Monday, 4 February 2013

Let’s talk about orphans

In the fourth blog responding to “This is Money” I want to talk about orphan clients.

I recently read about a financial planner who bought someone’s business, the assets were £15 million and number of clients were 7,000. If you do the maths the average client has less than £2,500 in assets. If the adviser takes say 0.5% he is taking on average £10 per client.

Simple maths for any business is that this doesn’t work and this also applies for direct businesses. Direct businesses have all been about expensive marketing campaigns but if your income is going to reduce you cannot afford to give this sort of service.

There has to a point in any business where you say we can’t service those clients or we have a packaged solution. Ultimately a client with £30,000 could become a client with £100,000 plus. So sometimes you have to assess all the details.

Of course there will be losers in this but there already was. For a number of reasons we are one of those losers we have less than £20,000 in savings and we could not get advice because we can’t afford to regularly save. So I have had to go back to basics, draw up a plan and put that in place. I am less concerned with cost but more concerned with the investments I choose and how much I save and whether that will deliver on the goals. In the future we hope to have enough to hand it over to an adviser but we have to do the hard work at the beginning.

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