Expert: Karl Cranswick Facilitator: John Chapman, Catalyst Partners
Headlines:
- Financial planning firms are reviewing their target clients and service propositions, particularly client segmentation and minimum investment thresholds for providing advice are increasing across the industry to manage rising costs of compliance
- Firms are re-evaluating their target client segments and developing tailored propositions for different wealth levels
- There is a focus on identifying and addressing vulnerabilities among clients through enhanced communication and data tracking.
Discussion points:
Positive impacts of Consumer Duty
The potential positive impacts of consumer duty, such as better outcomes for clients, increased trust, and improved industry reputation. However, concerns are raised about the rising costs of compliance, leading to higher minimum client sizes and exacerbating the advice gap. The group debates the challenges of serving mass-affluent clients and the role of technology and digital solutions in addressing the advice gap.
Vulnerability and client understanding
The concept of vulnerability and how to identify and address it with the sharing of experiences and approaches to assessing vulnerability, which can be temporary or permanent.
The challenges of defining vulnerability and the need for clear communication and understanding of clients' situations. The FCA's emphasis on vulnerability was highlighted, and the potential for fines related to consumer protection was discussed.
Defining good outcomes and regulatory expectations
The difficulty in defining what constitutes a good outcome for clients, as required by consumer duty.
The need for clarity and structure in achieving good outcomes, as well as the challenges of documenting and evidencing the delivery of good outcomes.
The FCA's expectations and the potential for unintended consequences, such as the devaluation of the wealth management sector due to overly stringent regulations.
The future of advice and digital solutions
The future of advice and the potential role of digital solutions and AI in addressing the advice gap.
The likelihood of large tech companies entering the financial advice space and the potential impact on the industry.
The need for a blend of human advisers and digital solutions, as well as the importance of data availability and integration for successful AI implementation.
Key takeaways:
- Identify vulnerable clients and document the process for assessing their vulnerability
- Determine how to communicate and provide services differently for vulnerable clients
- Define what constitutes a good outcome for clients in relation to the consumer duty principles
- Develop a roadmap to improve processes and outcomes for clients over the next 3-5 years
- Analise data and metrics to demonstrate compliance with consumer duty requirements
- Review pricing models and minimum investment thresholds in light of increased compliance costs
- Explore digital solutions and AI-driven advice to address the advice gap for mass affluent clients
