Consumer duty has helped improve communication between advisers and their clients but more can be done, according to Anastasia Georgiou, director of market expansion and pricing strategy at Morningstar.
Georgiou discussed how out of all the outcomes within consumer duty, communication “still has a long way to go”.
She said: “The implementation of the regulation last year presented opportunities for the industry to improve its communication with retail investors, but there is still work to be done.”
“Morningstar conducted research exploring factsheet design in the UK market and we believe there are valuable lessons that can be learned.”
Georgiou urged advisers to keep their communications with clients brief as too much data can overwhelm and alienate them.
She instead recommended creating “investor-friendly” documents with clear and concise content.
Georgiou also highlighted that language advisers used needed to be simplified while also avoiding technical abbreviations and jargon and instead should use analogies and simple explanations to make messaging more accessible.
“Investor-centred communication builds trust so speak directly to what matters most to clients such as their objectives, performance, costs, and risks.
“Transparency about costs is also key so it's important to provide a lucid breakdown of charges and show how they impact overall performance,” she explained.
Georgiou also suggested using visual aids to highlight key information and make documents more digestible.
She also highlighted the need for advisers to explain their data and to use clear language to describe context and relevance suggesting that data explanations empowered investors to make informed decisions.
“This first anniversary of the regulation is a reminder to firms to take action and refine communication strategies to ensure that, as an industry, we’re fostering a transparent and investor-friendly environment.
“This proactive approach not only meets regulatory standards but also enhances the investor's experience and trust, resulting in more positive business outcomes," she added.
alina.khan@ft.com
