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Value of advice must be made clearer

Charges and performance should be clearly identified. Basic risk-rated products should be available and should make clear the risks of doing nothing or having everything held in cash.

Access and education

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Consumers have a massive range of choice when it comes to investment products, with multiple access points driven by the expansion of technology, but there are significant issues that need to be addressed to ensure better consumer outcomes.

Broadening access to the market and opening up guidance to more products creates the opportunity for an expanded market, which will enable providers to effectively offer solutions in a cost-effective way while also building a market that will need full advice in due course.

Increased access also responds to the changing consumption habits of the wider population in terms of digital solutions that were not available under previous attempts to broaden access.

Consumer knowledge is generally low when it comes to understanding investment options and that often leads to inertia. Increasing financial education is a significant way to improve the financial wellbeing of individuals and their families while reinforcing the benefits of investing.

Financial education should also be continuous; the 'bank of mum and dad', for instance, needs help passing on their wealth to families.

ESG can help do good

Responsible investing and the integration of environmental, social and governance factors into investment decisions has taken on greater energy over the past year, partly due to the pandemic and the so-called 'Great Reset'. In many cases, ESG strategies outperform their non-sustainable benchmarks.

Advisers are now faced with the task of educating themselves on responsible investing and learning about their client’s ESG values, while also facing new regulations that will require ESG to form part of the client’s sustainability assessment. Again, this presents a significant opportunity.

Those advisers focused on ESG can generate a richer dialogue with their clients around values.

In doing so they can also demonstrate that in many instances taking an ESG approach can enhance investment returns. That in turn demonstrates the importance of the role of the adviser, in an area of growing importance to investors.

A recent PwC report predicts that more than 50 per cent of European funds will be in ESG assets by 2025, highlighting the view that ESG investing will become the norm.

Protection is vital

When consumers make mistakes it is due to a range of issues, from reckless caution where they focus on what are perceived as safe products that produce inferior returns, through to being simply reckless and investing in offers from too-good-to-be-true scammers and unregulated products.

Based on the key drivers that customers look for – ease, simplicity, transparency, and speed on product – consumer protection should reflect this.