In the FCA’s drive to ensure firms are communicating with their clients in a way that is clear, fair and not misleading, it has once again highlighted ongoing issues with client communications.

The regulator identified the design, content and delivery of disclosure documents as one of the key barriers to clarity for the advisory industry and set out its expectations for firms to make improvements.

But how can firms meet these expectations? The Consulting Consortium’s Director of Advisory Services, Colin Wilcox outlines a practical five-step method to approaching redesign of disclosure documents and other client communications:

  1. Understand your business model – variables relating to your business model, such as your proposition, distribution channels and structure, and customer base, will impact the type and format of communications you choose. For example, an adviser that provides an online rather than face-to-face service will need to consider how a traditionally verbal disclosure will be communicated and how comprehension will be judged and evidenced.
  2. Discover the information needs of your clients – research your client base to discover the most appropriate ways to communicate with them. Bear in mind that some of your clients may be vulnerable or may experience vulnerability at some point in during their relationship with you. You need to have alternative ways to communicate key disclosures if vulnerability occurs.
  3. Design with your customers in mind – think about the content and format of the documents you provide. Simple, jargon-free language, with information laid out in a structured way enables better legibility and client understanding.
  4. Test & refine – prior to rolling out, you must test communications with a sample of customers to obtain practical feedback and give you the opportunity to refine. This mitigates the potential for serious errors that may lead to significant remediation costs further down the line.
  5. Continuous improvement – communications should be checked regularly to ensure they continue to meet the information needs of customers and suit the proposition and distribution channels. If any of these elements change, communications should be reassessed for relevance and suitability.

We cannot emphasise enough the importance of keeping the information needs of your clients front of mind when designing or redesigning disclosure materials and other key communications. Although looking at examples of best practice can help inform the process, you should be mindful that what has worked for other firms may not be what’s best for you.

Source: The Consulting Consortium