• Using the customer’s own words taken from file notes to make the recommendations more relevant.
• Sending reports to customers before the second meeting and fully discussing them at the meeting.
• Using bullets instead of long sentences.
The FCA would rather not see templated reports unless they are personalised to the clients and all irrelevant parts of the template are removed.
One of the things to consider is ways to cut down the length of reports. Actually, there are only four things that need to be included.
1 The client's demands (needs) and objectives.
2 Why the recommended solution is suitable for that client.
3 Any disadvantages and risks to the client that are associated with the recommended solution.
4 The costs shown in monetary terms.
We can simply leave out a lot of things that often appear in reports. Remember that the suitability report only forms part of a file. It is the part that tells the client what has been advised and/or arranged. So we can leave out the following:
• Basic client details that already appear in the fact find.
• Client agreement – they know that they have signed a client agreement.
• Confirmation of permission – the adviser should not be working outside FCA permissions.
• Limited or full advice disclosure. Provided the scope of your advice is noted in the client agreement, it does not need to be restated in the report.
• Discounting alternative products or solutions. This is unnecessary as the clients will know why they have not gone for protection or investments, if they are looking at their pension. If looking at pensions, it is still necessary to discount stakeholders, although this is becoming more ridiculous with time.
We should look to be concise with other items:
• Attitude to risk and capacity for loss. This can be short, if the details are elsewhere in the client file.
• Investment strategy. Only a summary of the arrangement is needed as well as how it may fit with existing arrangements.
• Risk profile of recommended investment solution – at portfolio level rather than individual funds.
• Risk warnings and possible disadvantages – only include risk warnings or disadvantages that are relevant to that particular client and the recommended arrangement.
• The importance of review and costs. Although this is good practice, it is not mandatory. However, where a solution is recommended that is not self-rebalancing, you should flag up the importance of reviews to the client.
From the above, you may realise the extent by which reports could be potentially reduced in size and made more client-friendly. Good engagement letters and meeting notes on the file are an excellent way to help tell the client's story and provide some more information to support the suitability report from a compliance point of view.
