Advisers find sub £100K asset market uneconomic

‘Advice flight’ - one third of advisers leave sub-£100K asset market in five years  

  • Majority of advisers no longer serve clients with less than £100K
  • Warnings of a ‘lost generation’ of clients
  • Marketing strategies change as advisers move to capture younger affluent

The majority of advisers [57%] can no longer afford to take on clients with less than £100,000 in assets, a massive change from five years ago, according to new research from Canada Life.

The survey starkly reveals the financial impacts of regulatory change and increased insurance costs in recent years.

When advisers were asked the minimum amount of assets required to make it viable to take on a client, only around one in six (16%) said they would take on a client with less than £100,000, down from half of advisers (50%) in 2014. In reality, this means around one third of advisers have left the sub £100K client market in just five years.

Neil Jones, tax and wealth specialist at Canada Life, said:

“The economics of providing advice has fundamentally changed, no doubt an unintended consequence of increased regulation and rising insurance costs.

“In particular, the cost of providing advice has increased. That clearly means some clients will struggle to get advice, as they are effectively priced out of the market. Perhaps this is a bill that we should be prepared to pay as a society, but it’s costing both advisers and the wider population dearly.

“If this trend continues it could create a ‘lost generation’ of potential clients for whom it’s unnatural to just pick up the phone to their adviser, or to create a comprehensive financial plan.

“For advisers, the reality of rising costs makes it necessary - potentially permanently – to shift their focus towards wealthier clients and also to explore different income models.”

Some advisers are responding to the income challenge by turning to new measures to attract younger clients.

Over one in three [35%] are changing marketing strategies to appeal to younger clients, such as increasing their use of social media, adopting social media etc., while a third [33%] are planning to adopt a more technology-based service rather than face-to-face meetings.