September 7, 2023

Consumer Duty: Setting a higher standard of care

Heraclitus once said… ‘change is the only constant in life!’ And the Sutherland Independent team, and indeed all adviser businesses across the country, are experiencing that right now with the introduction of a new legislation known as Consumer Duty.

Consumer Duty insists that adviser firms put clients’ interests at the heart of all they do. 

It should go without saying that this principle is intrinsic to our business, but simply adhering to this principle is not good enough. Consumer Duty requires us to evidence what  we are doing to provide positive outcomes for our clients and how we are embedding this ideal into our company mindset and culture.

The first requirement stipulated by the Financial Conduct Authority is to:

Demonstrate how we work to Avoid foreseeable harm to our clients.

But how do we do this? 

Let’s show You!

Avoiding foreseeable harm is all about protecting clients from unexpected life events as well as acting on changes to legislation which might adversely affect your financial plans.  It is our job to mitigate any identified or potential risks to you, where possible.

We don’t have a crystal ball, but we can highlight likely problems, provide advice and issue ‘calls to action’ to reduce the impact they could have on you.

That is why we take time to have, and record, regular, comprehensive, discussions about your personal and financial circumstances as well as your current and longer term objectives.  By using this information and modelling various life scenarios we can show you what ‘gaps’ might appear in your planning and how well or otherwise you might tolerate future financial shocks.  In this way, we can not only prove that we ‘know our client’ well, but we can use the information you have provided to help you in your decision making and bring the peace of mind that comes with a carefully constructed, and tested, bespoke Financial Plan.

Whether you’ve recently gone through our onboarding process or are someone we’ve worked with for years, we will keep asking you about the ‘what ifs’.

  • What if you decide to retire early or your spouse wants a career change?
  • What if you’re injured or unwell and you become unable to work for an extended period of time?
  • What if you want to help your daughter buy a house following a break up?
  • What if your son moves to the other side of the world and you’d like to visit him every year?
  • What if you die without making a Will?

We also need to keep asking how you are  feeling about Investment Risk, how much of you feel you want to take – then comparing it to how much you actually need to take, as demonstrated by your financial model.   We need to understand how you feel about responsible and sustainable investing and whether or not you prefer index-tracking or actively managed funds to achieve your objectives.  We can then record and consider all of your answers and use them to create your very own ‘financial lifejacket’.

The number of questions we ask you might seem overwhelming at first, but we will give you the time and space you need to understand what we are asking and why.  And if you need someone else with you so that you can feel comfortable, then we will be sensitive to your particular needs and wishes.

For us it’s not only about demonstrating that we have done our due diligence…….

It’s about putting you front and centre.

Our advice is tailored to each individual client and we need to, at least annually, test that this advice is still suitable based on your changing circumstances and objectives, to demonstrate that the buoyancy of your ‘life jacket’ remains.

Acting in good faith

The second requirement stipulated by the Financial Conduct Authority is to:

Demonstrate how we Act in good faith with our clients.

Acting in good faith is all about working within your best interests. We like to think of it as a non-negotiable ‘pinky promise’ that we’ll do everything we can to get you to where you want to be

And how do we do that?

It’s simple… we work with you in open and trusted partnership, where you can be completely honest with us, and we will be clear with you. We don’t judge – so there’s nothing to be embarrassed or ashamed about when it comes to your money. We’re simply interested in making it work for your benefit – and doing everything we can, including potentially enlisting the professional services of others where need be, to achieve that for you.

We may challenge you too – perhaps you dream of starting your own business, but you lack confidence. We’ll fight your corner, asking what’s stopping you, and showing what financially at least, is possible to achieve.

But we won’t always just tell you what you want to hear.

Our job is to look at things objectively and take the emotion out of your decision-making. Sometimes we may need to address uncomfortable topics such as debt, illness and death. As difficult as these discussions may be, they can help you to avoid further discomfort in future.

Looking ahead, we will continue our commitment to Act in good faith through continuous professional growth and development. This is something already embedded in our company culture, but we will keep making sure that every member of the Sutherland team receives the training they need to offer excellent results for our clients.

We’re continually challenging ourselves and striving to improve, so you might receive the occasional survey asking for feedback – just to make sure we are on the right track.

In essence, we don’t rest on our laurels. We’re constantly looking at ways of improving what we do – and so we seek your feedback to evidence our openness to making those changes and refining our approach.

In our next article, we’ll show you how we make every effort to help you understand the information we share with you and to provide support when needed.

September 7, 2023