Consumer Duty tends to be discussed in regulatory terms - a set of rules firms need to demonstrate they are meeting. At a recent investment team day, I wanted to highlight what that means in real life and how the work each of the Investment Team members does every day contributes to good outcomes for our clients.
I asked each member of the team to reflect on their own role and come with an example of how they contribute to keeping the consumer at the core of what we do. The answers were insightful - not because they revealed anything surprising, but because they reminded us that a lot of what we always do, often quietly and in the background, is shaped by this intent.
I wanted to share some of that thinking with the advisers that trust their clients’ investments with us, and hope it is useful for you to share with those mutual clients. Below is a brief summary of the discussion; it’s not exhaustive, but it should give you a flavour of what Consumer Duty means to us in real life, not just the documentation and the theory.
The investment foundation
We believe good outcomes depend on good thinking. Our modelling work is built around an evidence-based approach, using academic research and long-term data, and we are continuously challenging the philosophy and the numbers. We always look to strengthen the analytical base, because the quality of that thinking flows through into the advice and the outcomes clients experience. One example last year is when our quant team refined our risk profiling process to give more stable outcomes to portfolio scores, meaning clients would not be potentially moved between models, incurring unnecessary turnover and associated costs, based on short-term data updates.
Consumer Duty is vital in the design and launch phase, but it doesn’t end there. We review our products on an ongoing basis - looking at whether they are still meeting client needs, responding to regulatory change and whether enhancements can be made and benefits passed on to clients. The aim is to make sure the products we offer continue to deliver good outcomes over time, not just at the point of sale. Last year, we increased our resources here in the shape of Nick Denton, Investment Product Specialist. Nick has already made changes, especially in ensuring our published materials are readily digestible for retail clients, such as our retail-facing target market document.
We recognise that advisers must work closely with clients, and that part of our job is to help them explain our service and the portfolio clearly and simply. Low costs and evidence-based investment strategies are straightforward enough concepts, but clients still need to understand why they matter. We provide the materials and support that make those conversations easier, via documents, our tech, webinars and conversations, e.g. we’ve upgraded our online portfolio analytics tools to support this, allowing advisers to compare portfolios for clients more easily.
Our Group Investment Committee meetings twice a year, and quarterly market updates, give us a regular structure for open dialogue with advisers where we can address the questions that matter to clients. These conversations have led to the creation of some of our short explanatory pieces, like the recent note on the Iran Crisis, that advisers tell us are useful for passing on to clients, particularly in times of heightened uncertainty. It’s well-known that client behaviour has a large impact on outcomes, so supporting advisers to support clients is key to us.
Operational excellence in the details
Much of what protects retail clients happens in the ‘operational layer’ - client importing, rebalancing, cash handling, continuity planning. It's not the most visible work, but it matters. When these processes are working well, clients can invest without friction. When there are problems in the processes, clients feel that impact. We have over 20 platforms with their multiple software systems to navigate, and we invest in making those processes as robust as we can, because delays and errors ultimately fall on the retail client’s outcomes.
We treat platform due diligence as a continuous process rather than an annual obligation. Our recurring question when assessing platforms on which to offer MPS is whether they are genuinely set up to serve the needs of end clients. When we make portfolio changes, we hold a post-implementation review of the end-to-end process on each platform and look for possibilities for improvement. We give this feedback to the platform and work with them for increased or improved functionality and development where needed. That focus on the end client, rather than just the platform itself, shapes how we approach the work.
One example of the work we’ve done here was to make share class conversions more accessible. When we launched our MPS, this was available on just one of the platforms we work with. In our last portfolio rebalance, we achieved share class conversions with 10 of our platform partners, meaning clients here did not have to take time out of the market to move from retail share classes to lower-priced institutional ones.
Our approach to model transitions - class conversions, wrapper reconciliations, and the handling of changes - tries to go beyond the minimum the FCA requires. We don't always get everything right, but the standard to which we hold ourselves when things don’t run smoothly is that the client comes first and has not been disadvantaged. That means thinking about the end retail client, not just the immediate adviser relationship, and flagging further action required to the platform or the adviser where needed, regularly reporting on assets held outside of models in individual client wrappers, for example.
We’ve implemented full post-trade reconciliation at wrapper level, to hold everyone accountable for what happens to client money. The principle behind this work is a simple one: when something goes wrong, the response should be led by what is right for the client. We reconcile each individual client wrapper following any trades to ensure they are in the right shape and any anomalies can be addressed. With the tens of thousands of individual client wrappers we look after, this is no mean feat, but we ask ourselves, “What would you want here if this was your own pension”?
A closing thought
When we look, honestly, at what the team does day to day, consumer duty isn't something we have to layer on top - it's already part of the very fabric of how the team approaches its work; it’s part of the founding ethos of Timeline, and not an afterthought or tickbox. We launched our MPS with the aim of bringing institutional-level service to retail clients, putting client outcomes at the heart before Consumer Duty was written.
We thought it was worth sharing that, and hope it's a helpful reminder for advisers thinking about who they are working with and why.
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