Research by Aegon, which involved 221 financial advisers, looked at the extent advisers expect the consumer duty to impact retirement advice.
The three areas advisers expect to change most are: the way they communicate with clients (34 per cent), the way they assess the value of advice (33 per cent) and the way they segment their client base and service offerings (28 per cent).
Steven Cameron, pensions director at Aegon, said: “The FCA’s consumer duty will have a significant impact on the retirement advice market, not necessarily drastically changing the advice itself, but certainly the framework and evidence that surrounds it.
“Advisers should be considering all areas of potential change in their business and services that could help deliver good outcomes for their clients.
“Where confident they’re already delivering as the FCA would expect, it is good practice to document how they’ve come to that conclusion to avoid being viewed by the FCA as overconfident or complacent.”
Source: Aegon and NextWealth, Managing Lifetime Wealth, Q. How likely is it that the consumer duty will change your retirement advice offering in the following areas?
The research, which was conducted with NextWealth for the 2023 Managing Lifetime Wealth: retirement planning in the UK report, was carried out in November and December 2022.
Communication
The most common way that advisers see the consumer duty changing their offering is how they communicate with clients.
Kusal Ariyawansa, a chartered financial planner at Appleton Gerrard, said as many advisers have stated, consumer duty will not change firms drastically.
“However, here are insights and improvements we can all make, for the benefit of everyone,” he said.
“It is disappointing to hear that communication remains substandard to the point clients feel they have 'at least a general understanding of how on track they are'. This is fundamental to the services we provide.
“It is not complicated to write in simple English explaining where someone is and what they have to do to get to where they want to be.”
Aegon also surveyed 209 consumers of retirement advice and asked them to rank the importance of six components of retirement advice. Performance of assets came out top, averaging 2.5 out of 6.
The research found advised clients already place a high importance on communication: 93 per cent agree that fully understanding retirement advice is important.
In addition, four in five (81 per cent) advised clients say they have at least a general understanding of how on track they are with their financial objectives, suggesting that advisers are largely delivering what clients want and expect, though with some room for improvement.
