Nutmeg believes the industry has much further to go to really adapt to the post-retail distribution review (RDR) world and is disappointed by the treatment of smaller clients.
At an event this morning, the online discretionary manager criticised Barclays following news the private bank intends to offer clients with less than £500,000 a reduced level of service as it repositions for higher net worth clients.
Nutmeg chief executive and former Wealth Manager cover star Nick Hungerford (pictured) said he views decisions like these as an example of how clients are among the big losers from the RDR.
Hungerford said: 'We’ve seen a shift in the investment industry this year as a result of the RDR as companies make clear where their client priorities lie. You only need to look at Barclays’ decision to scrap wealth management services for investors with less than £500,000 to see that.'
He added: 'IFAs have been slower than predicted to respond to the new regulatory guidance but we expect to see many more businesses restructuring in 2014. Sadly this delay is not one caused by a client- centric mindset, rather the fact that advisers can eke out trail commission (fees often hidden from clients) for one more year.'
Hungerford is less than impressed by the response from many established financial institutions, which have shown they are unable or unwilling to restructure to help less wealthy investors.
'There are millions of UK savers out there looking for an intelligent investment service. But not many companies are filling the so-called ‘RDR advice gap’, Hungerford said.
'To us, deciding that people with £450,000 are too poor to be worthy of an expert investment service smacks of hubris and reflects incredibly inefficient operational processes.'
Hungerford expects to see more overhauls of business models next year,as regulation takes its toll, but believes some will try to squeeze out as much commission as they can for as long as possible.
'We will no doubt witness a lot more businesses restructuring in 2014, but we expect the independent financial advisers to continue to drag their heels. They’re reluctant to change and won’t do so until trail commission is taken away.'