Rachael Rowe, RVP for Financial Services at Seismic
The FCA’s Consumer Duty has initiated a change in the way wealth managers’ approach client experience. Client needs must now be at the forefront of all products, services, and information designed by financial firms. This means the removal of all confusing language, jargon and hidden terms. Clear communication is now mandatory for wealth managers to help ensure clients can make informed financial decisions.
The Consumer Duty has set new expectations of commitment towards and protection of client financial goals. As we’re already seeing, this will be a continuous effort, not a one-time change. Ultimate accountability sits with the board and since 31st July, firms have had to be able to prove they are meeting new rules on client care, protection, and clear communication. This has shifted how wealth managers interact and work with clients and driven significant changes in internal processes.
Approaching compliance
Some may see the regulation as extra work with little reward, but many firms are now viewing the Consumer Duty as an opportunity to get ahead of the competition.
Firms can approach compliance in two ways. The first is to keep to business as usual as much as possible by seeking the path of least resistance and circumventing regulations. However, this strategy comes with significant risks associated with it. Take the warnings issued in December by the FCA to firms found to be earning interest on client cash while charging fees to hold it. The FCA are taking a no-tolerance approach to this type of behaviour, putting in a deadline at the end of February to correct behaviour. This comes as no surprise when practices like ‘double dipping’ were the exact reason the regulation was created in the first place.
The second approach would be to see compliance as an opportunity to innovate. By viewing compliance as an essential part of their business plan rather than a necessity, firms can make client outcomes a key target and set themselves apart from competitors. This may require a fair amount of change from the outset. However, going above and beyond in response to these changes will become a differentiator for new clients and act as a launchpad for new business.
The role of enablement software
So, how can businesses achieve these desired outcomes? The reality is that the financial services industry needs to catch up with others when it comes to using technology to improve customer experiences. The tech and healthcare industries, for example, have been placing customers at the centre of all decisions, and making compliance part of their business plans, for years with the use of tailor-made enablement software.
As a result, many players in these industries no longer view regulation as a burden but as an opportunity to train staff and create outstanding client experiences. Specialised tools can connect with new customers, gather valuable data, personalise interactions, and deliver impactful meetings that showcase their expertise. Beyond compliance, these tools enable businesses to go above and beyond for their clients and empower and assist employees rather than cut corners.
Training programmes powered by AI, for example, help to keep employees informed on the latest industry developments, building trust with clients through their expertise and ensuring they are aware of all regulatory changes. AI-powered enablement can also automate note-taking and summaries and even generate content for presentations and follow-ups, freeing valuable time. Finally, to ensure everything resonates with clients, AI-powered enablement software can be used to analyse vast quantities of content to see what works best.
These are just some examples of how technology supports the core principles of the FCA’s Consumer Duty, allowing firms to identify and adopt appropriate data collection methods to prove good client outcomes, meet these regulations and importantly, find value in doing so.
Looking forward
Connecting data, technology, and people will be the key to success. The FCA’s Consumer Duty presents a clear message: the industry must prioritise client well-being and outcomes. While some wealth managers may view this as an administrative burden, it’s a chance for them to differentiate themselves. By embracing the new standards and leveraging enablement technology, they can create a more efficient, client-centric practice and solidify their position in a fairer, more transparent financial landscape.
