The Consumer Duty Price and Value outcome is focussed on one thing: ensuring that consumers receive fair value. To meet this outcome, advisers will need to clearly demonstrate that there is a reasonable relationship between the price paid for a product or service and the overall benefit that the client receives from it. This can be achieved through thorough due-diligence, reporting, and use of technology.
Without the right tools and data available, providing and demonstrating fair value could become a time consuming and difficult task. In this article, we will share how you can make the most of FE Analytics and FE CashCalc’s powerful data and features to meet the Price and Value outcome.
Using FE CashCalc to demonstrate fair value under Consumer Duty
To meet the Consumer Duty Price and Value outcome, you will need to both provide and demonstrate value to your clients. FE CashCalc's onboarding features assist you in this by providing a high quality experience for your clients, whilst its visual cashflow models allow you to objectively demonstrate the value of your recommendations.
Provide a high quality service with digital onboarding
Providing a high quality experience for your clients is essential in ensuring that they are getting the most out of your advice services and are therefore receiving fair value for the price charged.
A digital onboarding process can support this by enabling clients to efficiently onboard themselves remotely. This will help you:
- Avoid outdated paper fact finds that are cumbersome for clients to complete and return
- Save both you and your clients time, and pass cost savings back to your clients
When using FE CashCalc’s digital onboarding tool, FE Onboard, you can fully customise your fact find by adding and removing sections as necessary. This enables you to provide a service tailored to individual client needs, further enhancing the value of your proposition, and more importantly, justify the fee you’re charging.
Define client objectives
A key component of the Price and Value outcome is ensuring that there is a reasonable relationship between the price and the overall benefit that the client receives.
The dedicated ‘Objectives’ section in the fact find provides your clients the opportunity to define their financial goals and objectives, therefore providing you with the information necessary to clearly demonstrate the value of your products in relation to their individual goals, and therefore evidence the fair value of your advice.
Create visually engaging lifetime cashflow plans
A vital part of meeting the Price and Value outcome is being able to demonstrate the value of your service and the benefits that the clients will receive.
Visually engaging lifetime cashflow plans are therefore invaluable not only as a financial planning tool, but also in demonstrating the clear value of your advice to your clients. By producing side-by-side comparisons of your client’s current and proposed financial plans, you can clearly demonstrate the benefits that the client will receive from your advice, as well as enhancing the value of your service by presenting plans in an easy to understand format that supports consumer understanding.
Furthermore, you can easily build charges and fees into the cashflow plan – enabling you to transparently demonstrate the value of your advice net of all costs. With FE CashCalc, you can meet the price and value outcome with ease.
Meeting and demonstrating Consumer Duty fair value with FE Analytics
A large part of meeting the Price and Value outcome is ensuring that any investment recommendations will provide value for your clients and therefore lead to good outcomes. FE Analytics provides a strong foundation with leading whole of market data, including European MiFID Template (EMT) v4.1 Value for Money data, along with powerful calculators and reporting.
Assess fair value of funds
Demonstrating the fair value of individual funds as well as the overall proposition is important in ensuring that your clients are receiving the best possible outcomes. Whilst this may initially seem a vast task, FE Analytics streamlines the process by collating ‘Value for Money’ EMT v4.1 data in a fund’s factsheet. Simply put, you will be able to easily ascertain whether the fund was found to provide fair value, enabling you to initially qualify new funds and assess existing investments at a glance.
Furthermore, if an Assessment of Value document is available, you will be able to access it using the 'Fund Documents' dropdown within the fund's factsheet. These are comprehensive documents provided by the fund managers to help advisers further assess and evidence that the fund provides fair value to the client. This provides a clear benefit as it brings all the information into one place, saving you time and enabling a more thorough and efficient research process.
Compare portfolio costs and charges
As part of meeting the Price and Value outcome, you will need to justify that the charges associated with the products you recommend are fair in relation to the benefits that clients will receive. As such, the FE Analytics Reduction in Yield (RIY) calculator allows you to easily compare the costs and charges between two portfolios (i.e. the current and proposed investments), and illustrate the impacts of these charges on yield. This enhances the quality of your service, further justifying the advice charges. It also adds another layer of transparency when supporting your clients to make informed decisions.
This calculator can also be accessed within FE CashCalc, where we have included additional features, such as accounting for tiered charging (especially useful for calculating platform fees), as well as producing the output in a visual chart, supporting consumer understanding even further.
Enhance the transparency of portfolio costs and charges
MiFID II introduced an obligation for firms to provide clients with ex ante information related to the costs and associated charges of providing investment services. Consumer Duty further demands this with its Price and Value outcome – making the FE Analytics Ex Ante Cost & Charges Calculator a necessity within your advice process.
The Ex Ante Cost & Charges Calculator provides a similar output to the RIY calculator, but focusses on one chosen portfolio, and allows you to input costs and charges on a much more granular level and further enhance transparency. This calculator also has the added benefit of pre-populating the charges based on available MiFID data to save you time and increase accuracy.
Another added benefit is the easy-to-understand report output, which includes clear graphics detailing both the granular charges as well as the forecasted overall charges and the impact that this would have on yield, again helping you to demonstrate the benefits of your proposition alongside a transparent view of the costs associated with it.
Provide and demonstrate fair value with the FE fundinfo Financial Advice Hub
The Financial Advice Hub supports you in both providing and clearly demonstrating fair value to your clients through a range of tools and features, from digital onboarding, to cashflow modelling, to fund data and reporting.