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Turning away lower earners risks backlash

IFAs who segregate their client base and turn away low-earners may face complaints when their advice is reviewed by clients’ new advisers, warns Zurich.

UK intermediary sales director Richard Howells says that some advisers are considering focusing on wealthier clients as part of their move towards fee-based advice.

But he warns that clients forced to go elsewhere will inevitably have their past financial services decisions reviewed by their new adviser, who may be quick to point out that the chosen products are not necessarily the most appropriate.

He says the knock-on effect of this could be an increase in the number of complaints against the original adviser.

Howells says: “People choosing high net-worth clients over lower-end clients need to be aware of the realistic impact of doing this.”

Evolve Financial Planning director Jason Witcombe agrees. He says: “There is a lot of truth to the idea that sending clients away may lead to more complaints. The process of client segmentation has to be managed very carefully and it may simply be a case of offering different levels of service.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. I disagree totally. If you identify a set of needs for a client and he can’t or won’t pay for the advisory work involved, or the implementation of any product/s recommended, let alone the products themselves, then he’ll have to go elsewhere. That’s free market economics, isn’t it? What would be the grounds for any complaint?

    To suggest that any half-decent IFA (and the vast majority, in this day and age, are considerably better than merely half-decent) would merely flog an unsuitable product just to get some commission is both insulting and fatuous.

  2. Is thsi Zurich saying “we haven’t got anything to offer HNW clients but please send us all your poor ones and your troubles will be sorted!”.

    What a strange conclusion to draw – quiet time and in need of some media space?

  3. isn’t this essentially saying that if another adviser looks over your recommendations, they will find a reason to complain.

  4. The reason that FOS receive so few complaints (less than 3% of the total) about IFAs and then only uphold less than 40% of those compalints is that the IFA sector is already a pretty efficient self regulating sector.

    As Julian corectly points out most IFAs are smart enough to work out that there is rarely just one suitable solution (product or advice) for any given set of client circumstances. Most product floggers would struggle with that concept.

    I sense that Richard is trying to introduce yet another unnecessary level of fear into the equation. Just because Zurich are struggling ahead of the RDR doesn’t mean that the IFA sector should sit back and not segment its client proposition

  5. I agree with Julian and Nick. Presenting a service proposition that your client has either agreed with (and is prepared to pay for), or has actively decided to refuse is no grounds for complaint.

    The important thing is to ensure you have a service proposition or menu that isn’t inappropriate for the level of service you wish to offer that client, and that you record every action relating to the contact with that client so that if there’s ever any comeback, you can demonstrate the steps you went through. This applies as much to someone with £5k as £5M.

    This is scaremongering from mass-market product providers who are finding themselves marginalised in this increasingly service-based industry.


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