I sent out a paper copy of a suitability report to a client yesterday. It was 142 pages long in total. Of this, 121 pages were appendices, which included:
- Illustrations and key features documents for three protection plans
- Illustrations, terms and conditions, fund factsheets and KIIDs for two Isas, with two multi-asset funds
- Risk tolerance information
Excluding the front cover and contents page, the meat of the report was contained in just 18 pages. It was in colour with supporting charts and tables. It was a work of art. But even printed double-sided it will probably give the postman a hernia. I just hope the clients read it.
Our clients place an incredible amount of trust in us. I think we underestimate how big a deal it is for someone to walk into our office for the first time and spill their financial guts to us. In return, we want to send them away with their needs met and their plans on track. We want to begin a relationship with them where we can serve them for years.
Yet, at outset, we give them 142 pages to read. If I were receiving one of these documents, I would wonder what the adviser was burying in the appendices. The whole thing looks like a cover-your-backside exercise, which I suppose it is. I imagine that if I had insisted my wife digest 142 pages of small print before I agreed to marry her, I would still be single now. There must be a better way.
I have long since given up trying to write up the cashflow modelling part of the planning process. Now I create a précis video, lasting about 10 minutes, that summarises the Voyant planning conversation. Clients love this, as it does not take long to watch and they are easily reminded of the reasons we made the decisions we did.
I briefly tried replacing the full suitability report with a PowerPoint presentation with a voiceover from me. This worked similarly to the Voyant video but covered the risk tolerance stuff, risk warnings, charges and so on. It was OK but still did not really satisfy my desire to make sure people had everything they needed to know in an easily digestible form.
I wonder if the answer is regulation of products rather than advice? If the only products available were those sanctioned by the FCA, the advice process would be a breeze. Advisers know clients do not really care much about what products they get, as long as their long-term needs are met. For the financial planner, the end product is merely a tool to use to help our clients achieve their stated aims, rather than the whole point of the advice process.
Perhaps a stakeholder-type suite of products, signed-off by our glorious regulator and given some kind of mark of acceptability, will close the advice gap. I cannot say I am hopeful of that ever happening – not least because presumably the regulator would then be liable if the products failed to meet up to expectations.
I wish I knew what the answer might be. Perhaps those wishing to comment on this piece have an opinion. For now, I will continue to provide eight times the information the client actually needs to make a decision. And I will try to save a few trees by opting to deliver the report in PDF form.
Pete Matthew is managing director of Jacksons Wealth Management