The Intermediary – January 2026 - Flipbook - Page 71
B RO K E R B U S I N E S S
Opinion
A gap that only
behavioural
science can fill
T
he Chartered Insurance
Institute (CII) has
delivered a timely
reminder: identifying
vulnerable customers
requires more than good
intentions. It demands structured,
evidence-based assessment that can
be applied consistently across your
client base. For advisers navigating
Consumer Duty obligations, this
presents both a challenge and an
opportunity, because the tools to meet
these standards already exist.
The problem with relying solely on
financial snapshots
Here’s what keeps advisers up at
night: two clients walk through your
door with near-identical financial
circumstances – same income, same
portfolio size, same retirement
timeline. Yet one navigates market
downturns with relative calm while
the other panics at the first hint
of volatility. Traditional financial
data capture the first part of that
equation brilliantly. They’re useless at
explaining the second.
The CII’s emphasis on capability,
comprehension, and resilience
acknowledges this gap. These aren’t
abstract concepts but behavioural
realities that determine whether your
clients can actually act on your advice.
Psychological traits including
Composure under stress, Confidence
in decision-making, Impulsivity,
and Familiarity Preference directly
predict how clients will respond when
markets turn or life circumstances
change. Measuring these factors is
foundational to fair treatment.
Diagnostic support
No one doubts that experienced
advisers develop strong intuitions
about their clients. But the CII’s
call for repeatable, evidence-
based processes acknowledges
an uncomfortable truth: even
excellent advisers are inconsistent
diagnosticians. It’s not a lack of
competence or training, but rather
how human judgement works under
complexity and time pressure.
Ask three advisers to assess the same
client’s vulnerability and you’ll oen
get three different answers. Ask the
same adviser on different days and
their assessment may shi. Suitability
technology doesn’t replace adviser
judgement; it removes the noise at the
assessment stage so advisers can focus
their expertise where it maers most:
tailoring solutions, explaining tradeoffs, and providing emotional support
through difficult decisions.
The technology enables you to
separate diagnosis from prescription.
Diagnosis benefits from systematic,
repeatable measurement. Prescription
requires the human skills that define
good advice, namely understanding
context, explaining complexity, and
building trust. Geing diagnosis right
means your prescription can be more
precisely targeted and more likely to
work in practice, not just on paper.
Spotting problems
The CII correctly notes that
vulnerability shis over time.
Bereavement, redundancy, health
shocks, or relationship breakdown
can temporarily overwhelm a client’s
decision-making capacity. Waiting
for these vulnerabilities to show up in
portfolio decisions or missed review
meetings means you’re intervening
too late.
Behavioural monitoring tracks the
interaction between stable personality
traits and changing life circumstances.
It doesn’t mean repeatedly testing
your clients. It means understanding
how their established behavioural
GREG B DAVIES
is head of behavioural science
at Oxford Risk
Identifying
vulnerable customers
requires more than good
intentions. It demands
structured, evidencebased assessment that can
be applied consistently
across your client base”
paerns will respond to new stresses,
and watching for early signals such
as withdrawal from engagement,
decision avoidance, increased anxiety,
that suggest intervention is needed.
This shis vulnerability management
from reactive to genuinely protective.
Building this in
Behavioural assessment isn’t
technically complicated. Most tools
integrate straightforwardly into
existing processes – a few minutes
during onboarding, periodic
check-ins, ongoing observation.
The real shi is conceptual:
accepting that understanding your
clients’ behavioural capacity is as
fundamental as understanding their
financial capacity.
The CII has set the standard.
And behavioural science gives you
the practical means to meet it. For
advisers commied to genuine client
protection under Consumer Duty,
the challenge is how quickly they
can build behavioural data into their
assessment process. ●
January 2026 | The Intermediary
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