Consumer dutyMar 27 2023

Almost half of clients do not read financial communications

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Almost half of clients do not read financial communications
Pexels/Suzy Hazelwood

Just under half (47 per cent) of financial communications are read very little or not at all, according to a survey from asset and wealth management consultancy firm, Simplify Consulting.

The survey found consumers rarely read communications sent to them by financial companies - such as pension companies, mortgage lenders and Isa providers - because communications are too long and too full of jargon. 

The survey comes as financial providers face tough new regulations around financial communications under the regulator’s consumer duty.

The research, which was with 100 investors, comprising 58 per cent female and 42 per cent male from under 18 to 65 years old plus, found that just 14 per cent of customers read all of the communications sent to them, compared to 16 per cent that are never read.

Some 30 per cent said they read very little.

Most respondents were in the 35 to 44 age group, with 45 to 54 year olds and 25 to 34 year olds making up the second and third highest number of respondents respectively.

Carl Woodward, co-founder and director at Simplify Consulting, said: “Regulation upon regulation over the years has clearly led to a vast increase in the length of communications and the language used within them. 

“Consumer duty is seeking to address the latter but it might potentially be at the expense of increasing the former even more if the issue of excessive jargon is to be addressed. 

“A large number of the respondents are in an age bracket poised to benefit from the ‘great wealth transfer’ yet the results show that the majority don’t seem to see their financial adviser face-to-face and many cannot understand the ‘jargon’ used in other forms of communication.”

The survey found that the top reasons as to why consumers are discouraged from reading financial communications are that they are too long (64.4 per cent), they don’t always have the time (50.5 per cent), there is too much jargon (45.5 per cent) and there’s no immediately clear action in the communication (45.5 per cent).

Others said it was lack of volition: “I don’t want to read it or feel I need to” (30.7 per cent) or that it was not written in plain English (27.7 per cent).

Woodward said: “With client communication one of the key tenets of the FCA’s consumer duty - whereby providers will be tasked to support consumer understanding by ensuring that their communications meet the information needs of retail customers - there clearly remains a disconnect.

“With consumer duty around the corner, it seems that financial providers have a huge task ahead to ensure they are compliant with the new rules around this issue.”

He added: “While we’re conscious that regulatory statements are vital, the industry still needs to work towards a form of communication that is inclusive and comprehensible if we are to ensure the next generation of investors are engaged in their own financial planning. 

“From our experience with clients, the task might seem daunting but it is not insurmountable.”

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