The Financial Conduct Authority’s new consumer duty should be at the core of any financial planning business, according to Ed Dymott, managing director of wealth at Benchmark.
Speaking this week (September 12) at 'Boring Money’s Consumer Duty – The Sequel' event, Dymott explained the process that Benchmark took to conform with the new regulation.
He said the consumer duty is already what the firm does by focusing on everything from suitability to client outcomes.
“Understanding certain consumer duty principles is the hub of what a financial planning business needs to do,” he said.
“That doesn't mean we didn't take it seriously but it didn't necessarily cost lots and lots of change. We stepped back and looked at all the engagement and material we provide to our clients to ensure it was fit for purpose, and made some refinements on the back of that.
“The other thing in terms of a challenge was that we have 200 independent businesses that we regulate so it was just about being ready ourselves, but we had to make sure that 200 firms were also ready as well and that was not an easy task.”
He explained that due to many procedures being in place, it allowed the firm to get under the value for money question.
Dymott said as a business, Benchmark has very low complaint levels and good retention which is positive.
However, he said: “The big focus for us was value for money and trying to understand as we survey and engage our clients if we are clear with value for money.
“The interesting thing for us was if you listen to the sentiment from the regulator, a lot of it is about performance and costs, which again, are important, but we knew that as financial planners, things such as wellbeing were really hard to try and measure.
“Actually one of the things that we were keen to explore is exactly how you measure in the fullness of everything we do and that evidence was the key part for us.”
Dymott said the business has taken a key focus when it comes down to the advice process itself and, while it has always done satisfaction surveys, it has now extended that to do some value for money.
Working with Boring Money, he said Benchmark conducts research with clients to assess their views on the value for money and then uses that on an annual basis to assess how it is doing.
“That really has a balanced view not only to look at performance and cost but also to assess things such as financial wellbeing, trust, the quality of relationship, how information is provided, and that allows us across all our advisers and all the clients that we interact with to really get under value for money.
“What it does is create a loop that says when we start to get that data back - what do we need to do in terms of applying that to what we do?”
Meanwhile, Kat Patton, head of proposition and market research at Hargreaves Lansdown, who was also on the panel, said her firm began with a good basis going into the duty as it had a strong foundation from the research it had done with clients around what outcomes were.
“The old adage that it's an evolution not a revolution was true but there was an awful lot of work across business with people put through their paces in a way that they probably hadn't been before.
“We had to reassess all our client journeys, journey mapping across the piece, 1,000s and 1,000s of pages of product review, so it was an incredibly heavy lift by teams and weekly and fortnightly calls with people that you generally wouldn't see in your day to day life all just coming together behind this is massive piece of work.”
Elsewhere she explained that some of the challenges with the duty were around data flow.
“Once we defined comfortable what we thought outcomes were, but then how you turned the data that you've got and seeing what clients are actually doing, how you said analysis of measuring and proving and evidence to make informed decisions.
“Probably something that we've made progress but it is still so baffling.”
sonia.rach@ft.com
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