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How wealth managers are responding to FCA's advice gap call to arms
by James Phillipps on Oct 23, 2013 at 13:34
‘There is a lot we can do to help clients in those situations. We can review their existing investments, help them understand their overall wealth picture, grouping their accounts and track their goals.
‘It has everything for investors from those who want everything and to do it themselves, to those who say just build me a portfolio. The RDR has thrown up huge opportunities around orphaned clients and online is a great way to service them.’
Charles Stanley Direct is a similar proposition, trying to combine the advisory and execution-only worlds and the latter area got that bit more competitive this week with the launch of new direct to consumer wrap, yourwealth.co.uk.
Powered by Investor Funds Direct, the platform offers the usual suite of Sipp, ISA, and direct investments and requires a minimum investment of £1,000 lump sum or £100 a month. The fee for the wrap is £4 a month.
Toby Hughes, founding director of yourwealth.co.uk, said: ‘With changes to the way financial advisers charge for advice one likely consequence was the emergence in the market of an advice gap, with fewer people taking professional advice, looking at alternative ways to manage their own finances and investments.
‘The launch of the yourwealth.co.uk fund platform addresses this by offering people the autonomy and flexibility to invest and manage their money as they feel is appropriate for them.’
But services such as this, while positive in providing a low cost investment proposition, do not address the advice gap. Nick Hungerford, the founder of Nutmeg, the low cost discretionary manager that can cater for clients with £1,000, said: ‘I am surprised by the lack of innovation given the opportunity.’
He said Nutmeg’s lack of legacy issues or a sales force means its overheads are low, but the flipside of this is that the likes of Bestinvest and Charles Stanley have the resources to support a direct service, while Nutmeg builds scale. These firms can later reap the benefits of clients who build their wealth upgrading to the full discretionary service. That is certainly the plan for these players.
But, ultimately, regulation rather than resource will be the key barrier for many. While those lines between execution-only and advisory are still blurred, a large number of wealth firms will continue to think that the risk outweighs the benefits.
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