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Financial advisers must improve their account management processes and customer communications — or risk falling foul of the new Consumer Duty regulations.
This is the warning from UK financial advice firms and consultants following the introduction in July of Consumer Duty regulations by the Financial Conduct Authority, the regulator, aimed at raising consumer protection standards.
With the FCA watching and pledging to take enforcement action against failures, industry executives say they will continue to review and modify the way they manage and respond to clients.
This commitment is shared by many firms featured in an annual list of the best 100 UK advice businesses, compiled by FTAdviser, the FT specialist publication.
Jeremy Woodley, an industry veteran and director of the Fry Group, an FTAdviser top 100 firm, said: “Consumer Duty is designed to ensure clients get the appropriate support, advice and level of service they need to achieve this right outcome, when they need to achieve it.
“When it comes to client communication, striking the right balance in terms of both quality and quantity is a challenge,” he said. “It’s crucial to ask ourselves whether our communications align and are appropriate for the level of service each client is telling us they want.”
Jessica Ayres, chartered financial adviser at London-based Timothy James & Partners — another FTAdviser Top 100 firm this year — said advisers must manage client expectations and ensure there is “consistent communication with clients”.
This should involve being clear about the economic situation, setting expectations for financial objectives, and revisiting their fees. “We are ultimately responsible for ensuring they get value for their money,” she said.
But despite the industry’s determination to deliver better communications, it seems many clients are not satisfied. Alex Whitson is managing director of VouchedFor, an evaluation site for financial advisers, similar to Trustpilot. He said VouchedFor’s Elevation system — a platform using insights from client reviews to help improve client experience — has revealed a disconnect between client satisfaction and adviser communication.
While the reviews show 95 per cent of clients would recommend their advisers, more than one-third barely ever speak with their adviser.
He said: “There is room for improvement. One of the most important drivers of client advocacy is regular communication, and yet 34 per cent of clients speak with their adviser once or less each year.”
It is not just the quantity that is lacking but also the quality. Woodley said: “Advice firms need to improve how they communicate and explain things in the clearest, most open and engaging way possible.”
According to Lowes Financial Management, another Top 100 company, the advance of technology “presents opportunities” to enhance the “quality of service provided to clients, by embracing digital tools, such as artificial intelligence”.
Ian Lowes, managing director, said: “Implementing robust initiatives to safeguard client data is paramount. Advice firms will also confront challenges by potential disrupters in the market, comprising digitised newcomers aiming to cater to a generation of clients who prefer non face-to-face guidance.”
The FTAdviser list is compiled by Financial Clarity, an ISS Market Intelligence business. A long list of 150 companies, selected on gross sales for the year to June 2023, was pared down to 100, by applying qualitative factors such as how long firms have been in business, and whether they are chartered by the Chartered Insurance Institute or accredited by the Chartered Institute for Securities & Investment. The list can be found on FTAdviser.com here: 2023top100.ftadviser.com.
Simoney Kyriakou is editor of FTAdviser
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