Schroders Personal Wealth is targeting individuals who do not use a financial planner in its first marketing campaign, although people in the industry have questioned how lucrative the business model will be.
The Wealth is Personal campaign aims to challenge people’s perception of financial planning, a press release said.
“The campaign is designed to challenge people’s perceptions about speaking to an adviser, to help us bring it to more people in the UK and to empower conversations with our clients,” said CEO Peter Hetherington, who was brought on in October to replace James Rainbow.
“We want to make financial planning more accessible and bring it to more people in the UK.”
The six-week campaign will include adverts that will appear in print and in tube/rail stations.
Does the business model make sense?
But GBI2 managing director Graham Bentley said the ad valorem revenue model implied clients would need to have investible assets to be attractive to Schroders Personal Wealth.
Research conducted as part of the campaign said 13% of people never plan financially for their future while 26% would be uncomfortable getting financial advice. That is despite the fact that 62% of respondents think about money every day.
Bentley questioned what proportion of the demographic targeted by Schroders Personal Wealth would have the excess income and capital that might be deemed investible.
“That said, advice does not require an investment end-product; however, a vanishingly small number of businesses could survive on the relatively small fees most people are prepared to pay for ad hoc financial planning advice,” he said.
The Schroders Personal Wealth website shows ongoing advice is 0.65% for a client’s first £1m with a tiered structure going down to 0.15% for any amounts over £5m.
A client would therefore be paying £650 annually for advice on a £100,000 portfolio with an additional £520 going to fund manager fees, £200 going towards the platform and £350 going towards the discretionary fund management fee.
CWC Research director Clive Waller said it was interesting to see a wealth manager focusing on financial planning. “True financial planning is not driven by AUM,” Waller said.
