In a world beset by the need for due diligence tighter than Olivier Giroud’s underpants, you might expect that product suitability would figure as by far the most important determinant of provider selection post-RDR.
However, what comes through loud and clear from our studies is that advisers recognise that suitability is far more nuanced than just appropriate product features and price – service and support play just as important a role.
Which should serve as a warning for those providers looking to the FCA guidance on inducements as a convenient excuse for further diminished resources.
Of course the FCA guidance will cause – and has caused – providers to re-assess what they can and should spend their support budgets on.
But any support that results in the enhancement of the service provided to the client – that is, by better informed and equipped advisers – is totally beyond reproach (as long as it is not delivered over three weeks in the Maldives!).
People hark on about the hackneyed old “battle for hearts and minds”.
But, as with most clichés, they are grounded in truth. With every decision you take there
is a battle in your mind – a battle between intuition and logic.
But while the regulator (and hence the adviser) is rather more concerned about the latter from a suitability perspective, logic is not necessarily the strongest influence at the point of decision making.
That BBC Horizon programme a couple of weeks back suggested that our thinking is riddled with systematic mistakes, known to psychologists as cognitive biases. These affect everything we do.
We like to think that our beliefs and decisions are based on solid reasoning and yet we are far more affected by a host of hidden influences than we are aware.
This is because our logical mind is a master at inventing a cover story. Most of the beliefs we have or decisions we make have come from an automatic response. But then your logical mind invents a reason why you think or believe something and behaved in a certain way.
Another way of summing it up is explained by the concept of post-purchase rationalisation.
Why we say (or document) we bought A over B from X over Y may be very different to the real reason we acted as we did. With so little to choose between so many products and providers, advisers need a reason (as well as a business case) to use you.