The advice gap will narrow in the near future, according to Julie Greenwood, head of adviser distribution at Octopus Money.
Greenwood said she was optimistic the advice gap would become smaller, following her conversations with advisers.
She told FT Adviser “I'm hugely optimistic. We knew with the new regulation coming in there would be that tightening, that squeeze on the industry.
“However, we are absolutely confident, because we've seen it happen in the energy industry, and now we are able to see it the same in the financial services industry, that where you create partnership and where you use innovation, we can absolutely solve that gap."
Greenwood shared what advisers have been doing for those who do not have enough investable assets to become new clients but have approached them for help.
She said: “Some firms are redirecting people to lead generation services like VouchedFor to find another advice firm but the trouble is all the advisers in that pool are also in the same boat of not being able to provide advice to them because it's not commercially viable.
“There are also some who are directing people to a direct to consumer option to self-serve through a platform and while that definitely has a place the reason the client came to the adviser in the first place was for advice.
“A lot of the D2C journeys start off with how much do you want to invest? And actually, when you listen to our calls with clients, they're nowhere near that part of the journey yet. They have no idea what they have or they don't even know whether owning a home is going to be possible.”
Greenwood said in the conversations she has had with advisers, many are thinking about what the impact of having a pool of lower value clients would mean for their business when they come to sell.
“For one of the firms we spoke to, 38 per cent of client numbers equated to only five per cent of assets. So this firm came to us and said, can you help us with this pool of people who may be better served elsewhere?" she said.
“If they could find a better home for these clients their average AUM jumped up to around 420,000 and they were then attracting a higher multiple because it was a cleaner book within their target market that they had the capacity to serve and deliver.
"Therefore, that made their business more valuable. So lots of firms that we're speaking to are now thinking about, how do you help me future proof my business, and help me get exit ready."
Collaboration with advisers
Greenwood said Octopus Money wanted to work with advice firms to bridge the advice gap.
Part of this has involved acquiring their books of smaller clients, especially in the wake of consumer duty.
