In the expansive world of financial advisers, various approaches exist, from general advice to specialised services for distinct segments of the population. Our recent survey sheds light on these differences and their implications in terms of specialisation, funds under advice (FUA), number of clients, fees and more.
Figure 1 - Client type penetration per Adviser
Source: Adviser Ratings
Note: Only 11% of advisers exclusively serve specific sectors or client types.
According to the survey, 55% of financial advisers do not focus on any particular client type, while the remaining 45% specialise to varying degrees. Among the latter group, Senior Managers, Medical professionals, and Blue-Collar workers are the most frequently targeted client type, whereas Pilots, Industrial workers, and Legal professionals are served less often.
A notable observation emerges when comparing the funds managed by specialists with those of generalists. Specialists, on average, manage funds that are 15% larger, with sectors like Legal, Medical, and Senior Management showing the most significant differences. This trend aligns with the disparities in average salaries across these sectors.
Overall, both specialists and generalists serve the same number of clients, suggesting that specialists manage higher investments per client compared to generalists.
The most evident disparities are seen in the fees charged. Generalists typically charge significantly lower fees than their specialist counterparts. On average, specialists' fees are 18% higher, particularly for those serving Legal professionals and Senior Management, where fees increase by 30% or more.
These findings indicate that while generalists may reach a broader audience, specialists manage larger funds and impose higher fees, particularly when targeting specific niches like the legal sector or top-level management. This underscores a clear need for and higher degree of differentiation when it comes to client type.
Now, looking at the industry and how the client book is evolving, it is clear that practices universally aim to increase their number of clients rather than reduce it. This expansion aligns with previous findings, showing a consistent trend among both generalists and specialists. While practices with specialist advisers plan to increase their client book to a greater extent, both groups plan to do so by strategically and purposefully targeting growth among specific client types, rather than catering to a broad spectrum.
Figure 2 - Practice intention on client numbers
Source: Adviser Ratings
Note: 67% of specialist advisers anticipating growth in their client books plan to focus this expansion on specific client categories.
In conclusion, the choice between a generalist or specialised approach in financial advice services will depend on the individual needs and preferences of clients, as well as the business strategy of the advisers themselves. Whether aiming to reach a broader audience or focusing on specific niches, the key is to align the approach with the desired growth trajectory and client base.
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