View more on these topics

James Hay weighs up future of orphan clients

Platform James Hay is weighing up how to manage orphan clients as it predicts the number on its platform will increase in the coming years.

Speaking to Money Marketing, James Hay chief executive Alastair Conway says the platform has started looking into orphan clients and whether it needs to do anything for those on its platform.

He says: “We only have a few thousand orphan clients but I expect as the years go by that number will rise. Because most of our clients are quite large as a customer size, advisers don’t let them go. For platforms who have a lot of smaller clients, who might not be viable in a fee world, you might find there are a lot more.”

The FCA highlighted problems with orphan clients in its platform market study interim report, published last week. The regulator estimates there are just over 400,000 orphan clients with more than £10bn of assets on platforms.

It is concerned orphan clients have limited ability to access and change their investments on adviser platforms, which means they are paying for functions they cannot use.

Cast adrift: Two years on, has the sunset clause left clients orphaned?

It also found some platforms charge up to 0.5 per cent more on top of existing platform charges for orphan clients. The regulator estimates around 10,000 orphan clients are paying extra fees of more than £1.2m each year.

James Hay says its work on orphan clients is not as a result of the platform paper but acknowledges they do present risks for the industry.

Conway says: “Orphan clients provide a unique challenge; they haven’t always chosen to self-manage and the move to be a direct client may or may not have been their decision. They could have been completely reliant on the advice they were previously receiving.”

He says: “As such they present a significant risk for the industry and platforms need to ensure that communications, including the options available to them, and pricing for orphan clients are clear and concise.”

Conway says James Hay does not charge orphan clients more but can see why some platforms might because of additional work the platform may have do without an adviser filling in the gaps.

He says: “It is not unreasonable for a platform to say, if I am doing more for a customer, I need to look at the charging for that differently.”

Recommended

1

Pressure on govt to save pension dashboard gains momentum

A public petition against plans to shelve the pensions dashboard has climbed from 17,000 to more than 82,000 signatures since Thursday. The petition, hosted by 38degrees, was launched six days ago. Backlash against the government has emerged over the past week as rumours swirl that ministers are considering abandoning the planned 2019 introduction of the dashboard. […]

Mark-Neale-at-office-in-2014-700.jpg
11

FSCS boss: We want advisers to think our levies are fair

The boss of the Financial Services Compensation Scheme has highlighted the importance of industry support for the lifeboat fund as he appeals to wanting advisers to think the way it raises levies is fair. Speaking to Money Marketing, FSCS chief executive Mark Neale says the organisation’s overarching role is to give confidence to advisers. He […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
97

How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com