IFA firms have made changes across four key areas to comply with consumer duty, including simplifying charges and reviewing client-facing communications, Pimfa has found.
In a report looking at how the piece of regulation has impacted the wealth and advice sector, the trade body reported that a "considerable amount of work" has been done by firms to raise standards.
Proposition
Pimfa reported that firms have made a number of enhancements to their proposition including re-assessing all service propositions both from a customer outcome perspective and fair value basis.
They have also introduced new in-house model portfolio ranges and made more significant distinctions between services, outputs and price points.
Changes have also been made to the advice models of firms by introducing technology to streamline the service for clients who do not need annual advice meetings.
The report also highlighted the duty is causing advisers to outsource investment management.
Pimfa said it was likely to see more firms tightening their propositions to deliver "a cohesive and consistent customer journey".
Fee Structure
Elsewhere, charges have been simplified with fewer bandings and tiers with some firms introducing a flat fee structure.
Some firms have partnered with MPS providers to reduce the ongoing service fee for clients by 10 per cent.
Pimfa also reported that firms have been evidencing and documenting the value of advice by using cashflow modelling and client satisfaction monitoring.
Other businesses have scrapped exit fees, capped charges and reduced ongoing service fees.
Client Communications and Support
The client communication area has seen the most amount of change with Pimfa finding firms are now applying "a consumer duty and vulnerability lens" when reviewing client-facing communications.
The amount of jargon used has been reduced with advisers creating monthly podcasts for clients covering all aspects of financial planning as well as publishing magazines with explainers on tax, pensions and investments.
More support is being provided to people who are vulnerable with new software tools launched to aid advisers when speaking to vulnerable clients.
As well as alternative formats of communication introduced such as braille, larger text documents and speech-to-text documents.
Pimfa said staff training has been "paramount" with firms bringing in behavioural experts.
Governance and Culture
In order to embed a consumer-centric mindset firms have undertaken courses to help improve culture and productivity.
‘Client outcome committees’ have been added to governance structures while head’s of client propositions and experience have been hired.
Artificial Intelligence is being explored within firms to improve workflow from report writing to recording of meetings.
Pimfa said they will continue to monitor and track changes and impacts as they anticipate further developments in the coming months.
alin.khan@ft.com
