Majority Of Advisors Fail To Offer Self-Directed Services - UK Survey

Stephen Little

3 June 2014

Despite many industry experts predicting a boom in self-directed investing as a result of the UK's Retail Distribution Review reforms pricing investors out of affordable advice, it appears that this may not be the case, according to new figures from investment platform .

Research carried out amongst 366 financial advisors in March 2014 revealed over four fifths (84 per cent) of advisors don’t currently offer a self-directed service to their clients alongside their current proposition, a figure that remains relatively unchanged from a year ago.

The survey also showed that only nine per cent are looking at adding a self-directed service to their firm’s current proposition, while 66 per cent have no plans to introduce this type of service in the future.

One of the unintended consequences of the RDR has been the "advice gap", relating to how consumers have been, critics say, priced out of receiving independent financial advice. The self-service directed model allows investors to manage their own portfolios and has been used by firms to retain lower net worth clients following the implementation of the RDR.

“At Cofunds we’ve been working with advisors for a number of years to develop full advice models. During that process, many become interested in also creating a self-directed service to sit alongside it,” said Andy Coleman, director of distribution at Cofunds.

“Time limitations, financial constraints and not having the infrastructure are likely to be the key factors at play here. Many advisors will instead be focused on ensuring service commitments to fee-paying clients are met and new regulatory requirements are being implemented, and not see this as an opportunity. Yet the cost benefits are clear, and as investors continue to become more confident and tech-savvy, we’re likely to see the self-directed area become an increasingly important part of an advisors’ core proposition,” he added.