21 Oct 2026
Are customer information and customer understanding the forgotten pillars of Consumer Duty? Graham Folley explains why understanding matters as much as information and examines how Fidelity WealthBuilder MPS helps advisers support better client outcomes through education, transparency and ongoing investment insight.
In today’s world, information is plentiful, widespread, and available through many different forms of media. Information alone is not enough when it comes to making investment decisions. Its real value comes when it leads to understanding. Poor information can lead to misunderstanding and, ultimately, poor outcomes. Understanding is therefore vital.
In investment, they say past performance is not a guide to future performance. However, I’d argue that, if you have the right information and understand where returns came from over the last 15 years or so, then that puts you in a very good position to recognise what might happen as we go forward. Many investors looking at their portfolios today may reasonably ask themselves: "How did I get here?" Understanding the forces that drove returns can help answer that question and provide useful context for what happens next.
Looking back over recent years, US large cap growth stocks drove a large proportion of equity returns whilst the rest of the world’s markets struggled to keep up. Meanwhile, sterling weakness was a tailwind for UK-based investors who invested in certain UK and international equities. More technically, the super-low interest rate environment led to a benign atmosphere for equity and bond correlations, which was both somewhat extended and historically atypical.
As such, understanding why returns were what they were, how asset classes behaved and what helped and hindered those returns is vital in working out what to do next, especially in the context of managed portfolios.
This is particularly important given that many long-term market forecasts suggest returns may be lower than investors have experienced over the last decade or so. Expectations formed during an unusually supportive investment environment may not always be repeated, making clear communication and realistic expectations increasingly important.
Now, let’s consider information and the end investor. Information alone can lead to a desire for humans to take action. As Warren Buffett once famously said, “it won’t be the economy that will do in investors, it will be the investors themselves”. And, as the philosopher Immanuel Kant observed in 1784, mankind is made from crooked timber and so is prone to acting irrationally.
In many ways, the Consumer Duty recognises this. The regulator’s guidance on the four pillars is as focused on customer information and customer understanding as it is on price and value. Back in July 2022, the FCA guided firms to provide information but also to focus on their customers’ understanding. One expectation, for example, is for firms to “communicate and engage with customers so that they can make effective, timely and properly informed decisions about financial products and services and can take responsibility for their actions and decisions”.
The rationale from the regulator echoed that of both Buffett and Kant – better informed customers who understand more are less prone to making poor decisions. A very good example of this is the value that can be added to customer outcomes when they avoid making snap, irrational decisions. Indeed, some of the greatest value advisers deliver is not through predicting markets, but by helping clients avoid emotionally driven decisions during periods of uncertainty and market stress. Historical data shows that in times of market uncertainty, the propensity for customers acting on the back of poor or no information is substantial.
Importantly, delivering these Consumer Duty outcomes is not simply about advisers providing more information to clients. It is about helping clients understand what is happening in the markets, how their portfolios are positioned and, crucially, why staying focused on their long-term objectives often leads to better outcomes. As such, this places greater emphasis on the support advisers receive from investment houses and, in particular, MPS providers.
Investment houses have a key role to play in helping advisers meet their Consumer Duty responsibilities through clear communication, education and ongoing investment insight. As I alluded to above, advisers need information on how the markets got to where they are now and what this means for the future. However, they should also be informed of, for example, the likely median return estimates for the various asset classes going forwards given that many commentators are predicting lower returns than have been the norm of late. Inflation remains an important consideration too, so investment managers need to brief advisers on what this means for asset classes and portfolios. After many years in which inflation played a relatively limited role in investment decision-making, investors now face the possibility that inflation could remain higher and stickier than they became accustomed to during the post-financial-crisis period.
But what does this mean in practical terms? My view is that investment houses should really concentrate on the following three areas when it comes to helping advisers build customer understanding:
The Consumer Duty is ultimately about helping clients make better-informed decisions and avoiding poor outcomes. Advisers are, of course, key here but the support provided by investment partners can play a vital role in building client understanding and confidence. For this reason, advisers should look to partner with an MPS provider that can support not only portfolio construction and investment management, but also the ongoing communication and educational needs that sit at the heart of good customer outcomes.
Providing information is important. Helping clients understand what that information means is even more valuable. By supporting advisers with market insights, portfolio commentary and educational resources, investment partners can play a meaningful role in helping improve customer understanding and, ultimately, customer outcomes. At Fidelity, we believe this support is vital to helping advisers build customer understanding and deliver good outcomes. It shouldn't be a one-size-fits-all approach but should be flexible enough to provide relevant information, insight and support when needed.
The customer information and customer understanding pillars of the Consumer Duty should not be overlooked. In many cases, they are the foundations upon which good customer outcomes are built.
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Important information
This information is for investment professionals only and should not be relied upon by private investors. Investors should note that the views expressed may no longer be current and may have already been acted upon.
The Fidelity Model Portfolio Service is offered by FIL Pensions Management and this article is issued by FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. UKM1026/420160/SSO/NA