Prediction of adviser shortfall in HNW space

27 July 2011

Recruitment specialist says many IFAs may be qualified to a level that means they can only offer advice on "relatively simple" strategies.

There will be a drop-off in advisers that will be catering to high-net worth individuals post-Retail Distribution Review (RDR), Lyssa Barber, managing consultant at specialist financial recruitment company Allemby Hunt, told FTAdviser.

Ms Barber claimed that post-RDR, there will be many IFAs who are qualified to a level that they can offer advice on "relatively simple" strategies but there will be a shortfall of IFAs that are sufficiently qualified to attend to the high-net worth space.

Ms Barber said: "In the ultra HNW space there are a limited number of individuals who can advise at that level and they are all going to be pushed through the qualifications as their institutions will support them and ensure that they remain in play."

She claimed that those consumers who have between £500,000 to £1m - "or even £5m" - and who want more sophisticated advice than the "mass affluent investor" will feel the shortfall the most.

Ms Barber said: "They want a sophisticated adviser who will be able to offer them the best of breed in the market and that's where I see the greatest drop off and where the issues will arise."

Ms Barber emphasised that this is not a new issue as the recruitment firm has "always found it difficult" to identify potential adviser recruits with sufficient qualifications and experience for its clients - "and that's before we look at the 17-18 per cent drop off in number of advisers across the UK".

She claimed that IFAs will be upgrading their clients, possibly chopping off the 'bottom' third, as there will not be enough advisers to go around to help the HNW market.

Ms Barber thought this was particularly relevant post-RDR as advisers may be leaving the business and will pass on their clients to those that stay post-RDR.

She said: "If an IFA is typically looking after clients that have £20k-£30k to invest and find themselves inheriting a few hundred clients from someone else, they may cut off the bottom third of their client base and stay with clients that are more interesting, have more money and are more sophisticated.

"IFAs want to be engaged by the clients they are presenting and this may be more complex solutions.

"The IFA is going to want to be engaged by that and if you had the option to get rid of a load of smaller fry clients and focus on the larger ones, a lot of people will go that way."