Advisory firms must slash fees by up to 50% and target mass-market orphan clients as there are not enough high-net-worth clients to support the industry, according to a Deloitte report.
The report claims that here are not enough clients with £200,000 investable assets and above to sustain the current adviser community.
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The current charges based on typical investment cases suggest financial advisor fees are more expensive than that of banks, the report says.
The report, written by Andrew Power, partner for financial services strategy, suggest that advisors could do better by focusing on tailoring propositions to the different segments and increasing efficiencies throughout the whole sales funnel.
Reducing annual servicing cost per client from £1,000 to £500 would allow advisors to profitably serve clients with less than £100,000 in investable assets, the report suggest.
The report states that simplified online advice and offering a lower-cost service are key levers for increasing the efficiency of advice.
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By GlobalDataAccording to the report, distributors will need to develop fully automated sales processes, differentiated by client need and lead generation skills. Also they need to retain a good sales force to maintain relationship with clients.
The report said getting advice through platforms such as ‘Advice Made Simple’ or ‘rPlan’, and ‘Money on Toast’ will increase the efficiency of the advisor thus making advice economic.
