These also need to be measured to assess if they will be achieved in order to support financial objectives, as part of meeting consumer duty.
A forward-looking assessment is required in all cases so as to cover other areas of the duty, whether the objective is specific or holistic. The use of advanced cash flow modelling can help plan for these financial objectives in support of a client’s life objectives.
Products and services
The culmination of a planning journey often includes a product being recommended, but the more important element within planning is the service being provided.
If you are providing a continuing service, then the review each year of client objectives – and assessing the potential for future harm – requires that the risks of any plan are taken into account.
The same elements emanating from the principles and cross-cutting rules need to be continually applied within the planning service.
The right products also need to be assessed and checked to see if they meet the client’s needs.
The purchase of annuities, while occasionally controversial, should be reviewed objectively against the wishes of the client and not summarily dismissed just because they appear to be providing a lower annual income than drawdown.
As always, it is a question of obtaining the right product for the right client – and being able to show that this is indeed the case.
Price and value
This all comes down to efficiency. If it takes too long to create a plan, it will not prove to be as good value for a client as something that can be created and presented more quickly.
Therefore, look for time-saving solutions such as backsolves or multiple stress-tests that can create the robust tests you need in as short a time as possible.
The value received is more than just an increase in assets at a point in time. Meeting the client’s objectives and giving comfort when required add as much value as a financial benefit.
Perhaps it goes without saying, but in terms of the total cost to the client for their advised investments, low-cost unsuitable advice is still unsuitable advice.
The focus is rightly on value achieved with suitable advice, and that includes some intangibles such as the emotions of reassurance and peace of mind enjoyed by the client.
Consumer understanding
A rule of thumb here is the client needs to be able to take what you tell them and explain what is going on to someone else. This can require education about the advice process, along with easy-to-understand metrics that can be used to assess the situation.
For instance, a simple question is, "Do I have enough money for my plans?”. In many cases it will be an obvious yes, but there will also be other clients for whom this is not so obvious.
