THOUGHT LEADERSHIP

Evidencing will improve Advisers told us in our survey that the fair value outcome had been the most difficult of the four to prepare for . An excellent whitepaper produced by Boring Money and supported by Benchmark , tackled the challenging issue of articulating and evidencing value . Significant consumer research identified that both practical and emotional factors were drivers of value for clients , and the paper identified five key pillars of value , each with different weightings : Trust and Peace of Mind , Planning , Information , Performance and Fees . The next stage is the production of a series of questions supporting these five pillars , enabling advisers to assess how well they are achieving these for clients , evidencing this and benchmarking against others . A high client retention rate doesn ’ t mean that clients always believe that value is being delivered and advisers will require a robust ongoing process to evidence fair value .

Pressure on ongoing charging structures will remain In the same Adviser Survey , 59 % of advisers said that there would be pressure on their ongoing charging structure as a result of Consumer Duty . In the 2020 review of RDR undertaken by the FCA1 , they reported concerns that > 90 % of customers are placed in arrangements for ongoing advice and that some may be paying for services they do not need . Ongoing client segmentation is vital and we are definitely seeing the emergence of new charging models , such as subscription based , particularly for clients in early accumulation where an ongoing advice charge may not be appropriate . There will be a lot of ‘ test and learn ’ ahead !

Consumer understanding will change our communication According to the National Literacy Trust , 1 in 6 adults in England in 2015 had what is considered to be ‘ very poor literacy skills ’ 2 . It ’ s little wonder therefore that our own documentation reviews have already identified where changes are required . We are an industry full of jargon and three-letter acronyms . I believe that we also need to focus on how digital engagement with consumers can be improved – can we make better use of technology such as AI to support this ? Perhaps not in 2023 , but one to watch – our group CEO appeared at a meeting in the US as a hologram rather than flying across the pond , so anything is possible !

The end of the beginning ? Are we now at ‘ the end of the beginning ’? The formal projects completed , Consumer Duty is here to stay and will start to evolve . The reviews and evidencing processes will become part of life . I look forward to the industry working together , sharing best practice and continuing to deliver the best outcomes for consumers .

To find out how Schroders can support you , visit our website at schroders . com / investment-solutions , contact your usual Schroders ’ representative or call our Business Development Desk on 0207 658 3894 .

1 Evaluation of the impact of the Retail Distribution Review and the Financial Advice Market Review , FCA , December 2020 2 OECD , Survey of Adult Skills , 2015

Important information Marketing material for professional clients only , not for onward distribution . The material is not intended to provide , and should not be relied on for , accounting , legal or tax advice , or investment recommendations . Reliance should not be placed on any views or information in the material when taking individual investment and / or strategic decisions . Past performance is not a guide to future performance and may not be repeated . The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested . The views and opinions contained herein are those of the author and may not necessarily represent views expressed or reflected in other Schroders communications , strategies or funds . Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy . Insofar as liability under relevant laws cannot be excluded , no Schroders entity accepts any liability for any error or omission in this material or for any resulting loss or damage ( whether direct , indirect , consequential or otherwise ). Schroders will be a data controller in respect of your personal data . For information on how Schroders might process your personal data , please view our Privacy Policy available at www . schroders . com / en / privacy-policy / or on request should you not have access to this webpage . For your security , communications may be recorded or monitored . Issued in September 2023 by Schroder Investment Management Limited , 1 London Wall Place , London EC2Y 5AU . Registration No . 1893220 England . Authorised and regulated by the Financial Conduct Authority . UK006578 .

# 09 | AUTUMN / WINTER 2023 | 43