Brewin Dolphin is to withdraw investment services for sub-£50,000 clients, arguing the cost of servicing these individuals has become unsustainably high.
Clients affected by the changes are being contacted by the firm and offered execution-only portfolios as an alternative.
‘Letters are going out and services are being withdrawn for investors with less than £50,000. The reality is that many of these clients remain with the firm on an execution-only or non-advised basis, and we want to be able to re-engage them with a compelling direct-to-consumer offering,' said Stephen Ford (pictured), head of investment management.
Ford said Brewin recognised the post-retail distribution review (RDR) advice gap is ‘real, it is here and it has opened up faster and wider than many expected, including ourselves’. As a result, the company is looking into how it can develop a new direct proposition, with its managed funds service at its core.
How to deliver this in a way that does not require face-to-face advice in order to make the offering simplified and more cost-efficient remains the key challenge, Ford said.
In June 2012, Brewin launched a managed portfolio service (MPS) for its smaller clients, headed by Edinburgh-based divisional director John Moore, to drive down the costs of portfolio management among this area of its client base.
At the time, the MPS was offered to 27,000 clients with investable assets between £10,000 and £150,000, although clients with over £100,000 could opt for bespoke management.
Five risk profiles were offered, with a 1.2% management fee plus VAT and no minimum or transaction charges.
The decision to withdraw investment management for sub-£50,000 clients also follows Brewin’s decision to withdraw its advisory dealing service, as a result of regulation back in autumn last year.
Clients were offered advisory and discretionary managed services as alternatives, alongside execution-only and its MPS.
The move helped drive execution-only assets up net £1.3 billion, a 24% increase on the year. Of this, £900 million was in new inflows, while £700 million was transferred from advisory to execution-only, Brewin reported in its preliminary annual results.