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Suitability reports – making them more accessible for clients

14 January 2019

At our Bristol Technical Insight Seminar, Rebecca Tuck, paraplanner with Magenta Financial Planning, presented on suitability reports, sharing some of her experiences and processes. Here, we present a few tips from her session.

How long should a suitability report be and what should be in them? Starting with the three elements the FCA says are required to be included in a suitability report,

  1. The objectives
  2. What is being recommended and why
  3. Potential disadvantages

Rebecca used the illustration of a suitability report developed as test by Benjamin Fabi of Principled Paraplanning for a simple protection case to show that the three elements could be wrapped up succinctly in just one-page. The report included the objectives, what was being recommended to meet the objectives, the key risks and the costs.

Of course, most reports cannot be wrapped up so neatly but looking at just how long a report should be often saw a conflict for paraplanners, she said.

She referred to the Professional Paraplanner parameters survey (November 2018 issue) which highlighted the discrepancy between the actual length of reports and how long paraplanners thought they should be – with some 46% of paraplanners saying they did not consider the majority of their reports to be the right length for clients.

10-page report

As a general rule Magenta Financial Planning aimed to produce reports of 10 pages or less, Rebecca said. “We believe that doing it efficiently, we can get across all the information needed in that number of pages.”

Achieving this, she said, was down to a formal structure and focussing on what the client needed to know to understand and make an informed decision.

It was essential to “say all the most important points first – ideally at the very beginning, with the first page stating what was discussed with the client in respect of what they are trying to achieve, and then what the recommendation are,” Rebecca suggested. “You a breaking it down into more detail from there.”

The detail goes into relevant sections, to make things easily accessible for the client. “I also like to put a summary at the top of every section. If it’s retirement planning, then that will be what are we doing with the pension, and then the reasons why.

“If that first page says everything that it needs to and you’ve done your job,” she stressed, “the client will understand what they are agreeing to and if they want the detail behind it they’ve got it. Even the most intelligent people like to receive their information succinctly.”

After structure, the next element to consider she said, is the language and notably, the accessibility of the wording used in the report. British newspapers aim at an average reading age of around 9 years and paraplanners should bear that in mind she suggested, in order for clients to be able to understand what they are being told and what they are being recommended to do.

Short sentences also work best. “As paraplanners we are used to writing and reading longer paragraphs but not everyone is. Breaking things down can make them more accessible and easier to digest.”

Hand-in-hand with that is the use of plain English. Rebecca suggested looking at consumer-facing websites, like Money Saving Expert, to see how they word descriptions of things like ISAs. “It can help break away from more corporate descriptions that we are used to seeing, as well as cut the amount of text we use and add clarity for the average client.”

Another top tip was to try your wording with someone you know outside the industry, to see if they fully understand it.

A further reason to keep things short, is trustworthiness, she said. “Studies have shown that the longer something is, the more you waffle on, the less likely someone is to believe you. It’s like you’re trying to disguise something.”

Professional Paraplanner