Mr P has somehow wangled another holiday, so I’m in charge of the Update again. And luckily for me, not one, but two industry behemoths came good with some news.
The kids are alright
First up, Hargreaves Lansdown reported record full-year performance backed by soaring demand for its digital services and a large increase in younger investors. It said in the last financial year, 83% of its new clients were under 55 and the median age of its client base is 46. According to research by Schroders last year, two-thirds of advisers have clients with an average age of 51-64, while for a quarter the average age is 65+. Almost half had seen the age profile of clients rise over the last five years.
HL also saw growth in the use of its online services, with 98% of trades done online and 76% of drawdown applications now made using an online journey. The increasing willingness for people of all ages to use digital tools has been well documented through the pandemic when many of us had little choice but to switch to online for everything from shopping to socialising. HL has always had a slick user experience so it’s little surprise that they’ve managed to capitalise on this strength over the last eighteen months by continuing to invest in functionality, guides and tools to help educate and engage their new breed of client.
This brings me to my next piece of news: Abrdn has signed a deal to buy Exo Investing, an AI powered wealth manager. Katey Pigden has the details here, but basically Exo provides an ETF-based wealth management proposition delivered via an app. Abrdn’s move into this space is interesting, especially when other big brands have pulled the plug on similar ‘robo’ style projects in recent years. Personal Wealth is an area Abrdn wants to grow ‘significantly’, bringing in Brooks Macdonald CEO Caroline Connellan, to head up the division, which includes 1825 Financial Planning. Last year, Citywire reported that 1825 was introducing a £250,000 threshold for advice, redirecting those with lower assets to online guidance. The deal with Exo could be intended as a solution to bridge the gap and provide an investment service for those with lower assets.
What does all this mean for advisers? We’ll be putting our Q2 advised platform figures out on Friday, so you’ll have to wait until then for the detail, but here’s a spoiler: AUA is approaching £550bn, up £100bn in 12 months. D2C platforms like Hargreaves have done pretty well during the pandemic, and advisers and advised platforms haven’t fared too badly either.
But that Schroders’ stat about the increasing age of advised clients should be ringing some alarm bells. While clients approaching retirement tend to be particularly attracted to, and attractive to, financial advisers, putting it bluntly, the older they are, the less time they are going to be a client. Retaining intergenerational wealth and appealing to younger investors, who will accumulate funds over the long term, seems like a sensible business plan that will have a lasting impact on profitability. That’s not to say that every adviser needs to launch a robo, but embracing technology like client portals probably isn’t a bad place to start.
This week’s link-ages
- Big news from AJ Bell this week switching its MPS from ‘agent as client’ to ‘reliance on others’ – Rob Langston explains in Professional Adviser what it means for advisers.
- There’s no Home Games over the summer, but you can catch up with the extensive back catalogue on YouTube, including one of my recent favourites #54 with Intelligent Pensions’ Fiona Tait who has forgotten more about pensions than I will ever know.
- And this week’s song choice is Help the Aged from the incomparable Pulp.
Normal TCWU service will resume from Mark next week.