How video can help to evidence client understanding

Posted 12 February 2024 by Ian Beestin

In December’s illuminate Gillian Hepburn suggested the Consumer Duty’s ‘consumer understanding’ requirement will change the way advisers communicate. Since the regulations took effect in July 2023, we’ve noticed a significant shift towards more educational content in adviser’s client communications, which suggests she was right.

But there are challenges to overcome with this: firstly, advisers and planners must ensure their communications are effective and engaging. This means traditional methods, such as sending detailed, jargon-laden documents, may no longer suffice. Gillian Hepburn's reference to National Literacy Trust research on adult literacy skills adds another layer to this challenge: if a significant number of adults struggle with basic literacy, how effective are traditional, text-heavy methods in achieving true client understanding?

Secondly is the requirement to provide tangible evidence of client understanding to meet the stringent requirements of the Consumer Duty. It’s this element that often poses the biggest difficulty.

Exploring alternative solutions

Research paints a revealing picture of consumer preferences and the effectiveness of different communication methods. A recent Hubspot study found that 72% of people prefer learning about a product or service through video rather than text. Cisco reported that online videos constitute over 82% of all consumer internet traffic, and Insivia's findings show a staggering 95% retention rate for information consumed via video, compared to just 10% with text.

In this context, financial advice, traditionally reliant on text-heavy documents, faces a critical question: how can the profession adapt to meet both regulatory requirements and client preferences?

Innovative approaches to client communication are not just desirable, but necessary.

Let’s take a close look at video

No matter what type of communication platform, the focus should not be on the platform itself but on what it represents: what we need is a shift towards more dynamic, engaging, and understandable modes of communication for clients.

The use of video in client education goes a long way to meeting this need. Video makes it possible to embed interactive elements such as quizzes or recap exercises, which in turn allow advisers to not only engage clients more effectively, but also gather evidence of their understanding in real time.

But the transition to more interactive and engaging client communication methods is not just about compliance; it's about improving the overall client experience and outcomes. Advisers who embrace these methods are likely to see enhanced client engagement, better-informed decision-making, and more effective advice processes. This can be backed up with our own research where, in a survey of 14,000 viewers, 98% valued their adviser giving them access to Money Alive educational content.

However, a note of caution: we need to be vigilant about the quality and relevance of any content we put in front of clients. Regular reviews, updates to reflect changing regulations or market conditions, and input from subject matter experts are essential to ensure that the information remains accurate. 

So what does the FCA make of all this?

One of the most important video box sets we include on Money Alive Office is designed to help advisers protect their clients from scams - undoubtedly the most grievous example of consumer misunderstanding. We shared it with the regulator who responded: "We are happy for you to mention that you have spoken to us about the Money Alive platform and the Pension Scam Aware box set and that we welcome this sort of initiative to help consumers avoid scams."

This suggests the future is bright for video content. Especially when you factor in the potential for development. 

Looking ahead, the future of client engagement in financial advice is in its ability to allow more personalisation. Video experiences that include specific client data such as portfolio values, contributions, and asset allocation will all be possible. Not only will this approach personalise the advice process, but it will also make it more enjoyable for clients.

Such innovations are key in moving towards a future where not just able to meet regulatory requirements, but where we’re also able to foster a more informed, financially literate client base. Innovative tools and platforms are part of this journey, but the core lies in understanding and adapting to how clients consume and retain information in our digital age.

Ian Beestin

Ian Beestin

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Ian Beestin

Ian Beestin