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OUTSIDE EDGE Robert Reid

As I sit here looking at yet another archive box to add to my collection, I feel sorry for IFAs who have even worse storage problems than me.

Soon, a major cost of the average IFA business will be file storage (if it is not already) and please do not all write to tell me about imaging when retaining original material may be better for our own protection.

It seems that we are not even safe beyond the grave and the regulators may soon use mediums to communicate with us after we have long since departed.

Given that the FSA shows no significant signs of reducing the paper mountain that compliance and disclosure have created, we need to think positively and consider what, if any, direct benefit can we derive from all this paper.

So, here is my suggestion for this week. Why not calculate the average weight for a compliant file on, say, pension transfers or retirement options? The regulator could then take advantage of the network of public weighbridges and cut down on those costly visits.

By now, you may think I have completely flipped but, no, I am simply illustrating the futility of all this paper. When I get an enquiry, I issue around six pages of documentation. Does my client read it all? I doubt it.

The increase in paper since disclosure does nothing to protect the client. If anything, it makes it easier for the less efficient providers to pull the wool over our eyes by writing in small-sized fonts and using confusing tables and mathematical processes.

What we must aim for in the review of disclosure and the review of retail investments proposed by Myners, which the Chancellor has confirmed will go ahead, is for the golden rule to be clarity, with the real public (not professional consumerists) consulted on style and content.

Simplifying disclosure should be much easier in a 1 per cent world where the charges are simpler. Loyalty bonuses and enhanced allocations do nothing to avoid the opaqueness that with-profits is now recognised as having.

At the moment, compliance is pushing IFAs to retain more and more material in an effort to prove we did our job to the best possible standard. Meanwhile, the average client is filing this material and not even reading it. As one of my clients said, should I read it or weigh it?

To cut down on all this paper, we must start to look at disclosure from the perspective of the client who, I am sure, would prefer it to be in the format of a list of frequently asked questions, with figures specific to their own position.

The concept of allowing non-specific key features documents, especially for investment products, is indefensible as it does nothing to enhance the knowledge of the purchaser or to reassure them that they have selected the most suitable product or investment fund.

Perhaps the problem is caused by the lack of options that paper-based communications offer compared with an interactive website or television. We therefore have a major opportunity to improve the public&#39s understanding of all things financial by allowing them to interrogate information pertinent to them.

Now, that would be a move forward. Given the increase in internet access, this could be the way for public weighbridges to be kept for their original purpose and to avoid the need to chase IFAs in the after-life by ensuring the public understand their options at the time of purchase.

As the Americans would say, we need to think outside the box. Or should that be the archive box?

Robert Reid is principal of Syndaxi Financial Planning

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