Explaining to consumers the risks and implications of their choices and clearly setting out the fees they will pay could help to meet Consumer Duty expectations .
2 . Supporting vulnerable customers through understanding
As an adviser , you ’ ll likely have experienced clients with different vulnerabilities . It ’ s no surprise that the treatment of vulnerable customers is a cornerstone of Consumer Duty , because it ’ s likely we ’ ll all be vulnerable at some point in our lives . When people have vulnerabilities , they might be more at risk of foreseeable harms , and this is where an emphasis on financial wellbeing could have significance .
‘ A lot of the time , when people are vulnerable … they will act in ways that might not be in their best short or long-term interests ’ says Steven Cameron . ‘ Consumer Duty wants us to consider how customers behave and transact in the real world .’
Dr Thomas Mathar , Insights Manager at Aegon , says treating clients as ‘ humans ’ aligns with the FCA ’ s desire to acknowledge that we ’ re all individuals . As well as recognising vulnerable clients , this also means accepting that people will have different lives , pressures , and emotional responses . By focusing on financial wellbeing , you could have a greater consideration of your clients ’ biases , concerns and emotional needs – helping you to craft more personalised financial plans .
One of the FCA ’ s four characteristics of vulnerability is capability , which could include a lack of financial literacy . You ’ ll likely spend more time assisting these clients to improve their understanding . Clear communication is important .
3 . The advice journey and financial wellbeing for the long run
There ’ s an obligation under Consumer Duty to pay attention to outcomes for consumers , but the journey is equally important . Financial wellbeing is about a person ’ s financial position in the here and now , but also their ability to be financially well over the long term .
This means thinking not just about outcomes but also the whole advice path . As people start living longer , more multi-staged lives as outlined in our Second 50 report , listening and empathy could help shape your client ’ s financial wellbeing and lead to better outcomes .
Financial wellbeing and Consumer Duty – two dovetailing concepts
Consumer Duty and financial wellbeing are intrinsically connected . The techniques used by a wellbeing maximiser include empathy , listening skills , understanding of mental shortcuts and biases , and how that affects progress . By adopting these techniques in your financial planning , it could help you to more naturally comply with Consumer Duty and improve the financial wellbeing of your clients .
An additional benefit of the ‘ wellbeing maximiser ’ technique is the potential to improve your profit margins while doing so . Read our guide to becoming a wellbeing maximiser to find out more .
IF YOU ’ D LIKE TO FIND OUT MORE ABOUT FINANCIAL WELLBEING , VISIT OUR DEDICATED ADVISER HUB .
TO FIND OUT MORE ABOUT OUR SECOND 50 RESEARCH INTO THE CHANGING RETIREMENT LANDSCAPE , VISIT THE ARTICLE HERE .
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