PRESENTER: Hello and welcome to this Akademia workshop on Consumer Duty. I’m Mark Colegate and in this programme, we’re going to be looking at some of the fundamental issues facing adviser firms. Let’s start with a look at the learning outcomes: establishing target markets; understanding and articulating the price and value of financial advice; addressing the challenge of ongoing client service. And now let’s introduce you to today’s panellists. Today we are joined by Paul Young, who is Head of Business Consultancy at Quilter Financial Planning, and Chris Jones, who is Proposition Director at Dynamic Planner.

Let’s get things straight underway. Chris, let’s start with you first. We hear a lot, a couple of things that always come up on Consumer Duty, it’s very, very long and product providers always say it’s very radical. Are both these propositions right, how do you get people to think about how radical it is and are there any shortcuts to working out what the best thing to do is?

CHRIS JONES: I think it’s important and I think it’s going to be impactful. It shouldn’t be radical. I feel that it is the culmination of a number of measures that the regulator has put in for organisations and advisers to focus more on the end consumer. And I think this time they are going to take it seriously. I can understand why the manufacturers and providers are feeling it’s more radical for them because it’s not so much in their nature to support the end consumer as it would be for an adviser who does that every day in his normal working life.

PAUL YOUNG: And actually just to build on that from Chris, I think if you look at the high-level principles and the cross-cutting rules, it’s hard for anybody to disagree with them, good outcomes for clients, act in good faith, all that sort of stuff. I think the challenge then comes into the nitty-gritty in the four outcomes and how you comfortably demonstrate that, but not just from your own view as an adviser but actually from the view of the consumer, and I think that’s where the nitty-gritty will come in.

CHRIS JONES: I think the other factor, which again differentiates between the adviser and the large organisations, is it is fundamentally about culture and intent, that’s fundamental. If you go into the Consumer Duty with the right expression on your face, the right attitude, with the intention, which is obviously acting in good faith, if you actually literally act in good faith, the intention to do good for your clients, then the rest of it naturally falls in line, and of course, an individual adviser or a small firm can change a culture and have an intent, it’s much harder for a large organisation to do that.

PRESENTER: Well, you said a lot of this comes down to digging down into these outcomes, so let’s start with those. Target markets and target market statements. Chris, you start off, you’ve got a blank piece of paper, what do you do next?

CHRIS JONES: Well, I think it’s reasonably straightforward. When you go from regulator language, you would be required to organise your business. And if I was to organise any business, I’d have little think about who are the people that would want my services generically, and I’d have a think about that and what they actually need. And then I would think about OK well within that group are there subsets and variants, and are there groups within that that would want something different and then another group want something else different, and then, of course, how would I vary that? If I organise my business so that whoever came through my door, whoever was referred to me, whomever I was looking after, I planned through an organised service and offering to them, which I put the effort in to make sure that it was right for them, I’m more likely to make them happy and more likely to sell and more likely to make more money, but I’m going to have to do less work because I’ve planned ahead, and I think a lot of that is a simple business principle that you’d probably apply from a sandwich shop through to a tailor or something.

PRESENTER: But picking up on that, Paul, a lot of advisers would say well we’ve done that already, I mean we don’t sell the same products to every client, we know our clients well, they’re all different, we’re doing this already. Again, how much of this is, when it comes to things like thinking about what your target markets are, is actually new and how much is it you’ve got to find a new language to explain what you’re already doing?

PAUL YOUNG: I think that’s a good point. I think a lot of good firms are doing this already, Mark. I think they’ve made up and they’re worried that they’re not, so that’s the first part. When they, you could say, almost by osmosis, a lot of us found our target market because we know where our sweet spots are. And I guess, this is a really good opportunity for us to perhaps not worry about the core market, but it’s the outliers that I see firms now worrying about, what do you mean by target market, the outliers mean perhaps a larger or more complex client than they may normally deal with, or a perhaps potentially lower value sum than they would normally do in that market. And I think that’s the bit where the challenge is going to come, it’s just well OK is that my core market and, if so, how do I deal with them most effectively?

The other part of it, which I find really interesting, is, I think, my learned colleague will talk more technically about PROD rules and looking at it from that perspective, that’s very much about the product, but this now means product and services. So it’s not just is this product fit for purpose, and I’m sure technology people do a lot of analysis of the product bit, but does that fit that type of client, and also there’s this other overlay as well about vulnerable clients, and I think it’s a very important differential, which is, it’s not so much the old days of are you a vulnerable client, it’s clients when they’re vulnerable. And I’ve had times in my life where I have been under pressure, stressed, etc. and I could say probably that’s affected my decision making, so it’s just how you also overlay not just your target market, but how do you also counter for people who may have been in stress or a time of vulnerability.

CHRIS JONES: I think that’s the magic of having a structured, organised business, because obviously if most of the people are predictable and known most of the time. Then through efficient use of things like modern technology, you can document what you would do for that client and efficiently you would play it in a consistent way right through to the end consumer’s [unclear 0:06:13] disclosure, which just makes life more efficient and gives more control to your business. But because you’ve got that, then you’ve got the freedom of time and the certainty of what that target market and that play proposition would be to be able to confidently deviate when someone is vulnerable.

If you come across someone that’s noticeably different from your normal target market is, you’ve got clarity on that. And you can see them when you’ve done it and you can report on that and say actually this guy is fundamentally different so I’ve done something that’s fundamentally different to my target market. But you’d know it was different because you knew what you would do for people who normally you thought he was like. And the vulnerability point, Paul’s spot on, is that throughout an entire investment journey or planning journey, people are going to have times of stress and vulnerability and other times. And the ability to know that, identify that and change up or down your service accordingly to support that person is vital, but you can only really do that if you’ve got the structure in place in the first place

PRESENTER: And, Chris, how do you document all of that, because some of this could be really sensitive but you do need to build, I guess, your audit trail as well?

CHRIS JONES: Absolutely. One of the interesting things about Consumer Duty is the word document only appears three times and then it’s referring to itself. So that’s the evidence that you need. And the other bit is it’s fundamentally around conduct, acting in good faith, conduct, business rules, for example, of conduct. So if you are conducting your advice, your research, and your target market assessment live in technology, then the evidence is gathered as you go along. And the output in documentation should only be the documentation that you’re using to communicate with the client in a way they understand. This is definitely not about making some more forms up in a head office somewhere and making advisers fill them out. You know, the additional work and cost aren’t about an adviser having to do more paperwork. It’s about rethinking these processes to make them efficient so they deliver on those outcomes.

PAUL YOUNG: And again it doesn’t have to be that technical. One of the best examples I’ve had is a firm showing me some of their existing brochureware, right, and I think it’s really quiet, its beauty is its simplicity, and on the front page it just shows, this is the typical life stages of a human, i.e. you start off, you get a career and then you get into the middle life and then this is how it works and this is how your journey’s going to be, and this is typically the sort of challenges you’re going to face at these stages, and this is normally when you’ll probably value advice, and these are the sort of products you might end up doing. And actually, I know it is very simplistic, but I love the story of, this is how your life’s going to be, which one do you resonate most with, that one in the middle, OK well people like you in that market said they’re a taxi driver to the kids, never have enough time for me, want to get round to doing my pension, never enough time with it, I’ve got loads of other stuff kicking about in different boxes, is that you, yes that’s me, OK well people like you said they valued a service that looks like this. And that is effectively a really quick, dirty, but lovely, pragmatic way to say look we’ve thought about our market and we’ve tried to communicate about whom we deal with, where our sweet spot is and what our services are, so you can do all the product research, but sometimes something as simple as just, I just love that life stage diagram, which just brings it to life.

PRESENTER: Well, you mentioned value there and I suppose that brings us on to price and value and how you, as an adviser, value the advice you’re giving, whether your clients have got the same view. Again, is this very radical or, if you’re an adviser, would you say we’ve been through this over the years, time and time again with the regulator?

PAUL YOUNG: So I think you could say that we have been through this time and time again. However, one of my first questions for a firm at the moment is when is the last time you had a sense check of your current fee model and what your minimums are and why you arrived where you’re at, and most of them say five, six, seven, ten years ago. So not only do they do something quite, almost templated post-RDR, a lot of them haven’t even reviewed their fees since then, and the challenge actually is I wish most of the firms would stick to their fees on their fee menus. My nervousness about price and value is that it’s about fair value and I’m worried, Mark, that people are reading that as oh that means I need to do things cheaper. And it’s not about that, it’s about getting across your own value now.

So I think it’s a really, I love this, because this is really prompting people and firm owners to look at OK we’ve got our target market, bucket number one, right, now what does it cost me as a business to deliver that, is it still what it used to be, cost of living is affecting businesses as well, as we know, so is it a good time to review the way we do stuff, is it a good time to review how we, the methods of payment, for example. And then that final bit though is the challenging bit, which we’ve never done before, which is, before Consumer Duty, I have been guilty of saying to firms, this is what you need to be charging, this is the fee, stick to your fees, please just believe in yourself and I’ll talk about value in a minute, and now if I tweak my own words with this was actually OK that’s all right having a minimum fee here, but now put another lens, do you think, honestly, it’s good and fair value for the end consumer. Not the fact that this is our fee, take it or leave it, do you think honestly for these outliers, for example, that this is fair value, and that’s a real challenge.

PRESENTER: Chris?

CHRIS JONES: Just as a thought experiment, we are obviously in the City, and we’ve got some bright people around here. Imagine if we went out and found what we knew for certain was the cheapest product and was going to deliver the best return, right, and we went out and we said great we’ve found it, we’ve finally found that magical product that can do that. So what I’m going to do, is I’m going to sell it to everybody. That would be the opposite of Consumer Duty. So just think that, right, it’s not about finding that product and making a document that says that you’ve checked it off. What the whole point, if you turn that on its head, and the point is if you start off with the consumer culturally, you start off and think about, who are the people that I’m likely to give advice to, what do they actually want, what do they say that they value, deliver that, work out the cost of you to deliver that and make sure that you make a profit so that you’re sustainable.

PAUL YOUNG: And it’s the sustainability, it’s not, you know, if you read into it, it’s not about going bust and making sure everyone’s got it at a cheap price, it’s about sustainable business. And it’s good to make healthy, fair profit, it’s good, it really is good.

PRESENTER: But how do you go about putting that together, because back in your RDR day, you were obviously saying to people, don’t discount your fees, and they would have said he’s a real worrier, he’s not on the front-line having to deal with the clients on it. But, you know, you, and the ultimate argument, presumably, was if the client paid that fee, they thought it was worth it and it was justified, so it was sort of the market set the price. What are some of the other things advisers should look at, other than just will the client digest it?

PAUL YOUNG: So, first of all, let’s go back to the target market there are loads of different calculators out there already, is have you looked at the cost to deliver a core piece of your advice in your core market? Now, let’s not, this is a danger because it then starts working out what your hourly rate is, and that’s not what this is about. This is a right as a business in order to deliver this I need to have so much money coming in per hour in order to run my business, and there are plenty of calculators to do that, you know, time, cost, but it gives you a core minimum. And what people can do with that is to say right, if I’ve got a million-pound investment versus a hundred thousand investment, is it ten times the time, often no, is it more time, yes, but is it more risk to the client, yes, and do you pay more into PI and everything else to protect a client if it goes wrong, yes, but do you pay ten times as much, no, but you pay marginally more. But the minimum amount of time is always the same for a million pounds versus a hundred thousand and you can very quickly go, say, well, what are my costs, how long does it take me to do a core piece of business as a business, and you don’t have to do that sort of, I don’t know, what’s the paraplanner rate and all that, just very quickly you can get to a right in order to deliver this, this is what I need as a minimum. That then is, the differential is, right, and is that fair value for money based on what we’ve been doing with the client, but does it make us sustainable? Now, that might be a bar now though, which is that actually if I get a brand new client and I can’t get that much income in, well, I’m not sustainable and that may not be right for them. So my nervousness is perhaps for lower value pots, it might be seen as a barrier to entry in the advice sector.

So what they can do, in summary, look at your costings, look at your core market, work out what you use as a minimum, but then also think about well what about high-risk areas? DB is charged differently, so we understand that usually there’s a risk premium. EIS and VCTs, we’re seeing firms charging differentially for that, but there are also higher principles, which I think is really, they’re formulaic now, is that they’re saying right, a brand new client takes me a long time to onboard and get to know, an existing client, I know them a lot more, a lot quicker, so actually it’s less time to see an existing client. So they take into account what the existing client has with them and use that as a formulaic discount, rather than the back of fag packet, Mark, which is great. So, pre-RDR, don’t discount, but people can’t help biases. But now I’m seeing people actually going right OK let’s have some formulaic structure, the amount of money you have with us, we’ll use to influence consistently what your new initial fee might be.

PRESENTER: Chris, let’s get your thoughts.

CHRIS JONES: I think you should look at charges absolutely last. And that’s because effectively what we did perhaps after RDR and a little bit because of MiFID is, after RDR everyone said right, I moved from commission to fees, so what I’m going to do is I’m going to do a newsletter, an annual review and maybe something else, I don’t know, and then we just did that. And then when MiFID came in, there obviously is an obligation to give advice on buy, sell and hold once every 12 months, so you’ve got to do that, right. So those are the things you’ve got to do. We shouldn’t be thinking right what have I got to do, what’s the minimum I’ve got to do and therefore how much can I charge for it? That’s the culture at the moment. Turn that culture on its head and go actually I’ve known my client for years, I know my area, I know my target market, what do they actually really value, they’ve had the same thing for years and years, what are they telling me they actually want, do these clients need more support, is this product going to be understood by this group of clients, if I put this product in place, will it actually still work when I’m not there because actually, this client is younger than me? Just thinking about the actual needs of the client, and the target market first, builds up the proposition.

You can deliver far more specific, tailored, irregular, differentiated advice through, say, software like ours than just having to do the annual review. You can think about, what do these people actually want, do they want to actually log onto a website rather than actually see me, do they want to see me, all this kind of differentiation, that’s easily captured within your service. You think about, OK, well, I’m going to use this platform, how much does this cost, right, if I use that platform, do I have to do more work, all that kind of stuff, because then you can think about the charges. And it’s about, it’s clearing it in the paper, it’s about equivalency, it’s not about the cheapest, it’s about what does this client need, and then with equivalent things that meet that need, then I can look at charges, and then importantly it’s got to be sustainable.

PRESENTER: But that world you’re describing there with that different mindset, Chris, does that mean in the round when you’ve talked with advisers, does that mean that their business model has got more time-consuming per client and, if so, how do you then factor that in, back to Paul’s point about working out what your cost of business is, because if you’ve got a view of your business in, say, how much time’s taken in 2020 but you’re living with a 2023 mindset, those figures are going to be very, very out?

CHRIS JONES: So Consumer Duty in reality is borne out of the COVID crisis. And actually many of the solutions have been borne out of the COVID crisis as well, because it’s making us realise what was really causing harm. So we know we all work differently now than we did before, we’ve all gone onto teams, this is obviously, I’ve come into the City for a change, I’ve had to put a suit on, I’m actually wearing trousers, this is unusual, I’m normally talking on Zoom and teams, so that technological change is massive. We’ve seen a huge increase in the number of clients that advisers can serve, and we’ve seen them differentiate far more than they would perhaps before this because of what this change has done. And I think the Consumer Duty has captured that, insofar as they’ve seen what causes harm, they’ve seen what works, advice works, other things don’t work, and then you can become much more efficient, and the challenge then is, as your clients might start to get bored with the service that you’ve got, is changing it up and reinventing some of the small bits to increase the value that’s felt. And if they feel the value, you know, price is only an issue in the absence of value, if they feel the value, then the rest of it is just going to fall into place.

PAUL YOUNG: And the test for that, by the way, is the why question. So when I say to people, so why do you have percentages, why do you have hourly rates, why do you have fixed fees, why do you, it doesn’t matter, that’s not right or wrong, remind me why, and if the answer is well because that’s the way we do stuff round here, then you’re in trouble, OK. Because a lot of it has been borne from the way it’s done in the past. A classic example for that, I’m finding, the challenge of regular contributions and how advice is paid for is a real issue still. It’s not because of Consumer Duty, it’s been there forever and a day, but I love the fact that I’ve got firms we work with saying well why do we charge for regulars this way, it doesn’t make sense anymore, but that’s the way they’ve always done it or they’ve done it since 2012. So being able to say and the reason why we charge fees this way and the methods of payment are this, just go back to well what was it that made you do that in the first place, and if the answer is well because that’s what we did a while back, then I think, yeah, you need to have a word with yourself.

PRESENTER: One final question on this, Paul. You mentioned the cost of living crisis, we’ve also got inflation of 10, 11% at the moment. If an adviser listening to you said, I agree with Paul, but now, 2022, 2023, is not the time to make radical changes and perhaps alter my business so I’m offering more value but fundamentally it costs more as well as part of the value trap, this is one for 2024, 2025, what would you say to them?

PAUL YOUNG: OK, I absolutely hear you, and I can give you a really live and recent example from last Friday. We’re working with a firm who’s looked at it and their average ongoing, for their core amount ongoing service is 0.75. We’ve done the figures, we’ve done the fees, they’ve decided to keep it to percentages, but actually they’ve realised it needs to move up, OK. And this adviser’s name was Doug. So if you’re watching, Doug, nice to see you again. And his point was exactly that, Paul, I get it, the facts, the figures, they all make sense, I cannot see how my clients are going to suffer this at a time when they’re under pressure, we’re under pressure, surely this is the worst time because of cost of living. And, luckily, one of the other advisers, instead of me, said that’s exactly the reasons why we need to do it. And what I will also use is another firm just up the road here, which we work with, who took me out for a nice coffee this last Thursday to say we’ve now worked out that when we went to see our clients and we started to do this, we started in May, out of the 251 clients we’ve seen, one has challenged us, and most of them have said I can’t believe you haven’t reviewed and looked at this before.

So we’re not saying that. So I’m not saying by the way this is that everyone needs to put their fees up, all I’m saying is have a fair look at what it is for your business. And you will be flabbergasted by the fact that they trust you, they respect you, the clients, and if you say look inflation is at x, first of all do you value our ongoing service, can I just remind you of the purpose why we did this and what value I think we’ve added over the years, if you see value in it, do you want to continue with us, yeah, well, in order to continue doing that then we need to have a price readjustment or we’ve changed the way we’re doing it, and nobody is pushing back. People are expecting it, in fact they’re probably saying, as we know, why haven’t you done it before?

CHRIS JONES: And there’s about 1.2 million people working in the financial service industry and every one of them is caught by Consumer Duty. And I think one of the opportunities is to actually remove all the sludge processes, to take out, if you’re doing work in the financial service industry that doesn’t actually avoid harm, enable the client to meet their objectives, then what are you, you shouldn’t, you should stop doing it. And I think the removal of sludge from the advisers’ processes and the people that they rely upon is actually going to reduce their operational costs. And also the use of modern technology and embracing the client-focused approach that’s enshrined in the Consumer Duty would allow them to actually see more clients and have happier clients.

Right now, where are you seeing the value? Consumers are really seeing that they need financial advice. But they’re also seeing they need active management. The idea in the past that you could go onto Robinhood and you could buy bitcoin or you could buy the cheapest passive on a DTC platform, that might have worked, but it doesn’t work anymore, and now that advice being received right now by the consumer is actually clearly giving value, but other things that happen, if they’re not giving that consumer value, we should stop doing them.

PAUL YOUNG: And that’s the sludge thing I thought was brilliant is about risk and I know you guys are massively into risk profiles and all that sort of stuff, but from a consumer perspective, we’ve had firms, I’ve got to do a risk profile on my client every year, why, well because I’ve got to do it every year, why is that then, well because I’ve got to check the attitude to risk every year, right well how do you evidence that, well I’ll just do the profile. That is a sludge practice. We know from a behavioural perspective, unless a client suffers a major life event which might affect the timescales until they enjoy their money, which might be a relationship breakdown, a bereavement or something else…

PRESENTER: Or could this be a client being in a vulnerable state?

PAUL YOUNG: In a vulnerable state, spot on, absolutely right, then actually what you set up for them a year ago is as good today as it’s always been. So why are we sending attitude to risk questionnaire to clients when you could perhaps send them a more engaging cashflow input. That’s what I love about some of this stuff is, people have started to say why are we doing this, from a consumer perspective, why are we doing this stuff every year, why are we doing, and that I think is a classic example of let’s think of it from the consumer perspective, how do I feel getting this thing, it’s the same answers I did last year. That, to me, is a really good example of removing some of those sludge practices and replacing them with far more engaging questions about by the way if you had to retire early, say, through ill health, are we sure we’ve got enough income there? Now, that to me is a far more interesting conversation than what’s your attitude to risk profile questionnaire.

PRESENTER: Sorry, Chris.

CHRIS JONES: Oh, no, it’s a great example, I’m just simply turning it on its head, because the reason you fill out a risk profile isn’t because the regulator says so, right. The reason you fill out a risk profile is because until the person’s invested, you need to do a psychometric one to manage out the current markets, any biases that they’ve got, so that you can understand what’s going to make that client happy in the future, how is that client going to behave, right now the markets aren’t great, because obviously if they made a decision when markets were up they probably would have made the wrong decision, right. So it’s using the behavioural psychology, the psychometrics in a positive way, so that when the time comes to deliver that advice, the client is actually being supported and they understand. It’s about understanding, the client needs to understand the risk that they’re taking and you need to understand the risks they’re willing to take. That’s the understanding part of it. It’s about doing that, not because someone told you to. And this is, again, you change it around and you say right, I’m doing it for the client, not because someone somewhere who doesn’t actually speak to clients is telling me to do something because he wants to fill out a form and pretend he’s meeting the regulation.

PRESENTER: I think we’ve moved a little bit on to the challenge of providing ongoing service to clients, which I think is a good place for us to finish the conversation. Chris, on that point, as an adviser, you’ve got your existing client base but you’re always looking for other ones, when it comes to Consumer Duty, how much of your time should you be spending thinking about your relationships and your relations with existing clients and how much should you be thinking I’ll be really different when I go out and meet new people?

CHRIS JONES: I think we are a service-based industry. I mean 75% of revenues come from service, we have to embrace that we’re a service-based industry. But, ultimately, it does come back to that support, whether you’re taking somebody on for the first time or whether you’re reviewing them, it’s the ability to see them all the way through their entire financial planning journey is important. And of course, you know, being able to help them to understand what’s going to happen in the future so that when it happens they’re better prepared for it, so even managing vulnerability as well but also managing the clients’ expectations and seeing them on that long-term journey, is essential from all of the aspects. And you need to think about what kind of service is necessary.

Obviously, going back to Paul’s point with the regulars, if you’ve got someone that’s starting out on a journey and they’re paying regulars, they probably can’t afford or maybe want an annual review. So you can still keep them as your client and keep them incubating until they’re ready, you could engage them in different ways digitally, and you just think about what that would be and you give them the right service as you go along. But of course, you know, just the simple concept of saying right, who are these people I’m going to talk to, what do they need, what would I charge them, can I sustain that level of charging, am I profitable, are the products that I’m using or the investment solutions that I’m using, can I actually keep those going and working for the client throughout that journey and can the client afford to pay those fees, is all-encompassing. And it picks up people at the beginning of their journey or the beginning of their journey with you in much the same way as it does a review client.

PAUL YOUNG: And it just made me laugh because you’re exactly right, a lot of firms have got this three levels of service, and I do the so can you help me understand what was it that made you choose it, and most of the answer is because I thought that was the template that my network gave me, or whatever, I just did it. And when you say well do you understand the reasons why, and it goes into the behaviours, we forget sometimes of why, this is what we do, what’s the driver behind it, and it’s absolutely right, it’s the, if you look at it from the consumers’ perspective, they only really value three things, the research has proved that, from an ongoing service with an adviser.

Number one is keep me informed but don’t spam me to death, you know, keep me informed with pertinent, relevant information but don’t be, just don’t bug me. And that doesn’t matter whether you’re 18 or 80, that’s the same. The method of delivery can alter, perhaps it’s more social media or email, but if you’re older perhaps a bit more letter or PDF. The second thing they value is like a milestone check is just can you just make sure that my stuff, my plans are on track and those people managing the money round here are doing what they’re supposed to be doing, yeah, and what we find is the older you get and the more money you have the more interest you have in it because you’re more closer to spending it, so youngsters, as Chris said, the rationale is well actually youngsters who are just starting on it may not be thinking it’s eons away, so perhaps do they need that as often. And then the third thing that people value is can you be my trusted safety net, my conversion tool of the world around me, can you help me understand Rishi Sunak’s budget, you know, what does it mean? So, when you’re young, you’re normally worried about the price of lager and petrol. When you get a bit older, you start worrying about that and also what’s my family income benefit or whatever it’s going to be, welfare, and then the older stuff is income, capital gains, welfare, inheritance, that type of stuff. So you’re altering, the older you get the more you worry about the budget, and the more wealth you have the more you worry about the budget.

So when you go boil it back to the consumer perspective, you go well there you are, you’ve got a really simple, people like you say to me, they worry about this, is that you, yes, well that’s the reason why we have an ongoing service like that. And it’s a different conversation from oh in order to look after you it's x fees, as Chris said, no, it’s actually do you value that type of service, yeah, OK well in order to do that this is how it’s going to be and these are the fees, and I think we’re just swapping it around a bit more.

PRESENTER: One of the themes I get from you very strongly, Paul, is this idea that a lot of what advisers do, and it’s very generally, they do and they haven’t necessarily always reflected on why they do it. It’s not necessarily it’s the wrong thing, but they haven’t reflected. If you looked at Consumer Duty, let’s run the clock forward, it’s now three or four years later, isn’t there a very high chance that a lot of what’s new now and we’ve done a lot of reflection, has just, it’s hardened out into process again. So how do you make sure it doesn’t just harden out into the next lot of process, should you put a date in the diary for four years’ time as an adviser firm and say let’s just go back and ask ourselves a question about everything we’re now doing?

PAUL YOUNG: Well, yeah, no, it’s a great question and I think, I use, what is it, I refer the right honourable gentleman to my previous answer, which is actually humans, we tend to suffer a major life event every three to five years, OK. And that’s a really good time with our clients to do a drains up, to actually understand what’s the purpose, remind them of the purpose why they did something in the first place, how are we getting on with it, is anything else in the way, and, I don’t know, is it plumbers’ taps leak, cobblers’ sons have no shoes, all that sort of stuff, we are not very good at taking time out on our own business and saying right, what did we get into business for in the first place, how are we getting on to achieve that, do we need to have a little pressure test. So yes I’d love it that every three to five years, people actually have a little bit of a drains up. We insist on it with the firms we deal with, no, come on, let’s poke it, and it’s funny, it’s like clients, that you may think everything is fine on the surface, but until you actually create an environment that says, you know, what’s going on, are we still on track for this, well it’s funny you should say I was thinking about this the other day, a mate of mine died at work and I thought actually do you know what I need to change what’s going on. We need to make sure we take our own medicine, we need to do our own cashflow, and that’s another thing that worries me as well is that the amount of firms who do great cashflows for their clients and yet their own cashflows perhaps need to be a little bit sharper.

PRESENTER: Chris, can I get your thoughts on that, how you do that period of reflection with clients, and also you mentioned things like being more efficient, doing lots of things online, can you do some of these deeper relationship dives online or do you have to be face-to-face?

CHRIS JONES: I think obviously the technology is very powerful in removing the things that advisers don’t want to do, aren’t very good at and enabling them to have more time to do the things they’re brilliant at, which is of course interpersonal skills. And when we talk about all the digitalisation of the world and soft skills like adviser ones are going to be employed for the longest. But going back to your question I think what I’d like to see is the word ‘have-to’ removed from advisers’ mouths. So most of the time advisers will go oh this Consumer Duty’s all very well but I have to because of this rule, or I have to because I’ve been told to do it, I have to do this, I have to do that. Then they go and see the client and they go oh yeah I know this is what you want, mate, but I have to give you this form, and actually you know that product that I said was going to really work for you, I have to do this. There shouldn’t be any have-tos. The have-tos should only come from the consumer.

So I think we are, it is, Consumer Duty is in many ways written for the advisers. It may not feel like that right now. But of all the people in the industry, the people that are the most client-focused, the people that are most prepared, who actually in reality are most following the Consumer Duty are the advisers. The problem is that because of documentation and bureaucracy, they have to do things that go against acting in the best interests of clients and acting in good faith and so on and so forth. What we can do is if your conduct, if your actual advice processes, if you go back to the olden days when you might have had a nice leather folder that you got at a conference and you go out and, that’s my sales folder and I’ll take you through my sales folder, and then later on I have to go and pay someone to document my suitability letter to get past compliance, which has got nothing to do with what I actually told the client. We don’t need to do that anymore, because through technology I can actually sell through technology more effectively than I could from a folder, and that technology can be the evidence. And, in truth, if you act in the best interests of the client, if you act in good faith and you meet the principles and then you deliver that advice, in reality, in action and you document what happened, if later on someone doesn’t like what you did, you can’t change the documentation of what you did, because what you did is what happened. This idea you go back and create extra documentation to get you out of what was perceived to be the wrong advice when that was actually what the consumer wanted is quite unpalatable. And I think there is a huge opportunity to make this Consumer Duty actually live for advisers and give them what they really wanted.

PAUL YOUNG: The tech is key, and we’ve seen lots of firms deliver better quality outputs to clients far more quickly and broaden their horizon of how many clients they can look after in households, and that’s a classic example. Digital is not a de-valuer; in fact, I battle with people, I’ll do it cheaper if it’s online. No, a lot of people actually really value it more. So I’d echo everything that Chris said.

PRESENTER: Right, we’re pretty much out of time, so I want to get a final thought from everyone. Paul, if there’s one thing to leave us with when it comes to Consumer Duty.

PAUL YOUNG: So I can’t help but reiterate, the technology, it’s a gamechanger done well. It’s a value enhancer, not a price robber, and it’s a gamechanger for the amount of people you can look after and quality, so that’s a done. But if you want my, you know, where do you start, start at the end with your servicing, your ongoing servicing, think about what the client values, think about the price to deliver that, and the reasons why you do that, think about Consumer Duty and the pricing, not just now, in the future, the method and style of delivery, and that should give you, that’s the client, once they’ve entered it, either new or existing, have someone look after them, start there and it should wash back through. That will help you understand your target market, help you understand your pricing, help you think about the value, help you think about how to get technology to deliver that better, and I think that’s the way you cover those four boxes, but you start with the end in mind and work backwards.

PRESENTER: Chris?

CHRIS JONES: I agree with Paul. I think if you start with the intention of the client being happy at every review and work backwards from that, you can’t go wrong.

PRESENTER: We have to leave it there. Paul Young and Chris Jones, thank you for joining us.

CHRIS JONES: Thank you, Mark.

PRESENTER: And thank you for watching. Do stay with us. We’ve got that information on structured learning outcomes coming up right after this.

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