe in the value of having a good brand and an agency did the work on that for us. I’m never going to give up on the marketing completely but I believe in knowing your limits and I have to ask the experts in at the right time; sometimes I will call people in to brainstorm.”
James is happy for Simplified Money to remain an appointed representative of In-Partnership rather than becoming directly authorised.
“It cuts down on the paperwork and keeps our resources down, which helps cashflow and allows us to get on with what we are doing,” she says.
“One network I met told me there would be an application fee, then it would take a percentage of the business. In-Partnership had a completely different approach, being all about how they could help us. So we made the right decision,” she says.
What is the best bit of advice you’ve received in your career?
Don’t keep everything in your head; write it down on a to-do list.
What keeps you awake at night?
Lists! I think about a lot of things at the same time and they go around in my head.
What has had the most significant impact on financial advice in the last year?
Pension freedoms and technology.
If I was in charge of the FCA for a day I would…?
Find a better way of funding the Financial Ombudsman Service.
Any advice for new advisers?
Listen to your instincts, keep your eyes open and ask questions.
2016-present: Director/financial adviser, Simplified Money
2014-present: Director/owner, Marketing Finance
2011-2014: Head of marketing, Partnership
2006-2011: Director, Marketing-hub.co.uk
2002-2006: Intermediary marketing manager, M&G
1998-2002: IFA marketing manager, Axa Framlington
1990-1997: Various marketing and product research roles at Provident Mutual, Abbey National, Liberty Life, Axa Equity & Law and Saga Investment Direct
1988-1990: Actuarial assistant, Manulife Financial