Expert: Tom Hawkins, Head of Strategic Partnerships, Charles Stanley Facilitator: Ben Wright, Director of Progress, Change Squared
Headlines:
- Each firm has reacted differently to Consumer Duty
- Fair value assessments have been challenging
- Discretionary model portfolios are becoming more popular than advisory
- Insourcing is becoming more common
- Most advisers are now gathering client feedback
- Tailored communications help clients understand
Context:
Each firm has reacted differently to Consumer Duty:
All delegates reported they had reviewed their service proposition as a result of Consumer Duty, however actions and outcomes as a result of this review varied considerably. Some delegates reported that “nothing much has changed”, others said that their reporting/data/record keeping had increased, whilst some had gone much further.
A few delegates reported increasing fees and removing some clients which were not profitable. One delegate reported they had removed 1/3 of their clients but were now more profitable by increasing fees for the remaining clients. It seems that Consumer Duty will result in less clients getting advice.
Most delegates said that they had increased the rigour of their processes, formalising and documenting them to ensure that all clients get the same experience.
Fair value assessments have been challenging:
All delegates reported that fair value assessments had been a challenge as the concept of value is so subjective. Approaches taken ranged from measuring the time/cost for every activity undertaken and then putting a margin on top, to just confirming in writing that they believed their current structure provided value.
Most delegated reported that their charging structure had remained broadly the same. Some reported fee caps, others fee increases. It was apparent that everyone had approached and dealt with the fair value questions differently.
Discretionary model portfolios are becoming more popular than advisory:
Some delegates continue to run advisory model portfolios, albeit with automations in place to collect client confirmation of changes. However, most delegates had moved to discretionary models (either insourced or outsourced) as they were easier to manager (confirmation of switches not required).
Insourcing is becoming more common:
Whilst most delegates reported that they outsourced to MPS providers, a number had either insourced for a while or had started insourcing as a result of Consumer Duty. Insourcing gave a USP, meant the portfolios could be run to the advisers’ specifications and gave them a greater sense of control. It was also seen as less risky as the insources DMFs didn’t have their own advisers.
Most advisers are now gathering client feedback:
The majority of delegates are asking clients for more feedback than they have previously. A number said that this was in relation to “value for money” but it seems that Consumer Duty has increased the general appetite for client feedback. Most used surveys for feedback. A couple of delegates said they just asked clients or took no complaints as the sign of client satisfaction.
Tailored communications help clients understand:
Delegates reported that they were starting to change their communications to ensure they were understandable to the audience. One delegate reported using different suitability report structures for different personas of client. Whilst approaches varied, it was clear delegates were starting to get much more sophisticated in segmenting their clients based on communication preference, creating a more personalised experience.
Key takeaways:
- Consumer Duty appears to be working. Advisers are getting much more sophisticated at understanding different client personas and then creating appropriate solutions for each. All delegates had thought about, and reviewed if their services provided value for money
- Advisers are getting more sophisticated at understanding different client personas and creating personalised experiences
- However, fair value assessments have been challenging and the Consumer Duty could result in less clients getting financial advice
