Suitability Reports -Too much information?


Sometimes you can be doing something that you do every day, and then one day it dawns on you that you might actually not be doing that something quite as well as you would like to do it. Sounds like a riddle? Well, actually no. What I’m referring to is the complex and often long-winded document we call the Suitability Report.

The problem with many Suitability Reports is that whilst they provide a lot of information, very often they provide too much information, from a client’s perspective. All this information could be simply too much, and perhaps in the wrong place. How many clients do you know who, if asked, would want to read through what may seem to be endless pages to get to the recommendation and the reasons for the recommendation?

From our perspective it’s about demonstrating the professionalism of the adviser. It’s about putting in all the information to demonstrate that we “know the client”. It’s about justifying the recommendation. We have to follow the regulatory requirements and any instructions from our compliance department for the content and, very often, the layout of the Suitability Report. But the client is not under the same constraints. There is a big difference between providing the right level of information, and how you actually provide the information. Let’s be honest and put ourselves in the client’s shoes. Are our Suitability Reports really that clear?

Next time you’re observing an adviser in a client meeting, take note of the client’s reaction to the report

Suitability Reports will contain, amongst many things, information through the use of charts, tables, graphs, taxation calculations, product description, product provider credibility, and often more. All of which is built into the main “body” of the report, in amongst the clients’ current situation, their objectives, and the recommendation. This creates not only too much information in one place, but it could also cloud the very message that we are trying to deliver.

A Suitability Report should be clear, fair and not misleading. Whilst it is unlikely that the content itself would be misleading, the way the report is presented and the sheer amount of information provided within the Suitability Report is, for many clients, unlikely to be clear. Next time you’re observing an adviser in a client meeting, take note of the client’s reaction to the report. A long and complex Suitability Report may impact on a client’s ability to understand the report. It may even put the client off altogether. So is that being fair to the client?

So why don’t we stop to consider what our clients actually want to see in a Suitability Report? Why would we enforce our “style” upon them? After all, when we tell a client that we will provide our recommendations in writing, we don’t tell them the format or length of the Suitability Report. Maybe we should. Take a look at the last Suitability Report that you presented to a client. If you were that client, what would you think?

Good practice would surely be to ensure that not only do we demonstrate that we understand the clients’ needs and objectives, and that we’ve also taken the clients circumstances into consideration, but to ensure that the client understands what we’ve recommended and why? When we talk the client through the Suitability Report in a presentation meeting, we clarify certain points within the report, and check for understanding, but at the end of the day talking is just words which the client may or may not remember. It’s the written document that they would refer to post that meeting.

Is there a solution? Can we deliver the required information, but in a way that the client doesn’t get too much information at once? I think there is.

Figures abound in Suitability Reports, but figures are not advice. They are figures to help the recommendation. But words tell a story. Words give advice.  Suitability Reports are usually split into two sections: the main part of the report, supported by the appendices. Just suppose that instead of where we would normally put details of existing investment as tables into one or two pages, we simply summarised the investments and their values, and put the detail, the tables, the charts, et al, into the appendices? By referring to the appropriate appendix we would shorten the main body of the report, making it clearer for the client to follow the report through from end to end without having to pour through all the figures. Think of it as an extended “Executive Summary”. Should the client wish to understand their investments in more detail, we would also be giving them the option to refer to the appendix indicated for the relevant details.

There are a number of other areas that we could apply the same changes to: Taxation calculations, details on the provider, additional information on the product, and so on, could all be moved to the appendices. Providing the report stresses the importance of reading all of the information contained within the appendices, there should be no issue with this approach. After all, nothing has been taken out. The provision of too much information has simply been reorganised for the client’s benefit.

The client receives a concise document that is simple, clear, and fair. It doesn’t matter if the body of the report is perhaps only a few pages long. What does matter is that the client no longer has to read through perhaps twenty pages, maybe more, of information in order to understand the flow from their current position and their objectives through to the recommendation.

Clear, fair, and not misleading: That’s surely got to be a good thing for the client?



About Author

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I am a highly-versatile and forward thinking management professional with a history of successful delivery across more than thirty years’ in the Financial Services Industry. Core skills include assessing, training, coaching, process design and implementation, specialising in people, processes, and procedures within a Training & Competence or Learning & Development framework. Periodic writer for T-C

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