Let’s start with some numbers:

● Only 9% of consumers have paid for financial advice in the last two years.*

● The minimum asset threshold for new clients has risen by 12% to £214k on average in the last year.**

● And, 38% of clients account for just 5% of AuM.

As you’ve likely guessed, we’re talking about the advice gap—and the commercial gap that accompanies it.

The Strain on Adviser Capacity

Time is finite, and giving advice is costly. Regulatory pressures and fair value assessments often make minimum charges prohibitive for clients with fewer assets. For many firms, adviser capacity is at a breaking point. Lower-asset clients not only erode margins but also impact business valuations. Firms are now considering the opportunity cost of time, shifting focus toward clients with complex needs who contribute more significantly to growth.

Understanding the Cost to Serve

Do you know your cost to serve? Many firms don’t have a clear view of what it takes to provide initial and ongoing advice. Under Consumer Duty, have you mapped out the hours of adviser and admin time per client, alongside regulatory and PI costs? In some cases, maintaining loss-making relationships is a strategic choice, such as when clients are part of a family with cross-subsidies.

However, minimum fees often fail fair value assessments when tied solely to investable wealth. While tech can reduce admin burdens, it’s critical not to lose the human touch.

Addressing Client Groups

Our research identifies two client groups:

1. Existing clients who are loss-making.

2. Referred clients outside the target market.

Existing clients present the greater challenge, as advisers feel a duty of care.

Regulatory scrutiny is intensifying, with S.166 notices issued for advice fees charged without service delivery. Equally, saying “no” to referred clients is tough.

What Are the Options?

Firms are exploring various approaches:

● Referring clients to platforms like VouchedFor or Unbiased—though most advisers face the same challenges.

● Directing clients to D2C platforms, which may not suit those seeking advice.

● Using junior advisers—helpful but potentially risky for client outcomes.

● Offering transactional advice, though often still loss-making.

● Partnering with robo-solutions, but the starting point is “how much do you want to invest?”

A New Approach

At Octopus Money, we aim to democratise financial advice. By combining accredited financial coaches with tech-driven solutions, we create a seamless journey from financial planning to regulated advice.