Wealth Management advisers worried about clients


Article by Phil

Will lower value clients be disadvantaged by the new Consumer Duty? Some Wealth Management Advisers think that they will.

Research from Wealth Wizards found that there were a significant number of lower value clients (those with assets under management of between £25,000 and £50,000) who had ongoing service arrangements with advice firms. 50% of these clients said that they still wanted a face-to-face annual review from their adviser. But, in 70% of cases Wealth Wizards found that after their annual review there had been no change in circumstances and no requirement for any action by the advisor.

However, the amount of work Wealth Management Advisers needed to do to prepare the review was the same as for most other clients.

The issue is the cost. If a firm charge say £1000 that would be a 2% charge on £50,000 investments, or 4% on £25,000. This might be considered by the FCA to be too high.

A big part of the new Consumer Duty is the requirement to consider value for money. Including comparing charges with other Wealth Management Advisers and market averages. At these levels some firms may be tempted to stop offering an ongoing advice service to lower value clients (in terms of assets under management. Which it seems from the research would disadvantage the 50% of clients who still want to see their adviser.

This could be an unintended consequence of the new rules intended to promote better value to clients.

More Wealth Management Advisers could adopt our approach. We offer different levels of ongoing access to advice. These include a Digital offer which is lower cost and offers one remote meeting with an adviser each year plus access to investments through our online portal. The alternative is for clients to continue to simply use their adviser on an ad hoc basis and pay for the services on a transactional basis.

It would be a shame if clients lost touch with their advisers.


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