Over the years the wealth management industry has been hindered by excessive regulation. It has resulted in wealth providers often overcomplicating their product offerings with lengthy disclosures, technical correspondence, and ambiguous marketing materials. These are barriers to investing and create unnecessary confusion, deterring consumers rather than empowering them.

While customer-facing documentation has improved since the introduction of Consumer Duty, there is still scope to enhance consumer understanding. The FCA acknowledged this during their strategy update in March, with their focus on “rebalancing risk”. The aim – to stimulate the UK economy, giving firms more flexibility in meeting regulatory requirements, whilst simplifying outdated or conflicting regulations.

Focus on Consumers First

Deregulation presents an opportunity for firms to be innovative with their product designs and remove the barriers that have impeded consumer understanding in the past. This enables firms to shift their focus from – figuring out how to explain a regulation to – determining what the consumer needs to know to make an informed decision. While wealth providers will still need to comply with regulations, simplicity should not be sacrificed.

To improve consumer understanding, wealth providers have an opportunity to review their clarity of messaging and focus on the outcome to be achieved.

Simplifying Product Disclosures & Key Features Literature

These documents are often overloaded with technical jargon that make it difficult for consumers to understand the products benefits. This causes confusion and is overwhelming, leading consumers to avoid reading the document and therefore still being uninformed.

This can often result in inaction and consequently a poor outcome for consumers.

To ensure these technical documents deliver the right outcomes, firms should:

• Use plain language and avoid jargon – use “restrictions on taking cash” instead of “liquidity constraints”, followed by what these restrictions are in simple, understandable terms.
• Focus on what matters to the consumer – only include key information that the consumer needs to make an informed decision.
• Visualise costs upfront – incorporate visuals like charts, infographics to simplify complex data.
• Offer interactive versions – allow consumers to explore at their own pace, with links to additional resources that offer further context when needed.

Increasing Engagement through Marketing:

Marketing material is written with complex product descriptions, regulatory disclaimers and prioritise legal compliance messages over customer-focused information. This makes it difficult for customers to understand the product’s key benefits and risks, so they’re unable to make informed decisions.

Therefore, customers will be more likely to choose a product if providers:

• Ensure risks are proportional – provide context to risks so consumers understand the likelihood and impact of a risk occurring.
• Explain the benefits – acronyms for products are insisted upon such as “ISA”, but this doesn’t explain to a consumer what the product does, firms need to be explicit.
• Use real-life examples – show how products meet every day financial goals.
• Provide educational content – engage younger demographics to help demystify complex topics.

Clarity in Customer Correspondence:

Correspondence sent to consumers often remain unclear, failing to clearly state the purpose of the communication upfront, any actions consumers need to take, the potential outcomes of these actions, or the consequences of inaction.

To deliver better outcomes for consumers firms need to:

• Understand their target market – send clear and personalised correspondence, tailoring messages to individual customer needs.
• Keep messages concise – information must be action-oriented.
• Provide links to additional information – if consumers require additional information to make an informed decision, it should be readily available. However, presenting too much information upfront can be overwhelming and counterproductive.
• Tone of voice – use a more conversational tone to resonate with customers, moving away from formal, corporate language.

Leveraging Technology:

Traditional methods are often prioritised over digital innovation with paper correspondence & e-mail often the default methods of communication for many firms. This limits efficiency, personalisation, and customer engagement.

While this should remain an option for demographics who prefer paper over digital communications, such inflexibility may lead consumers to believe that the provider does not meet their needs and expectations, ultimately prompting them to not invest.

To make product offerings more accessible firms should:

• Ensure mobile friendly content – to provide easy access on handheld devices, whenever it suits customers.
• Interactive documents – annotated with additional information when required.
• I functionality – use AI-powered chatbots for 24/7 real-time support.
• Provide interactive solution – for example forecast calculators, to help customers model financial scenarios and make informed decisions confidently.

Conclusion

By simplifying their approach and adopting a customer-first mindset, wealth providers can foster stronger relationships, build trust, and create a more inclusive and effective product landscape.

Committing to simple product disclosures, effective marketing, concise communications and leveraging digital innovations enhances the customer experience and encourage more confident investing.

At Simplify we use our practitioner-led expertise and unique frameworks to help our clients maximise their chances of improving customer understanding. For more information, contact us at [email protected].

James Wood

Delivery Specialist