Direct Offer / non-advised Business


About 15 years ago we used to write out to clients with details of a Fidelity ISA and an app form and ask if they wanted to contribute. This was known as direct offer and was all okay with the network of the time. We stopped doing this pre-RDR as was a lot of hassle.

Now we are thinking of offering a direct offer service whereby we give details of a platform and fund/MPS and ask clients if they wish to proceed. We have checked with our current compliance people and they say it is not great as full advice is preferred, but is acceptable. We would provide an ongoing service. I'm not talking about cold calling, mass mailshots etc, just giving people the option when they come to us of full advice, or a lower cost info only proposition.

The problem is finding a platform that allows us to key this business as most nowadays ask if personalised advice/recommendation has been made, which is not the case here. We have found a few platforms that allow it on ISA/GIA, but none on pension.

Does anyone have any suggestions of a platform that can accept this type of business?



  • NathNath Member

    I don't understand this to be honest. Are you an IFA business? I seriously can't believe in this day and age you can 'get away' with this anymore? You are providing details of a platform and fund/MPS and how do you know this is suitable for the client? I would seriously be sacking off your current compliance people if they say its acceptable.

    What makes it worse is that you are then saying you would provide an ongoing just sounds like very lazy advising (its not even advising to be fair) and that the firm wants to bypass gathering client info/goals etc and providing a personalised recommendation but then wants an ongoing relationship as well. Talk about have your cake and eat it.

    I just thought this type of thing (especially if you are an IFA/Restricted advice firm) went away with the dinosaurs.

    I appreciate you can have a lighter touch service and there are providers out there like Nutmeg that can give consumers an option to self invest but it seems you want the best of both worlds.

    Apologies, if I have misunderstood the wording but it just reads as though you are giving details of a platform/fund MPS for the clients to invest, and then switch the ongoing on.

  • NathNath Member
    edited March 23

    I'll add that for non-advised sales this is from the FCA below:

    In non-advised sales, you do not make any personal recommendation and leave the customer to decide how they wish to proceed. For example, providing generic information recommending your client should buy household contents insurance (without mentioning a specific insurer or policy) that is unconnected with the sale of a contract would not be an advised sale.

    You appear to be giving details of a specific platform/fund etc....this is an advised sale and my understanding is you will need to gather relevant client info to ensure the recommendation is suitable and follows the relevant COBS suitability rules.

    You mention you will recommend a fund...what is the risk level of this fund and how do you deem that suitable for each client?

  • Well said Nath! I'm saving this post for inducting the youngsters!

  • Hi, thanks for your replies. I must admit I was surprised when told that this was a possibility, although I can see the appeal to the client and us.

    This is just an embryonic idea to reduce all the time factfinding, comparing, doing SL etc , and instead just saying to the client we can set you up with X platform in Y fund portfolio, here are the charges and features etc. Our initial fee for this would be minimal. We get clients coming to us that are put off by the time/charge of full regulated advice, but still like to talk to us, run things by us etc so prefer not to go direct to a provider. We appreciate that it is not execution only, which is why we have been told this is called direct offer.

    There is a lot of industry news about the whole guidance/advice issue, and we feel it shouldn't just be the providers that can give guidance, as we financial planners are well placed to do that too (obviously as long as the difference between service is clear to the client).

  • NathNath Member

    I appreciate that there is an 'advice gap' that was created by the RDR and I agree there should be more help for these clients that are stuck in this gap.

    However, what you are intending to do is provide a personalised recommendation, but without gathering sufficient Know Your Client info, as you are telling them to set up platform X and fund Y. As far as I am aware this is against FCA and COBs rules as you are not confirming suitability of platform X and fund Y. How do you know the fund you are recommending is suitable for that client's time horizon/risk profile/capacity for loss etc?

    There were Robo Advice offerings for advisers set up a few years back like Parmenion Interact, but this still involved a set number of questions to determine suitability bit with a lighter touch. You seem to be just sending out an app for a platform and a blanket fund and asking clients to sign up, charge an initial fee and then add an ongoing fee, without gathering any information. How do you know the client needs ongoing financial planning if their needs are deemed simple enough in the first place to not warrant a full advice exercise?

    On typing this and thinking further, I am guessing where your compliance are coming from though now, they are probably referring to COBS 4.7 which is in relation to Direct offer financial promotions. This is a whole different scenario and if you are going down this route I would imagine you would need to be very careful and follow those COBS rules to the letter, to ensure you aren't breaking any rules. I still think you would be breaking rules by taking ongoing fees though as under MiFID rules you would need to confirm annual suitability of the product you have recommended if you are taking ongoing fees, along with other regulatory requirements so you would be in a position of having to have sufficient information for them anyway at review time?

    However, I stand by my original points, as an Independent or Restricted advice firm, we should be gathering appropriate information to ensure the recommendation is suitable for our clients and clients should value the advice and pay accordingly. If they don't value or its not viable to pay your minimum fees as set out in your service charter, then there are other alternatives for them.

    It just currently screams that both you and the clients want the best of both worlds though. Your last paragraph mentions we should be able to give guidance as well as providers.....we can...but when you start telling them to set up platform X and fund Y this is no longer guidance in my opinion and should be backed with with the appropriate fact find. Perhaps its just be being sceptical but I feel as a regulated advice firm we should be doing the job properly.

  • Thank you Nath for the detailed reply, it is good to hear another opinion as we are only a small office. Yes, it is direct offer that we have been told to use, and compliance say it is not necessarily an easy option, but one that can be used with care. As you mention, we will need to make sure we are following the rules exactly if this goes ahead!

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