Our latest article form the PFS Paraplanner Panel comes from panel member Phil Greenwood who says he has long advocated for a layered approach to report writing, as he delves deeper in to why we must adapt and move away from blanket approaches to Suitability Reports.
Having co-authored a guide to Suitability Report writing, this may seem like an odd question for me to be asking.
But with Consumer Duty in full swing and a focus from the FCA on ways to tackle the growing advice gap, is it time to re-examine the Suitability Report?
To me, the purpose of the Suitability Report is (and always has been) to help the client understand the advice.
The key part of understanding is communication. So how good are Suitability Reports at communicating the advice?
Communication modes
People learn in diverse ways. A common method of categorising these is the VARK model:
- Visual
- Aural/Auditory
- Read/Write
- Kinaesthetic
While not perfect (and in practice people rarely fit one style of learning), it is a useful structure to consider the different ways information can be communicated.
How does the Suitability Report communicate?
The report itself is a multi-faceted communication device.
It can cover the read/write (words) and visual (diagrams, charts, graphs, symbols etc) modes of communication. It is my experience that a combination of the two provides the greatest clarity.
I see a tendency to use words as the core piece of communication in reports, but just having blocks of words isn’t likely to be the best way of conveying the advice. Suitability Reports do need to cover both.
There is evidence that including visual aids improves learning and leads to improved performance in tests and, therefore, improves understanding.
But it’s not just the type of communication that’s important. It is also the structure you use to present the information.
I have long advocated for a layered approach to report writing.
- A high-level summary which relays the key points (what the advice is, how it meets objectives, costs etc).
- You can then elaborate with additional detail to aid understanding further.
- All technical detail and calculations can be captured in a technical appendix.
This caters for everyone, without having to make anybody work through reems of technical detail or explanation before getting to the point. It also provides additional detail and context for those who need it.
Crucially, it removes any barriers to understanding the advice and how it will help.
You don’t want to make your clients work for their advice.
What doesn’t the Suitability Report do?
Some people are auditory learners. They take in information better if it is spoken. Suitability Reports don’t directly cover this area. I think catering for this preference should be more prevalent.
A video accompaniment to the report, explaining the advice, could be a great way of including this segment of clients.
Many clients are busy with their lives. They may not have the time to sit down and read through a report. They may, however, be able to listen to a voice-note on the go. It’s also easier to watch a video on your phone than it is to read a report.
Kinaesthetic communication is related to learning through experience or practice. It is likely to incorporate the other three modes but, in my mind, it provides a different context – a separate way of presenting information.
This is where case studies are useful. This isn’t necessarily going to work in a Suitability Report, so it’s worth considering if there is any additional material that could sit alongside it.
Combining
Many people will actually learn best with a mixture of these modes, often with a preference for one style – although it should be noted that this does not necessarily remain consistent for an individual.
Communication is complex. This is why I think the multi-layered approach to report writing, and combination with auditory / video explanation is the best way to ensure client understanding. Being aware of the kinaesthetic angle could also play into how you present the information.
The key is clarity.
So, while I do still advocate for the Suitability Report as the anchor of the advice (and as a record of the advice given, in a format that is easily resurfaced), I think it is worth exploring complementary communication.
Feedback
Feedback mechanisms are an important part of communication and need to be improved. We need to be able to measure and evidence understanding as part of Consumer Duty.
This can link in with asking clients about their preferences, about how well the advice came across, which bits helped them to understand the advice, was there anything that detracted from their ability to process the information?
The future
As communication is a key element to giving good advice, and everyone learns differently, having blanket approaches to reports is perhaps not the best solution on an individual level.
Generally, time and cost have been at the heart of why you would make report output quite uniform. I think with the progression of AI, one of the things it can help with (either by providing data, freeing up time, helping to write, or all of the above) is to better personalise reports to a client’s preferences.
If you know they are an auditory learner, you can make a more detailed video. If you know they prefer visuals, you can adapt your report. Some clients prefer a more casual tone; some prefer more formal writing. The point is, the more you can cater for how your individual clients process and understand your advice, the better the outcome for them, and for you.
So, is the Suitability Report dead? Absolutely not. But it has its weaknesses, and these should be addressed if we truly have client understanding at the heart of giving advice.
Further support/guidance:
FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty
What percentage of people are visual learners? – California Learning Resource Network
The VARK Modalities: Visual, Aural, Read/write & Kinaesthetic
Main image: sasun-bughdaryan-F5XL8ntN9KE-unsplash
