Spending more time educating investment clients would pay off for advisers in increased business, new research* from behavioural finance experts Oxford Risk shows.
Its study with investment clients of wealth managers conducted ahead of the implementation of Consumer Duty rules on July 31st found nearly half (47%) agree they would invest more if they felt better educated by their adviser or wealth manager.
The study delved into client attitudes around the four key areas of Consumer Duty – Consumer Understanding, Consumer Support, Products and Services and Price and Value. The Consumer Duty aims to increase consumer protection and promote fair practices in the financial services market requiring firms to act in good faith towards retail customers, avoid foreseeable harm, and enable and support customers to pursue their financial objectives
Oxford Risk’s research found 82% of clients say communications from their advisers are understandable and 84% say their adviser personalises communications. More than four out of five (83%) agree that their adviser equips them to understand the value of their investments.
More than three-quarters (77%) agree that their adviser only offers them products and services which are specific to their needs, while nearly four out of five (79%) agree that they are clear about any or all charges or fees on their investments.
Oxford Risk has developed its Investor Compass Risk Suitability solution to support advisers in meeting the new Consumer Duty regulation. It is an end-to-end risk suitability solution built on advanced behavioural finance. It helps outline an investor’s willingness and ability – both financial and emotional – to take risk and to help their advisers support them in making the best financial decisions to meet their objectives.
James Pereira-Stubbs, Chief Client Officer, Oxford Risk said: “The research with clients is very encouraging for advisers and wealth managers as it demonstrates what a good job they already do, but there is still a need to improve further to meet the upcoming FCA Consumer Duty.
“The research underlines that the two key areas for improvement are matching clients to the best investment solution from the start of the relationship and putting more effort into personalising the client’s experience with advisers, where an in-depth understanding of their financial personality is essential.”
Oxford Risk supports advisers and wealth managers in adapting to Consumer Duty and more details on its services are available at Meet New FCA Consumer Duty Regulations (oxfordrisk.com)
Its behavioural tools analyse investors’ financial personalities and preferences as well as changes in their financial circumstances which, supplemented with other behavioural information and demographics, enables them to build the most comprehensive picture of client suitability.
The company, which builds software to help wealth managers and other financial services companies assist their clients in making the best financial decisions in the face of complexity, uncertainty, and behavioural biases, has developed proprietary algorithms which rank products, communications, and interventions for their suitability for each client at a particular time.
It believes the best investment solution for each investor needs to be anchored on stable and accurate measures of Risk Tolerance. Behavioural assessments then provide an opportunity for investors to learn about their own attitudes, emotions, and biases, helping them prepare for any potential anxiety that is likely to arise. This should be used to help investors control their emotions, not define the suitable risk of the portfolio itself