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The ‘advice gap’ a reality as minimum portfolio sizes double

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Over 200 financial advisers told us their view on the state of their industry, sustainable investment and the economy in the fifth annual Voice of the Adviser survey. The advice gap was the risk that following market reform many investors would not be able to afford independent advice.

With four years of data we have been able to track the minimum portfolio size financial advisers will look at to take on a client over five years. The retail distribution review (RDR) changed the way the financial advice market operated.

Rather than a fund provider paying the adviser a commission (and potentially securing greater market share by paying a higher commission), the client now pays the adviser directly, as a fixed fee for a specific service or as a percentage of their portfolio. In reality, the client has always paid directly or indirectly, but this system is supposed to create greater transparency.

RDR came into force on the 31st of December 2012 and we have watched as minimum portfolio levels rose gradually in 2011 to 2013, and then shot up in 2014.

Since 2010, and post the RDR, the average minimum portfolio size financial advisers will look at to take on a client has risen from £34,660 to £69,770. The number of financial advisers who have a no- minimum policy has fallen from 58% in 2011 to 46% in 2014.

To receive a copy of the full report please register for our newsletter here if you are an investor or here if you are an adviser.

If you’re looking for financial advice why not refer to our 2013 Guide to Ethical Financial Advisers.

Photo: Tax Credits via Flickr

Further reading:

Financial regulator FCA acknowledges advice gap

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

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