Consumer Duty is shifting the evidential burden. It is no longer enough to show what was disclosed – advice must now evidence what was understood, and how that shaped the outcome say Elly Dowding and Lee Coates OBE, Directors at In Accord and the Accord Initiative
Consumer Duty has introduced a subtle but important shift in how suitability should be evidenced.
It is no longer enough to show that information was provided. Firms are now expected to demonstrate that clients understood it and that this understanding shaped the advice.
For paraplanners, that shift lands squarely in the research process because suitability is not just written at the end of the advice journey. It is built through the due diligence and the rationale that underpin it.
Understanding is no longer a front-end exercise
Traditionally, client understanding has been treated as part of fact-finding and advice delivery.
Risk profiling, objectives, capacity for loss – all these inputs feed into research, which then produces a recommendation.
The Consumer Duty challenges that linear model.
If firms must evidence that clients understand what they are being told, then understanding cannot sit only at the start or end of the process. It must run through it.
That includes how paraplanners:
- Interpret client information
- Select and compare solutions
- Frame the rationale for recommendation
Because if the recommendation relies on client understanding, the research must reflect that.
The research gap: technically suitable vs realistically understood
Paraplanning due diligence is often robust and meticulous. Investment solutions are assessed on risk, performance, cost, mandate, process and governance. Comparisons are structured. Rationales are documented. But there is a gap emerging.
A solution may be technically suitable – aligned to risk scores, time horizons and objectives but questionable if the client does not properly understand how it behaves.
For example:
- A client categorised as higher risk may not tolerate real-world volatility
- A portfolio designed for long-term growth may conflict with shorter-term behavioural tendencies
- A sustainability-focused solution may be selected without the client fully understanding what that means in practice
These are not edge cases. They are foreseeable outcomes. And under Consumer Duty, foreseeable harm must be anticipated – not explained after the fact.
What this means for paraplanning due diligence
The implication is clear: research must move beyond matching products to data points. It needs to consider whether the client can realistically understand and stay aligned with the recommendation over time.
This introduces a different lens into due diligence.
Not just: Is this solution suitable?
But also: Is this solution understandable for this client? Are the key risks and behaviours capable of being explained clearly? Is there a risk of expectation mismatch?
In practice, this means the research must anticipate how the recommendation will land.
This is significantly easier to do where the advice file goes beyond COBS minimums and demonstrates knowing the client fully in terms of investment preferences and objectives.
Alignment is a two-sided exercise
A consistent theme emerging across the industry is that suitability depends on two equally strong foundations:
- A clear understanding of the client
- A clear understanding of the investment solution
When both are strong, alignment is achievable. When either is weak, the paraplanning rationale becomes harder to defend. This is particularly relevant for centralised investment propositions (CIPs).
Where firms do not fully understand their client base, research tends to drift:
- Either towards overly broad solution sets to “cover all bases”
- Or towards overly narrow propositions that may not reflect real client needs
Both increase pressure on paraplanners to justify inclusion, selection and ongoing suitability.
The role of communication in research
Communication might appear separate from research. In practice, they are increasingly linked. If a solution cannot be clearly explained, that creates risk.
If key features such as volatility, income variability or sustainability characteristics are difficult to articulate in a way the client can grasp, the likelihood of future misalignment increases. This is where the industry is starting to shift.
Firms are beginning to assess not just the technical attributes of solutions, but how those attributes translate into client-facing explanations – including readability, clarity and interpretation.
For paraplanners, this means research is no longer purely analytical. It must also consider explainability.
Evidencing the link between understanding and recommendation
Ultimately, the file must show a clear chain:
- What the client needs and expects
- How that was interpreted
- Why a specific solution was selected
- How that solution aligns with both financial and non-financial factors
Recommendations rely on client understanding; the file needs to show how that understanding was established.It is a higher, but more coherent standard. It is not about adding unnecessary layers to paraplanning; it is simply about recognising that the definition of suitability has expanded.
Good research will increasingly demonstrate:
- Awareness of behavioural and preference-based factors
- Consideration of how investment solutions are experienced, not just constructed
- A clear link between client understanding and product selection
It is about placing a solution the client can understand, engage with and remain aligned to over time.
The direction of travel
The move from disclosure to understanding is already influencing supervisory expectations. The next step is alignment. For paraplanners, due diligence is at the centre of the conversation because if a recommendation depends on client understanding, then research must reflect it.
And if that link is missing, the suitability case becomes harder to sustain – no matter how strong the technical analysis appears.
These themes are explored in more depth in a recent Accord Talks podcast episode.
Elly Dowding and Lee Coates OBE are the directors at In Accord and the Accord Initiative, which provides free-to-access education, resources, and compliance support to the financial advice sector.
Main image: dan-bucko-9DXo7yCT6mc-unsplash
