'Lower value' clients

Hi everyone, I hope you are all keeping well. One of the advantages of this lockdown is that there seems to be more time available to ponder things like processes and efficiencies. With this in mind, I am interested to know how you and your firms deal with ‘lower value’ clients? i.e. those with less than £100K of assets. They might be children of clients, or ‘builders’ such as young lawyers/doctors etc, who may become big clients in future.

Do you have a separate proposition for these, or do you not deal with these clients at all, as they aren’t profitable? Or is there a minimum fee applied?

What do they get? It is basic investment management i.e. a Managed fund, or something more complex.
Do they get financial planning or is that extra?

Sometimes it is a good idea to take these clients on long term, as they have a lot of potential but to give them the full service would mean making a loss on them, which might be good in the long run, but not always.

I think this is what is commonly referred to as the 'advice gap!'

Thanks all.


  • If your business model is based on the amount people have to invest / hold in pensions then perhaps this is what needs to be reconsidered?

    If providing planning is what you are doing then this has a value that has nothing to do with the size of a client's assets.

    Rather than dismiss such clients as being uneconomical (so you are in effect deciding what they can afford to pay) set out your fee structure based on the provision of financial planning advice - both initial and retainer; have a minimum for more straightforward cases - the fee can be more if the situation is more complex, and set that out to the client - it is up to them to decide if it is affordable.

    I have attended far too many workshops / seminars with groups of advisers (pre RDR) who said clients would not pay fees if commission was abolished; or that they wouldn't pay very much / enough) It was all wrong ( and the enlightened knew that).

  • Hello, thanks for this. I don’t disagree with any of that, however we do have a segment of clients where they either don’t want, or don’t need a full financial planning service at the moment. I’m thinking children of existing clients, who might be studying at university and need a relatively simple investment solution until they are older, or very young professionals, who want something similar at an early stage of their career, pending more complex financial planning in the next couple of years. I’m interested to know how other firms enagage with this, admittedly small, client segment.

  • JonaJona Member

    @Gustavo_Fring Certainly for junior family members (and depending on value and complexity) we tend to offer this at no extra cost over and above what parents pay us as an ongoing fee. Advice is for the family unit - plus does this make clients more "sticky" and more willing to refer?

    Where it is more complex or requires a decent bit of leg work; but is essentially a one off piece of advice - then we charge our normal initial fee and explain to the client we are here to help them but applying an ongoing advice fee would not be cost effective for them. Future advice will be given on an ad-hoc basis with discount to the "new client" fee rate as we have previously worked with them.

    There is no retainer for our services nor commitment to us; but we hope that the initial advice we give is of sufficient quality and the candid and grown up conversation we have about advice fees means that they want to work with us again; with the promise of an "existing client" discount to sweeten it a bit!

  • parawhatparawhat Member

    @Gustavo_Fring We record time for all client work, so in the case of family groups where we may also do work for children/elderly parents etc, we'll either bill the head of the family group or the indivdiuals directly depending on what was agreed between the adviser and client. Generally though, where the work is relatively simple (e.g. JISAs etc) we'll either do this pro bono and/or it will already be adequately covered by the main clients retainer.

    All that said, we have recently set up a telephone based proposition for clients who simply don't want or need a full face to face holistic offering or have relatively straightforward needs that could be met more efficiently (in terms of cost) for both the client and us. I suspect some of these would be considered to be pretty decent clients in normal IFA terms too!

    The proposition is restricted in terms of provider, product (GIA, ISA, SIPP) and investment solutions. In reality, that's very like how most IFAs operate with panels and CIPs, but just without all the additional research and audit trail needed for WoM advice. All in costs, including ongoing advice fees, range from 1.26% to 2.08% depending on the investment solution used. It's mainly aimed at accumulators and decumulators who have relatively straightforward affairs e.g. saving towards retirement and then taking benefits. It's still early days, but so far so good. :-)


    Jonny (paraflex)
  • Thank you for your replies, interesting stuff and lots of options to consider.

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