Meet the firm offering financial planning for £40 a month

‘I have spoken to chief executives and people earning hundreds of thousands of pounds. But also people at the opposite end of the scale, who have no real wealth’

Last month US-based financial planning guru Michael Kitces told New Model Adviser® advice firms should consider charging £150 a month to serve millennial clients. Although some people dismissed the idea, many advisers said they would be willing to embrace a subscription charging model. 

One company, Nottingham-based Neon Financial Planning, already charges a subscription fee of £40 a month for an ongoing service that includes financial coaching and access to its savings app. Williams Robins spoke to Neon managing director Rebecca Aldridge, also managing director of Balance: Wealth Planning, and Jon Page, Neon director and financial planner and a paraplanner at Balance. Together they set up Neon in 2018.

Last month US-based financial planning guru Michael Kitces told New Model Adviser® advice firms should consider charging £150 a month to serve millennial clients. Although some people dismissed the idea, many advisers said they would be willing to embrace a subscription charging model. 

One company, Nottingham-based Neon Financial Planning, already charges a subscription fee of £40 a month for an ongoing service that includes financial coaching and access to its savings app. Williams Robins spoke to Neon managing director Rebecca Aldridge, also managing director of Balance: Wealth Planning, and Jon Page, Neon director and financial planner and a paraplanner at Balance. Together they set up Neon in 2018.

Where did the idea of Neon come from?

Aldridge: We knew from the beginning Balance only served one element of the market. We wanted to serve the younger end of the market too. It is not to say they are not wealthy, but they have different needs.

The intention was to start with Balance, get that going, and then build a second branch to the business that would cover a younger market with different needs. It is like deciding to start a family. There is never a right time to do it. It is never going to be convenient or easy.

We were inspired by Sophia Bera. She is an American financial planner who set up a business offering financial planning for young people in the US. People said: ‘you’re a fool, it will never work, people won’t pay you,’ and she said: ‘just watch’. She is all over it.

She is so articulate about what she is doing and we thought: ‘we’ve had this in our minds for the last couple of years, we need to get on with it. It’s time.’

What does a Neon client get for £40 per month?

Page: We charge £40 a month as a fixed fee per individual, or £60 for a couple, and with that we will have an app. It is not quite ready to go yet but it will be shortly. It is based on the MoneyInfo app, which gathers together all your credit cards, loans, mortgages, investments, pensions. And the idea is you can see that all in one place and get a handle on it.

As advisers, we can spot problems before they arise or spot opportunities as well. We will also include a coaching session once a year. So that will be a meeting to talk about the plans, a catch-up on tax planning plus an annual review of their assets.

Clients can phone us up whenever they like. But if there is a particular service they want, they will be charged a fixed fee as per the website.

Neon offers a free financial health check for visitors to the website. Can you explain how that works?

Aldridge: The financial health check is automated and visitors to the site receive responses. Basically it is a load of tips from people who know what they are doing. Things they may not know.

There have been so many people click through and take advantage of this tool, it is crazy. We wanted it to be something that would attract people so they can test out what we are all about: what is this company like? Are they really interested in people aged 25 to 45? Or are they just trying to ‘get the kids in’? So it was designed to be a taster I suppose.

It is too early to say [if we are getting many referrals from it] but we have had maybe 100 people use it.

You also offer financial coaching. What does a session look like?

Aldridge: First of all, it is new and it will probably look different in a year’s time to how it looks today. So we will adapt to the feedback we get.

The ongoing service is not compulsory. Some people will just want us to fix some life cover for them. They might not want to speak to us, but when they do they might want a two-hour coaching session because they want to get to grips with their budget.

In a way, these financial issues are more complicated when you are younger. There is less money to go around, and there is likely to be more debt and less certainty about the future. If you are 30, you will not know what you will be doing in 10 years, you will not know if you are going to move abroad. That makes some elements of planning quite difficult.

It would be wrong to assume young people have simple lives.

Page: When we first launched it, I did not imagine we would have the people we have had. I certainly did not imagine we would have so much interest from London [given the firm is Midlands-based] and they would have all sorts of opportunities and problems that need sorting out.

I have spoken to chief executives of big companies, freelance journalists and people earning hundreds of thousands of pounds. But also people at the complete opposite end of the scale, who have no real wealth who want protection or to get their mortgage sorted.

Aldridge: A lot of the people who have got in touch ask about one thing; a defined, specific need. In the course of a 15-minute conversation, however, you uncover they have all sorts of different concerns and issues – the ISA was just what was on their mind at the time, so they do actually want a full review.

We were quite surprised about that. We thought people would call up saying: ‘I want an ISA but need advice about the sort I should get.’ But that really has not been the case at all. They have wanted someone to look at the whole situation and tell them what looks good and what does not.

They have wanted the personal touch. £750 is a good price for something that looks at the overall picture.

Why not offer a full financial plan, for £100 to £200 upfront, plus £100 to £200 per month?

Aldridge: That model is really interesting because it removes a barrier, it brings people in. But what is the behaviour of the financial adviser or firm working with that client?

If I have done £1,000 of work and charge £200 for it, my motivation is to get that person to buy enough more stuff to make a profit from them. I did not think about clients this way, but you would only take on somebody at a loss if you were expecting them to generate more income for you later.

It is really beneficial because it brings more people into planning, and that entry barrier is removed. But what is the behaviour going to be like for the firm pressing that person to buy more from them because they have not had their money’s worth?

I like the idea that each piece of work is on its own profitable and at a sensible price. I do not like the freebie at the outset, but I can see the benefits.

I suppose you could see it like a payment plan…

Aldridge: Yes, if the service is where you pay £1,000 or £1,500 over the course of the year, but without (or only small) upfront costs. If you positioned it like that as a package that might bring people in at the outset.

But I am not stupid, I can get as much as I want and then I can just stop. If it is not something you are tied into, people will just stop it and if it is something you are tied into, they will not do it in the first place.

You must have priced it quite keenly.

Aldridge: We think each case will be profitable. In many cases it is quite simple advice and the cost reflects that. However, we are expecting in the first three months or so we will not be making profit on advice because each case will be taking us a little bit longer than it will do when we do it in six months’ time.

The other thing we did is compare it to the bundled pricing we have at Balance. We might charge £5,000 to do a stack load of stuff. If someone had bought all that individually from Neon what would the price difference be? And Neon is slightly cheaper.

But at Neon we do everything via video conferencing. It means things tend to be cheaper to deliver because the meetings are a little bit shorter; we are not having to give them coffee and chocolates. It is like an Ikea model where you have to pick up your own stuff and bring it to the till.

We are asking people to do questionnaires for us in advance. We say: in order for us to keep our costs where they are you need to do this bit for us, and it takes an hour of their time rather than an hour of ours.

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