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Financial Advisory

23 June 2022

AdvisorsAdvisory DistributorsFCAFinancial AdvisoryGoals-based planningInvestmentsUKUS

Facilitator: Ben Wright Expert: Rob Ciro


  1. Advisory firms value consistency, and being able to prove that consistency, when making recommendations
  2. UK investors have less financial sophistication than US investors
  3. Goals-based planning is more important than investment performance
  4. The FCA wants to see consistent outcomes.

Discussion Points:

It was important to firms that any recommended solution could be researched and compared to other solutions using an established research tool.

It was universally agreed that investors value the ability to meet their goals much more than investment return, and therefore the underlying investment wasn’t as important as the financial plan. In the US, goals-based planning isn’t prevalent.

From the discussion and prevailing trends in the US, it appeared that the typical UK investor is less financially sophisticated than the typical US investor. This means that complex products are harder to recommend as it’s more challenging to get the client to understand what they are investing in.

The session was broadly focussing on the ability to customise and manage portfolios for investors on a large scale. There was general concern that it can be dangerous to allow clients to dictate how their portfolio is constructed.

By giving clients a high level of customisation on their portfolio, there is a danger that they will insist on changes from the standard portfolio, which will adversely affect the portfolios performance or risk rating, leading to sub-optimal returns. Individually customised portfolios would make it challenging for a firm to show that its investment process brings consistent outcomes for clients.

Key Takeaways:

  • The US and UK average investor are quite different in their level of financial sophistication
  • More financial education is needed for UK investors to allow them to understand more complex concepts coming across from the US
  • By comparison, the lack of goals based financial planning in the US could signal a huge opportunity to create a new style of financial advice there
  • As long as clients meet their goals, the investment solution is less important