Pi Financial has teamed up with Momentum to offer a range of low-cost model portfolios designed to offer a solution to clients ‘orphaned’ in the fallout from the RDR.
The solution comprises three models – Cautious, Balanced and Dynamic – which target returns of between 3 and 5 per cent annually, while maintaining a total cost “within 1 per cent pa”.
All funds will be managed by James Klempster, who runs Momentum’s Factor Series funds. The portfolios will be broadly diversified achieving the appropriate risk level through investment in a range of equities, fixed income, cash, property and alternative strategies.
The models will be made available to advisers through the Novia platform while end users will be able to keep up to speed through Momentum’s Moneyhub, which can be accessed online to offer a tailored overview of assets, liabilities, spending and goals. If these individuals need to speak to an IFA, Pi will have several level-four qualified advisers manning phone lines to deal with queries.
The portfolios are only currently available to Pi’s clients, but a white-labeled version could be made available to other advisory firms as early as next year.
Comment:
The so-called advice gap was much anticipated as an unintended consequence of the RDR. While those forecasts have come true, all we have seen in response so far is a lot of hand-wringing, with very little in the way of action to address the gap.
The best suggestion so far has been for advisers to push those clients they no longer see as valuable towards one of the many consumer-targeted platforms. However, these D2C platforms are seen as a replacement for advice and do not offer the ability to maintain any relationship with the client. This feels like a kinder solution, maintaining contact with clients, who can contact Pi as often as they like, and leaves the door open for the advisers to revert to a fuller service should the client’s circumstances change.
To make the most of this product, clients will need to actively use the Moneyhub platform, but the models will still provide a service regardless of how engaged the users are.
Pi Financial currently services some 85,000 clients across the country and anticipates the models being appropriate for as many as 70,000 of them (with just shy of £1bn in assets) thus freeing up time to improve service levels for those clients that it keeps on a fully advised basis.
James Klempster’s stewardship of the Factor series has seen him underperform his peer group according to FE data, but none of the performance could be described as disastrous and the solution looks an effective way to ensure the RDR does not leave individuals behind.
