Smart businesses know that delivering consistently good outcomes for clients means staying ahead of the game. Prioritising forward planning, knowing what’s coming down the road and adapting accordingly. Done right, and any crises that have the power to disrupt outcomes becomes less of a threat.

As we start to look towards life after lockdown, is your business prepared to navigate the obstacles of our new normal?

As you’re grappling with the changing needs of your workforce and the rise of remote working, the needs of your clients and the associated risks have also shifted. Here’s what you need to keep in mind so you can respond effectively.

The lasting impact of vulnerability

Vulnerability skyrocketed at the height of lockdown and it’s an issue that won’t disappear as we emerge from the thick of it. The global economy has plunged into recession and soon we’ll start to see the withdrawal of the Government’s emergency financial support measures. At this point, any client could start to see their financial difficulties escalate and as a result, heightened vulnerability should still be at the forefront of your mind during every client interaction.

Take annual reviews as an example. There might be some logistical issues with how they’re conducted, but it’s more important than ever to get them done on time. It’s likely that a client’s circumstances and objectives will have changed, and their risk profiles might’ve shifted too. This is the opportune moment to spot the signs of vulnerability and take appropriate action, so you should have the right policies in place to support your frontline staff in doing so.

In our experience most firms already do, but they’re rarely able to demonstrate and evidence how their policies are effective in practice. We can help you prepare for FCA scrutiny of your policies and procedures by looking at the customer journey as a whole, identifying where your policies drive fair customer outcomes and where things need more work.

Clients will seek more value for money

The FCA’s talked about value for money for years, and we expect to see an increased focus in this area now. After all, history has taught us that complaints spike when portfolios reduce in value. It’s a natural reaction as clients grow more anxious about their future and financial security.

So, you should also put extra effort into ensuring you’re still delivering value for money, and that you can evidence that. Firms should be able to justify and contextualise their charges. There’s no doubt that areas such as product research, compliance, annual reviews and CPD are all important investments. But they’re costly, and it’s up to you to show your client how all this contributes to the quality of advice they’re receiving. A transparent analysis of costs can be helpful in demonstrating the value for money you’re providing.

Clamping down on unsuitable advice

In their quest for better returns, it’s likely that clients will start to look for more growth from non-mainstream products. In the last recession, many investors seeking growth opportunities looked towards products like Unregulated Collective Investment Schemes. But since then, the FCA’s review of UCIS advice revealed that much of that advice was unsuitable.

With interest rates still at a record low of 0.1%, we’d expect to see the FCA’s focus on unsuitable advice to be ramped up in an attempt to avoid history repeating itself. So, these types of products should only be sold to the correct target market who truly understand the risks involved. Get it wrong, and it’s likely that clients will complain if and when they see significant losses, and regulatory scrutiny will undoubtedly follow.

Finally, we can’t talk about high-risk products without mentioning Defined Benefit pension transfers. Last week the FCA released its policy statement which officially drew the line on contingent charging, among other measures. It sees DB transfers as a key risk of harm in the period following lockdown. After all, if clients are feeling the pinch financially, they might be tempted to transfer out of their DB scheme for a quick windfall. But in this economic environment, the risks of transferring are higher, so the FCA will still want to see evidence that any transfer recommendation takes into account the client’s long-term needs.