Research company GfK estimates 200,000 more clients than advisers expect will be unlikely to pay for advice in the future.
With independent financial advisors originally predicting only 14 per cent of clients, or 140,000 investors, to drop out of the market, the new GfK RDR survey suggests the actual number will be 34 per cent – or 340,000 clients.
GfK divisional director for life, pensions and investments Martin Grimwood says: “We already know that Ifas have segmented their client base in response to RDR and the majority is offering differentiated services to retain as many clients as possible. What’s missing here however is the client perspective. With 34 per cent of past customers saying they will ‘never’ pay for advice, our recent research shows that far more people plan to avoid fees than the Ifa community expects.”
In terms of purchase route, 67 per cent of people who have used an IFA in the last five years would prefer to go direct to the provider. Some 52 per cent prefer to use the company website, 18 per cent would contact them using the telephone and only 10 per cent of clients would choose to buy their investments through a platform or fund supermarket.
Grimwood adds: “Many of those people who plan to go direct are the next generation of serious investors. They are accumulating their wealth now and should be the perfect audience for the support and advice of an adviser.
”We believe it’s essential that the IFA community address this potential drop-out by ensuring the value of independent advice is clearly communicated – as our research suggests this important message is failing to get across.”