Tackling Annual Suitability Reviews – Olympics style

7 August 2021

With Team GB absolutely smashing the Olympics, in this article Holly Johnson of Para-Sols and The Art of Finance, carries on the exciting Olympic theme when talking about the perhaps not so exciting Annual Suitability Reviews and what the bronze, silver and gold standards could look like.

There remains a huge amount of misinformation and confusion around Annual Suitability and our requirements under MiFid. So I’m putting on my coaching tracksuit and hoping I can help you get that perfect 6.0 in yours.

The background

We know that ASRs stem from the Markets in Financial Instruments Directive II (MiFID II) and the numerous requirements it brought in. We also know that MiFID II has been with us for quite some time now and so firms should have had in place a procedure of setting out periodic assessments of suitability.

The objective of MIFID II was to provide greater protection for investors and to provide some clarity. We can all get on board with the initial intentions but it is safe to say that the success of this is debatable. One of the rules was for financial advisers to notify clients if their investment portfolio had fallen by 10% or more. Again, the intention of increasing transparency is great, the blanket approach for absolutely everyone is however, is not so great. If anything, it may just cause unnecessary panic and unnecessary workloads. Unsurprisingly, the government has announced that it will consult on scrapping the 10% drop communication need and potentially amend MiFID II rules.

The exact rules MiFID II brought out can be seen as confusing or obscure, considering the draft legislation had in excess of a million paragraphs, but luckily we’ve actually read them and it might be simpler than you think.

Basically, it’s all about ensuring that the client is informed, protected and what is being recommended remains suitable. There are a few ways to do this, which brings us onto the medallists!

First up, bronze

Remember that MiFid covers only ISAs and GIAs and does not account for pensions or bonds and has also targeted platforms and providers for them to keep the client informed also. Therefore, if your clients are on a platform who have sent out a periodic summary including all charges and information they need to cover, the minimum that is needed from you to make an ASR compliant are the following three things.

1. Changes to objectives/risk profile.

2. Changes to plan/strategy

3. Confirmation of suitability.

It can be done in one page. One page. Accompanying the platform disclosure and confirming that all remains suitable.


This is generally where the majority of people and ASRs will sit.

We think it’s only fair, if you’re sending something to your client talking about their ISA then they should also have the same level of information on ALL of their holdings.

Typically this ASR will be slightly longer and cover off:

  • Background and soft facts. Talking about their objectives and circumstances.
  • All charges (instead of referring to the platform disclosure).
  • Information on non-MiFID products
  • Fund performance
  • Risk profile information

This is a more personalised document, which is nice for the client to receive whilst also covering off your obligations to MiFID.


Here we go, the big shots of the competition.

You can put anything you want into an ASR, and we’ve seen them all! I would personally shy away from putting in everything but the kitchen sink (though if they’ve recently depleted their pension to pay for a new kitchen, you can probably mention that). There is however, value for some clients in having more information in their ASRs. Examples of this are:

  • Updated cashflow reports, including projections and commentary on how they’re financial plan is coming along and whether it remains on target.
  • An update on their capacity for loss.
  • Update on anything major legislative changes and what that might mean for them.
  • An update on their IHT position, especially if they’ve made gifts or have passed thresholds during the year.

Remember, if anything flags up in the ASR that means a circumstance or risk profile or financial planning area has changed, this should convert to full advice, and go down your company route for that.

So there we have it. The olympics of ASRs. Remember, even being on the podium is an achievement, so as long as you’re keeping your client informed and hitting the minimum requirements, then you’re doing great.

Right, I’m off to practice jumping really far, into a sand pit.


Professional Paraplanner