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How will you deal with smaller clients in the RDR world?

This week we ask advisers how they will cater for their lower-net-worth clients in the post-RDR world.

Andrew Reeves

Director, The Investment Coach

‘In our relationship with our lower-net-worth clients, the biggest changes have been caused by the internet rather than the retail distribution review: with so much financial information available, you have to consider how to package market information and how best to convey your financial knowledge to the client.’

Terry Bignall

Senior consultant, Executive Advisory Services

‘We are going to be dealing with our lower-net-worth clients on a transactional basis, and with new clients coming in, we need to establish whether working with them will be cost-effective. You have to be open and honest with the client from the off: we inform them about the charging structure we are going to be using and find out whether they will achieve a level per annum to make the relationship financially viable. But it’s important to remember that people’s circumstances can change overnight and you should never write off a potential client.’

Colin Raizon

Financial consultant, Merlin Financial Consultants

‘We are not applying a hard-and-fast rule when looking at lower-net-worth clients. A lot of other firms are putting in strict rules that they won’t deal with clients with less than £100,000, or they are looking at customers purely in terms of what they can bring the business in five years’ time. We are looking at each case on an individual basis. We’ve been with many of our low-net-worth clients for many years and we intend to continue helping them in the future.’

Sue Hussin

Senior financial planner, Mackay Stewart & Brown

‘Existing clients who currently pay less than our minimum fee of £200 per month will receive an annual valuation, an annual meeting upon request (for which we may have to charge), regular newsletters and access to electronic valuations. We plan to offer a new lower-cost service to young professionals who will be good clients in the future.’

Andrew Elson

Chartered financial planner, Beaufort Asset Management

‘For most IFAs, it will not be a big market in the RDR world. I think the profession is inevitably going to need to concentrate on higher-net-worth clients: holding on to a single high-net-worth client could be ultimately preferable to keeping six smaller ones. That being said, by changing communication techniques, we can still provide great services to smaller clients. By using Skype or talking with clients on the phone while we update their information online, we can improve communication and provide a more cost-effective service that would keep these customers viable.’

Dorian Squires

Investment manager, Compass Independent Financial Services

‘Our main consideration was our ability to offer a relevant but profitable service. When finalising our proposition, it was evident a more simplistic offering was required as we were keen to maintain our independent status and not get involved in restricted advice models or “decision tree” advice. We settled on using a multi-manager approach where customers could benefit from an element of portfolio management without needing proactive ongoing servicing.’