One in two financial advisers ‘fire’ customers with less than £50,000

14 December 2017

Customers with investments of less than £50,000 are increasingly being turned away by their financial advisers. In 2014 just under a quarter of financial advisers showed customers with this level of assets the door, whereas in 2017 this figure rose to one in two advisers,  according to new research by Schroders.

In total, one in four financial advisers asked clients to leave their practice in 2017 for not having enough money.

The research, based on a survey of 250 financial advisers, showed that the number of customers that advisers are no longer choosing to service has steadily grown over the past few years, with some customers being asked to leave if they have less than £100,000 or £200,000. 

The findings raise further concerns about an ‘advice gap’ – a growing amount of the public going without adequate financial advice for managing their savings.

This growing gap was recently acknowledged by FCA chief executive Andrew Bailey at a speech at Mansion House.

Rule changes in 2012, known as the Retail Distribution Review, have inadvertently contributed to the advice gap. The new rules banned the paying of commission to financial advisers by fund managers and instead required advisers to charge their customers explicitly. 

This meant that for many advisers, clients with smaller assets were no longer deemed profitable enough to service.


The commission ban, however, has not been the only factor in the growing financial advice gap. 

According James Rainbow, co-head of UK intermediary at Schroders, it is also part of a longer-term trend. Over the past few years, he pointed out, the number of financial advisers in the UK has steadily declined. At the same time, he notes, the demand for their service has increased, particularly with the growth of personal pensions, thanks to the pension freedoms. 

"It is a labour-intensive process. There is only a certain number of clients’ financial advisers can provide regular service to," he said.  

This article was originally published on our sister website Money Observer.

Read more about financial planning on Moneywise


In reply to by Paul (not verified)

Of course any business has to generate an income commensurate with the service or product they provide. Nothing wrong with that. But why the "Hidden Costs" by many which are never disclosed? Transparency or rather lack of transparency has always been one of the key rules/agenda of many businesses. Its the same old story of the camel and his Arab master and the tent. This will never change. As soon as one door is shut, another window is opened. Businesses have been operating like that from the time of Adam & Eve.

In reply to by C S (not verified)

I do take exception to your outburst CS. I am a financial adviser and if you had bothered to keep up with things, we all have to fully disclose all our fees before clients go ahead with anything, there are no 'hidden' fees at all. This is also something I have always done anyway as a matter of course. You may feel you can do much better without someone like me but there are many people out there who do not share your knowledge or confidence. I get the impression that you have had a bad experience or just plainly don't trust anyone, which ever it is it is not a true reflection and is insulting.

In reply to by Paul (not verified)

Your description of me as naive just sums financial advisors up for me. I can assure you I am far from naive and I am well aware of risk and reward and very alert to the fact that we haven't had a market crash or correction for a while. You, I or anybody else cannot predict or do anything about that but what we can do is follow the smart advice of diversification across types of investment (shares, funds, bonds, property, cash etc.), different sectors and regions. Is that naive enough for you? And, why would I need a stockbroker, I can do it all online!

In reply to by anonymous_stub (not verified)

I am not a great lover of any hidden costs and I agree that all costs should be shown clearly. You could say that anyone in any business has to generate an income commensurate with the service or product they provide. There is absolutely nothing wrong with that. To reduce people to just money grabbing individuals is a little harsh I feel. If we were all to do everything for nothing no one would earn anything.The morality comes with making sure you are always up front with what you charge so that clients can always make an informed decision.

In reply to by Chris Murphy (not verified)

I think your first line saying 'your experience of financial advisers has not been great' says it all. I think what you have to understand is that some advisers are good and some not so good. Just like everything else in life. I have been advising for many years and have many, many very happy clients who I feel very close to and have greatly benefited from my help, much more than any fee I charged them. Your comment also :-'I could do quite a lot of deals and build up my portfolio and spend the 500 that way, one good year of growth and my money is paid back and probably more' Is quite naive and perhaps the fact that we have not had a stock market crash lately is protecting you from the reality of risk and reward. Investing money for clients is certainly not as straightforward as this and holistic financial planning overlaps into many different areas of a persons future goals and aspirations and security. If you want to buys some shares just go to a Stockbroker and they will fit the bill for you perhaps I feel, and by the way I do not charge anything for a fund switch and still make more than enough to cover my costs.

In reply to by C S Sagoo (not verified)

Check out this weeks Sunday Times business section which covered this topic.

In reply to by Paul (not verified)

"Hidden Charges" are still being found. Only a week or two ago there was an article on this subject in a well know financial magazine/newsletter which revealed these. In the past, the financial advisors had kept very quiet about the commissions being collected by them and if asked would give out very little and vague information. So, say what you want to, the reality is that in the real world every body is out to make money by whatever means and financial advisors are no exceptions.

In reply to by anonymous_stub (not verified)

I am a financial adviser of nearly 30 years and the cost of providing advice has gone up and up especially over the last 10 years and the amount of time and due diligence and self justification you are required to show has also gone up and up and this has certainly caused a problem for the smaller investors, since their funds will largely bear the ongoing costs unless they elect to pay via an external method such as a standing order. I am also quite concerned how little attention the FCA give to this issue, as, in their Ivory Towers when they just keep introducing layer after layer of due diligence and repetitive justification of the advice we give, They are looking for a risk free world at a minimum cost to the client. There is an old adage that says you pay for what you get and ye shall reap what you sow. The latest wonderful raft of legislation that has just been introduced is called MiFID II (Markets in Financial Instruments Directive)and comes form our European cousins (The European Committee on Economic and Monetary Affairs) and many are saying it is a backdoor attempt to destroy the UK Financial Services Industry, not such a crazy idea perhaps from their perspective, given we are/were world leaders in this type of advice. So why are we accepting a bucketful of trouble form the EU. The FCA has done little to protect the industry, despite the impact it is going to have on the costs to the consumer, the very people they were set up to protect! they have just embraced this whole thing naively, with little thought about how much this is going to cost the end consumer and drive up costs even higher. There is certainly a limit to what an investor should be expected to pay so who should foot the bill??

In reply to by anonymous_stub (not verified)

I am surprised to read that people with less than 50k net assets would even consider paying for financial advice, the service shouldn't even be available to those with less than 25k in my view. The decision to stop Fund managers paying commission to them though is the right one though, financial advice isn't essential and so others shouldn't have to pay for it if they're not receiving it. The person receiving it should pay directly since it's an optional extra. Although research shows that those who receive financial advice are on the whole better off (I believe I read that in a Moneywise article previously), it's far more satisfying to spend the time and effort researching things yourself and making your own decisions, any gains made in this way will be much more pleasing I think. If anyone is reading and has less than 50k net assets, my advice is to subscribe to the Moneywise newsletter which is free and read the expert articles, by doing this alone you can make a start and put together your own plan to manage your spare cash and existing debt, you don't need to pay someone to tell you, seek advice from family, friends and colleagues instead if stuck on something. You'll see that after making a start and developing an interest you'll quickly become better and more efficient at managing your own portfolio.

In reply to by anonymous_stub (not verified)

Looks like the so called Advisors are getting Greedier by the day.

In reply to by anonymous_stub (not verified)

my expereince of Financial Advisors has not been great and their charges are very high. They don't give advice any better than research done by yourself. For example, ok you get charged for each share deal by the online platforms, the deal charges are approximately ~£12 across the board, bearing in mind I have been asked for £500 pounds to change the funds in my personal pension (which is something I can do online with the provider) I could do quite a lot of deals and build up my portfolio and spend the 500 that way, one good year of growth and my money is paid back and probably more

In reply to by Chris Murphy (not verified)

Your right, no one has exclusive knowledge on how investments will perform, you can only position yourself in such a way that you are fully aware of the risks you are taking and be prepared to accept them, should things not go as well as anticipated.As I alluded to in my previous reply, unlike you, not everyone has this knowledge or confidence or perhaps even time to deal with their financial planning as you do and these people value greatly the ability to work with someone like myself to help them achieve their goals. This would involve significant time spent exploring and identifying these goals and needs and the best way to address them. This usually include discussing a wide range of other issues and analysis, not just the best fund to to invest in. A large majority of advisers normally provide an initial discussion on all this for free.Of course, like any service, this is not for everyone and some people prefer to go it alone, which is completely fine too, if they feel they have the knowledge and expertise to be able to do so.

In reply to by anonymous_stub (not verified)

The Best person to look after your money is nobody but only you yourself. The so called Financial Advisors are there only to see what they can skim off your money, and they do this by very devious means hidden under the so called advice. Do a bit of your own research, and you can do much better than many of them. Any sensible person will take a lot more care to look after his or her money or any assets than rely on someone. This is the normal in life. When others are involved, their first or hidden agenda is "What is in it for them".

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