Advisers should treat their client's behavioural biases as a form of vulnerability, according to Just's Martin Lines.
Speaking at the Chartered Institute for Securities & Investment's Paraplanner Conference, the provider's business development director said the Financial Conduct Authority had done a lot of work on vulnerability and behavioural biases recently which echoed the same issues.
Mr Lines said: "Are behaviour and vulnerability two sides of the same coin?
"Behavioural research shows us consumers are not economically rational super consumers, and this is very close to what the FCA has said around vulnerability.
"Sometimes I think you undervalue your knowledge and experience against the average consumer in the UK. About half the adults in the UK have the numeracy skills of an 11-year-old."
The FCA has been calling for firms to develop better ways of working with vulnerable customers for some time.
In a paper published in 2015 the watchdog criticised financial services firms for "streamlining" consumers and offering products and services that were "not designed to meet the non-standard needs of those who do not fit into a set mould".
The regulator reiterated its stance two years later when it said it expected consumers to take reasonable responsibility for financial decisions but firms still had to take the needs of vulnerable consumers into account.
Mr Lines said there were many behavioural biases which consumers are subject to, including herding, familiarity bias and a tendency to focus on losses, no matter their size.
He said: "If people don't have the services of a planner their access to information is going to be limited. If they try and go it alone they are going to face choice overload.
"Filtering that through and finding the best option is a real help to consumers but if it is not explained thoroughly and they don't understand it they do nothing at all or they do what everyone else is doing."
damian.fantato@ft.com
