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Shifting sands: Is provider D2C push a threat to advisers?

There have been a number of providers making a play for the direct-to-consumer market of late and they are no longer shy in coming forward about their plans. 

Aegon’s D2C push via its Retiready platform, launched last month, is fronted by tennis legend John McEnroe. Meanwhile, Royal London launched its first TV advertising campaign in 10 years earlier this month as it prepares to go after the direct market, initially through simple protection products.

Standard Life, Legal & General and Just Retirement are also said to be eyeing the D2C space.

Going direct represents a significant shift for many of the above providers, which have typically talked about advisers being their “core” market. So how does the direct push sit alongside intermediated business for these companies?

Aegon says Retiready should be seen as a solution for advisers as well as Aegon.

Chief executive Adrian Grace says: “What they have got is a lot of low-value clients and they don’t know what to do with them, suddenly they can give those clients to Retiready and in time, when the client needs advice, we can refer them back to the intermediary.”

The provider says the D2C platform can support an adviser charge being bolted on should a client decide to take advice further down the line. It is also currently working with a group of advisers to devise plans to allow advisers to use Retiready but declined to comment further.

Royal London consumer business chief executive Jerry Toher says he recognises advisers’ concerns about the impact of its D2C launch but emphasises the provider is targeting a very different segment of the market to advisers’ current client base.

He says: “We are not using our D2C proposition to market existing products; we have built simplified products specifically for that channel. 

“Advisers’ existing client base would not be a target for us at all. We are targeting the mass market who are less likely to seek an adviser in the first instance and may have been served by bancassurance channels in the past – and it does not look like anyone has found an efficient way of servicing that market yet.”

Toher adds Royal London would always seek to refer clients back to an adviser where appropriate.

He says: “We are mindful of the regulatory distinction between adv-ised and non-advised sales and we are definitely on the non-advised side of that line. But where clients’ needs get close to that line, we would refer them to an adviser through a directory service like Unbiased.”

“Everybody is watching the thematic review and when that comes out, I hope the FCA will give more guidance on good and bad practice.”

The disconnect between providers’ advised and direct channels appears most blatant when it comes to some platforms. The Platforum has carried out research on the difference between advised and D2C pricing by the same provider based on clients with portfolios of £20,000, £100,000 and £500,000. It found that direct clients of AJ Bell with £100,000 to invest, split between an Isa and a Sipp with eight transactions a year, will be charged £339.60 a year, but the same client going through the Sippcentre advised platform will be charged £447.60.

AJ Bell marketing director Billy Mackay says a typical D2C client is more likely to have £50,000 on the platform than £100,000, so the cost comparison at £100,00 is not representative.

He adds: “The advised and direct propositions are very different. From a tool perspective in adviser world, advisers have access to things like bulk dealing, auto-rebalancing, and they can generate reports. There is a lot of functionality advisers can use, but that functionality has to be built and it has to be costed.”

Can advisers compete?

With tough decisions to make about which clients are profitable to continue servicing, some advisers are looking at how they can incorporate a direct channel within their business. IC Direct, the D2C proposition launched by Informed Choice, was closed to new business last month. Managing director Martin Bamford said the decision was taken as its pricing had become uncompetitive.

Pilot Financial Planning director Ian Thomas says: “You look at something like IC Direct, run by a much bigger firm than my own, and it is clear that it takes a lot of resource to do. Maybe we are not best placed to offer that kind of service.” 

Cazalet Consulting chief executive Ned Cazalet says advice firms need to bear in mind that future advised clients can build their wealth through D2C propositions.

Cazalet says: “Whatever you think about bancassurance or IFAs the key point is the numbers of people
offering face-to-face service is going down and down. And those left giving face-to-face advice are looking to service the higher end of the marketplace. If you have diverse organisations trying to connect with consumers that is not a bad thing for advisers. A young person for example may not wish to see an IFA but they might see an ad on TV and get protection. The same goes for savings plans. Further down the line he will take that stuff into an
adviser’s office when his needs get more complex.” 

Grey area

In regulatory terms, experts say  a significant “grey area” remains between advised and non-advised offerings. 

The regulator is currently carrying out several pieces of work on the issue, including a thematic review of non-advised and simplified advice, the results of which are due to be published in the summer.

The Lang Cat principal Mark Polson says: “Everybody is watching the thematic review and when that comes out, I hope the FCA will give more guidance on good and bad practice.

“Providers are very risk-averse and I suspect they will try very hard to stay the right side of the line. Unfortunately, most of the content is likely to be pretty anodyne as a result.”

Independent regulatory consultant Richard Hobbs agrees there is a big grey area between advised and non-advised which the regulator cannot clarify. He believes this lack of regulatory clarity may cause problems for firms launching D2C offerings further down the line.

Threat to advisers?

EY financial services senior adviser Malcolm Kerr does not believe life offices’ push into the D2C space poses a threat to advisers in the short-term as it may take a while to gain traction in the market.

Kerr says: “Insurance companies have got a bit of a challenge because it has been a long time since they have marketed directly to consumers and they will face strong competition from the likes of Hargreaves Lansdown.  

“Advisers wanting to get into this space would be best off launching a non-advised service for existing clients who want to transact certain types of business. Attracting traffic to an IFA website from new customers would be extremely difficult and require a great deal of investment.”

Polson says advisers have no need to fear a move to D2C, as their propositions will be focused on their relationship with the client.  

He says: “I imagine there will be fights over marketing rights – providers would say we should be able to market to our orphan clients who do not have an adviser but the problem is what is your definition of an orphan client?”

He says providers are “breaking their backs” trying not to upset advisers but sometimes this can be done unintentionally, for example, due to poor quality of data.

Polson adds: “Any provider which tries to cut across advisers will see their back book marching off at a rate of knots so it is not in their interest to do that.

“D2C is a sector with tons of space for new propositions, some of which will come from advisers and some from providers. Any adviser with the mindset ‘that provider doesn’t love me, they’ve got a direct arm’ needs to move on because the world is very different now.”

ADVISER VIEW: Peter Chadborn


“The threat of providers launching to the direct market comes where it relates to companies who cannot be trusted to differentiate between orphan clients and advised clients. There are providers which advisers may be happy to pass clients to if they have a close relationship, but there are others which I would not trust in a million years to respect where clients have come from. Advisers do not necessarily need scale to set up a non-advised service. We set up our own on a low-cost basis because its purpose is to serve only those clients who approach us and for whom an advised solution is not suitable.”

Peter Chadborn is director at Plan Money

EXPERT VIEW: Malcolm Kerr


Insurance companies are looking to go direct because to some extent their traditional product solutions are no longer that relevant. The direct-to-consumer space is very price sensitive – you are dealing with savvy investors who want to shop around for the best deal. It will be very challenging for providers, but if they have got capital and patience, then over time a number of them are likely to succeed in building a successful D2C business. In the short-term I don’t think they pose any real threat to intermediaries.

I imagine providers will work very closely with the regulator on whether their offering is non-advised, simplified advice or full advice. And they really do have to be crystal clear on that. The FCA is fully aware of the risks and anybody wanting to get into thisneeds to fully engage with the FCA. I think the FCA would be keen to engage at the development stage rather than letting problems develop later.  Advisers wanting to get into this space would need to make sure their processes are very separate. They would have to have two websites, and if a client wanted to do their Isa on an execution-only basis, say to the client: ‘You can do it without advice, here is our execution-only website’. Trying to do it through one piece of technology would be extremely difficult and could give rise to client confusion. The FCA is going to be pretty cautious about disclosure of services – particularly given the failings identified by its recent review on disclosure of charges.

Where the D2C route will work for advisers is for existing clients. Getting traffic to a website is extremely difficult if you have no national brand. It is also about skill set – intermediaries’ skills and experience lie in giving advice, not selling a product through a website. 

Malcolm Kerr is financial services senior adviser at EY


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I don’t have a problem with competition from providers.

    It is clear to me that there needs to be clarification on what constitutes an execution only case now known as non-advice sale.

    The old definition used to be a written letter from the client giving precise details of the contract that the client wants to take out. With the online environment becoming more and more prevalent surely on-line wizards can have the potential to steer a client down a particular path which could potentially constitute advice.

    With so much content being provided by some well-known providers including detailed videos, what does constitute advice?

    If providers were allowed to provide products D2C without adequate rules around advice and further harm could be done to the adviser community. If the regulator is able to give clearer definitions than it could have a potentially revolutionary effect to the adviser community and increase adviser numbers over the next few years bridging the advice gap that is becoming such a problem.

  2. I think ‘guidance’ is OK Peter? That’s advice without the advice bit apparently!

  3. Steve

    Should that not read ‘Guidance = advice with no cost or liability and most important hidden charges.

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