However, we know what followed in 2021 and 2022. As inflation started to pick up, those inflation hedging assets rose towards the top of the pile as you’d expect, and the winners were those that lost in the short-term over 2020 during very specific conditions. In hindsight, you could argue that the smart thing would have been to remain broadly diversified, trust the process and perhaps focus on engaging with clients around periods of heightened volatility.
In summary
So where am I going with all of this in respect of Consumer Duty?
Well, making changes to your clients’ investment strategies off the back of short-term market fluctuations isn’t part of the long-term plan and that’s particularly important in the context of having the right product, services and processes in place to address your clients’ needs front and centre. Secondly, supporting your clients around periods of market turbulence is an excellent way to demonstrate value because it ultimately improves their chances of success by getting them to stick with the long-term plan you’ve worked hard to put in place.
Finally, all of this highlights how this new package of Consumer Duty principles, cross-cutting rules and detailed expectations of conduct go way much further than simple tick box compliance in delivering tangible value to your clients.
For support ahead of the Consumer Duty, visit the Royal London Consumer duty hub.
