Our Duty to Consumers
Our firm was established with a clear vision. We want to make a difference. Our objective is to create a unique client experience, with the delivery of positive outcomes underpinned by tried and tested processes, and a focus on longevity through thoughtful futureproofing. Within this context, we aim to leverage the strength of the entire practice for the benefit of its current members, their families, and future generations. We will be the difference we want to see in the World.
FCA Consumer Duty Guidance
The FCA have published Finalised Guidance on Consumer Duty in July 2022 (FG 22/5) defining its expectations for the treatment of consumers of retail financial services. This has been the focus of a great deal of FCA attention over the past year. The FCA expects Consumer Duty principles to become embedded in a firm’s culture. The focus of regulation will become outcomes based. The core principle of Consumer Duty is the delivery of ‘good outcomes’ for retail clients. The aim is to:
- Raise standards
- Reduce poor conduct
- Increase consumer confidence in advice
The Consumer Duty is based on a framework of three overarching, and cross-cutting, rules. These state that we are obliged to:
- Act in good faith towards retail customers
- Avoid foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
The FCA Consumer Duty guidance, and obligations for firms, is built around the outcome for retail consumers in four key areas. The FCA views focus on these areas as defining the relationship with the client and has proposed guidance.
- Product and Services
- Price and Value
- Consumer Understanding
- Consumer Support
The delivery and discharge of Consumer Duty carries a far-reaching range of specific implications for firms, their practice, and procedures as they relate to their clients.
- Firms will need to be clear on the intent of their advice, and its desired outcome.
- Firms will need to demonstrate they understand what the client wants and needs.
- The onus will be placed on the firm to conduct research and assess the evidence of what clients need.
- Firms will need to consider how their service proposition balances both business and individual needs.
- This implies much greater emphasis on data collection, management, and presentation for interrogation by the regulator.
- Disclosure may need to change and become much more bespoke depending on client needs.
- Firms will need to evidence how they are helping clients understand their advice, and how it will deliver positive outcomes for them.
- Firms will need to consider how they will accommodate vulnerable clients, even if this state is transient.
Our Approach
Our firm fully embraces our duty to consumers and focuses on the delivery of positive outcomes across the four key priorities. We have designed our practice from the bottom up in support of these principles.
Our Culture and Values
Our firm wants clients to feel confident they are dealing with a firm where both excellence and fair treatment are central to our culture. Consistent with acting in good faith towards our clients, and underpinning our mission, we operate within a clearly articulated values framework. This not only guides our every action, but this also serves as the standard to which we hold ourselves accountable.
- Authenticity – We are always mindful we may be able to improve and will never represent ourselves as something we are not.
- Integrity – We are a company you can trust. We are guided by our moral principles, and always seek to do the right thing for our clients, staff, and stakeholders.
- Humanity – We are a company that never forgets the critical importance of rewarding human relationships, nurturing a culture to which all our stakeholders can feel they are valued, belong, and will always be treated fairly.
Our Proposition
Our business proposition is clearly articulated from the outset, through both our Terms of Business and disclosure documentation. From the outset our firm has elected to operate a simple, restricted advice model which is inherently easier to explain, understand, and navigate through the advice lifecycle.
Our Process
Our advice process is designed to empower clients to make informed choices, making decisions with ‘their eyes wide open’ and only proceeding to make financial commitments when they clearly understand what they are doing. Our advice is delivered in the context of a strategic financial planning, identifying key objectives across a client’s lifetime, and creating a tailored strategy to meet them. Our process has four discrete stages specifically designed to provide clarity and empower informed decision making along each step of the client’s journey.
- Identify your objectives and benchmarks of progress towards them
- Plan how to meet your objectives
- Advise on the best strategy, products, and services
- Implement, review, and adapt your strategy relative to benchmarks to maximise positive outcomes
Empowering Informed Choice
Our advice process is designed to empower the client to make informed choices. We take a collegiate approach to developing the strategic financial plan with our clients, actively encouraging engagement and full participation in the entire process. Once we’ve identified key objectives, we will clearly explain the options available, empowering clients to make an informed choice as to how they proceed. During this process we will help them develop realistic expectations of the solutions we recommend. Our clients can then proceed with confidence knowing that any product or service we arrange will do what we said and perform to the standards you have been led to expect.
Ensuring Transparency
A central focus of our advice process is supporting our clients to understand how the solutions we recommend will meet their needs, and to develop realistic expectations of their strategic financial planning. Clarity is the critical component of strategic financial planning and delivery of positive outcomes. Effective disclosure is essential to empower client understanding of our advice, the characteristics of any product or service they buy, and to help them understand how it meets their requirements. Equally, it is also important to maintain clientawareness of product performance in the context of their longer-term planning, and when opportunities arise to act at certain points in the product lifecycle as stated in the terms and conditions. Some products or services may also carry an element of risk. We will always make sure our clients are provided with clear information, through or letters, reports, briefings, supporting documents, and verbal communication, to keep our clients fully informed throughout the advice process.
Demonstrating Outcomes
Our advice process clearly identifies client objectives and recognisable benchmarks of progress towards them. Clients are further delineated into those accumulating wealth towards financial independence, and those decumulating to support income. At the outset projections are useful to identify a likely trajectory towards objectives, ideal time horizons for important benchmarks, and likely obstacles to their achievement. These projections are, however, based on assumptions which may ultimately prove incorrect. Overemphasis of lifetime cash flow forecasting in the planning process can therefore create false expectations. This presents the real danger of clients failing to aggregate sufficient funds to become independent, or eroding capital to the point their income becomes unsustainable. Instead, our approach focuses on clearly reconciling the relationship between the asset allocation of client portfolios, with actual returns, and their ability to support income needs. In this context, ‘Dynamic Spending’ has proven successful in preserving capital in the long-term, and therefore supporting income sustainability. Financial data collated for successive ‘Dynamic Spending’ annual reviews builds an actual trajectory for the client’s progress towards their objectives. This forms a meaningful comparison with projections and basis on which to adjust strategic planning. Annual review reports demonstrate progress and outcomes to the client in an accessible, transparent, and unambiguous manner. Critically, reviews offer the opportunity to actively engage with the client, improve their understanding and ability to navigate the planning process, while encouraging ownership with respect its outcome.
Supporting Understanding
Clear and balanced communication is a key component of our approach. From the outset our recommendation letters and other reports, together with verbal communication, will clearly document our advice along with the range of possible outcomes for you. This takes place in the context of an ongoing dialogue aimed at consistently improving the strength of our working relationship. Over time this will help us more fully understand your learning preferences, helping us tailor more effective communication and empower you to make the most informed choices. In this respect we fully embrace the fact that this dialogue is a two-way process, where we aim to be available and responsive when you need us. Our firm are advocates for improved understanding of strategic financial planning. We operate a broad multi-media communications program aimed at ‘demystifying’ otherwise complex economic and financial matters, improve understand, and ultimately the effectiveness of our service to clients. Our program includes material to improve understanding around generic issues (such as economic terms and product features), regular commentary on the progress of investments, along with timely coverage of topical issues likely to impact our clients.
Supporting Vulnerable Clients
Our firm has a fully articulated Standard Operating Procedure with respect our commitment to vulnerable clients, which has been factored into both the design of our proposition and discharge of our Consumer
Demonstrating Our Commitment
Our firm has been designed to operate online on a virtually paperless basis. We have made this decision with the following in mind:
- To support uninterrupted service continuity
- To facilitate access to advice and support for our clients
- To facilitating more efficient, accurate, and timely service
- To allow tracking and recording of key metrics to continuously improve our practice
- To reduce barriers to interaction with our clients wherever they live
- To encourage and facilitate dialogue and feedback from our clients
Coaligned Interests
From the outset our proposition has been founded on the coalignment of our interests with those of our clients. Our Terms of Business overtly state a commitment to leveraging economies of scale for the benefit of all clients. Generational fee linking, with our firm and key investment partners, is the most obvious manifestation of this policy. Our terms also include a vision statement with respect how we will further reduce our fees where possible as the practice grows. In the meantime, our innovative fee structure offers unprecedented transparency and participation for our clients. We have committed to actively engage with our clients on the management of service provision costs. Our firm seeks to involve clients directly in our governance, seeking feedback on key issues impacting service provision, and more broadly through participation in our client representation committee. We are conscious that we are neither the finished article, nor do we have a monopoly on good ideas. We are, however, committed to work with those we serve towards continuously improving.
People First
Our clients are not commodities. As their advisers we recognise they are relying on our professional judgement to guide them through some of the most far reaching and critical decisions they will ever make. We understand that our relationship with our clients will exert a critical influence on the direction of their lives. We take this responsibility, and the delivery of positive outcomes for each client, seriously. A core feature of our service is a focus on working to develop excellent working relationships with our clients in the long term. Reduced to its most fundamental level, for us people come first, and the people we serve will know that any advice we would offer them is nothing less than we would do for our own Mother.
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