Is bigger better?


One of the tasks undertaken as part of the supervisory process for advisers is a review of written work produced by them that is destined to find its way in front of clients.  This is important as it will form the basis of the lasting record that exists of the interaction between an adviser and their clients, long after the memories of the detail of the discussions held have faded.

I use the word “faded” specifically because they do not disappear altogether as clients are often left with a memory of what was said, or what they think was said at the time.  There are instances of clients make a complaint about being badly advised on the basis of what they remember happening during the advice process, rather than what the final advice actually was and what they agreed with the adviser.

This isn’t something that’s specific to the financial advice and we all do it from time to time where we have a recollection of something but can’t necessarily remember the detail, especially where more than one option has been agreed during the process.

The problem with including an executive summary in a report is that given the option, many clients will only read that, rather than the detailed advice. 

An example of this happened recently when my wife’s car was coming up to its next service. She had bought a service plan with the car originally which she believed lasted for 4 years, but the garage said not, so after a search for the original paperwork, she found there was a 3 year service plan and a 4 year GAP insurance plan had been bought at the time and her memory had just switched the two.

This is a relatively simple example but financial advice can be provided on a range of investments and pensions with tax, legal and inheritance tax implications the effects of which can last for years.  It is obviously important to ensure that the advice is suitably documented, is readable, does not use unexplained jargon and contains appropriate caveats.  Importantly, this also needs to include reference to anything the adviser had raised which the client has not wanted to pursue at this time.

It is absolutely necessary therefore to make sure that all of the provisions of the advice are documented sufficiently as the FCA will assume that if it isn’t written down it didn’t happen.

But the question is how much detail is enough, is there anything that can be omitted, how do you make the documentation accessible to the average reader and more importantly, how do you make it accessible to a vulnerable client who might struggle with reading, or more simply struggle with the long, complex wording that it seems to be assumed in some circles, the FCA wants us to use.

However you only have to read the FCA’s finalised guidance for firms on the fair treatment of vulnerable customers, from February 2021, to realise that this is not the case, as on communications they state that firms must  “Ensure all communications and information about products and services are understandable for consumers in their target market and customer base.”

It goes on to say that firms must “Consider how they communicate with vulnerable consumers, taking into consideration their needs. Where possible they should offer multiple channels so vulnerable consumers have a choice.”

Yes, all of the relevant and important information still needs to be provided to all clients, including relevant product information and disclosures but the challenge for the industry is to make this as accessible as possible to all of their clients.

I recall undertaking a post-sale file review for one adviser a few years ago now, in which the report spanned 37 highly detailed pages, including colourful pie charts and a host of additional information, some of which was not directly relevant to the advice being provided. I spent a little time on this and worked out that it could have said the same thing in under 20 pages.  The report would have been more readable and understandable, but would still have contained the relevant regulatory disclosures and information.

The other aspect of this was that the client had, at the time, agreed to an hourly rate for any advice and I had to consider whether the bigger is better approach to this report was in fact providing value for money for the client?

Many solutions have been tried by firms to improve their written output, but I have to just point out to those who haven’t worked it out yet that sending out an overly wordy and technically complex report out by email, instead of in the post, doesn’t qualify as improved communication.

Many attempts have been made by firms of all sizes to use executive summaries and appendices within reports as a way to help clients to focus on the advice and then read further around the subject. By the way, it is appendices, not appendixes as I found in another report I once checked.

The problem with including an executive summary in a report is that given the option, many clients will only read that, rather than the detailed advice.  Appendices are also contentious in as much as, are they meant to be the source of generic technical information, say on taxation, or are they meant to relate more specifically to the advice provided? If they are simply a home for generic information, do they need to be there at all as you would expect the advice section to include specific detailed information on the tax implications of a particular recommendation, wouldn’t you?

This is where the bigger the better approach can fall down because you can find that, bombarded by unnecessary information, clients can question the value of the advice itself.  Although many will still proceed with it, there is that dangerous period after the dust has settled when they can experience cognitive dissonance, the mental discomfort from questioning whether they have done the right thing or not? This uncertainty can lead to the inaccurate faded memory that I mentioned earlier and in its own way, sooner or later, to a potential complaint.

It is important therefore to reassure the client that they have done the right thing and that the advice was sound.  This is often done by the adviser in post-sale contact, or at least it should be, but it could be the point at which the executive summary could come into its own.  Sending a client a short review of the advice provided and the actions taken would help to reinforce the benefits of what has been agreed and continue to demonstrate the effectiveness of communication with clients, let alone removing the potential for a later, unnecessary, complaint.

So when it comes to communicating with clients, it’s not always that bigger is better and many clients, with or without vulnerabilities, would see the advantage in having a series of different types of communication to aid their understanding and may well welcome a summary that they could refer to in the future, instead of having to try to read through a lengthy report to find the answer to a potentially simple query.

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Derek T Davies is a freelance Consultant,Editor and Writer

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