Opinion  

Avoiding obfuscation makes good commercial sense

Noel Butwell

Noel Butwell

The savings and investments industry is often accused of using jargon too liberally. 

This is partly down to the nature of what we do. The world of finance is undoubtedly technical; many would argue too technical.  

But there is probably truth to the charge, and communicating in an inclusive way remains a big industry priority. We must ensure consumers understand the services the advice industry offers so they can make informed decisions – a responsibility that was rightly recently regulated as a part of the Financial Consumer Authority’s consumer duty regime.  

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This is not just the right thing to do. Avoiding obfuscation also makes good commercial sense. For financial advisers, raising the curtain and helping clients to understand industry language and concepts demonstrates expertise and the added value they provide. 

Financial strength is a great example of such a concept. It is straightforward at surface level, and if you asked most people they would likely assume it is a measure of how much money a business has. 

However, to financial advisers it means so much more. A platform partner’s financial strength covers capital and asset strength, but it also encompasses everything from their operational resilience and the strength of its management team to its ability to withstand external market shocks.

These attributes have never been more important. In the current economic environment, people are turning to their financial adviser to help them maintain the balance of investments they need to achieve their long-term financial goals, but also, no less importantly, for reassurance. 

Above and beyond

It can feel like we have not had a period of economic stability in this country since the start of the pandemic. And I know from the conversations I have had with firms that the sector continues to go above and beyond to give people more than just practical financial support.

They are using the technology at their disposal to have potentially difficult conversations with clients about the impact of market turbulence on their finances. For example, cash flow modelling tools have helped advisers' position falls in income to retired clients without causing alarm. 

Helping clients understand financial strength and how, in the context of platforms, it covers more than they might expect, can deliver the same benefit. It gives clients confidence that, in difficult times, their adviser has partnered with a robust and reliable technology provider to support them.  

Financial advice is a profession built on relationships. By demystifying and fully explaining the importance of financial strength and carefully chosen partners, advisers can also deepen valuable, long-term relationships and cement their position as a trusted source of support for clients.

This is true now, as clients navigate another period of economic disruption, but could become even more relevant as the financial advice market evolves. 

A positive shift

While we can not predict the future, automated services and digitally enhanced solutions are already changing the way people access advice. This shift is positive because it could eventually increase industry capacity and help to address the well-documented advice gap in the UK.