Suitability Reports – avoiding common problems

There is an old joke about a man going to his dentist, picking up a magazine in the waiting room and reading that the Titanic had sunk. This reference to how out of date dentists’ reading material can be is unfortunately not merely a mildly amusing joke or restricted to dentists. 

Most firms’ websites have some sort of ‘News’ area. However, clicking on the link often results in a realisation that the ‘news’ is decidedly not new, and has not been updated recently. It is not uncommon for the last update to have been done months, or even years, before. This is understandable if the website is primarily intended as a static online presence rather than an integral part of the business model. Initial good intentions about updating the site regularly can often fall by the wayside and remain a constant, yet low, priority item on someone’s to do list that somehow never seems to become a ‘done’ item. Understandable or not, out of date content does the firm’s professional image no good. 

Sad to say, the same can be true of suitability reports.
 

Bespoke
There are various ways to produce a suitability report, but it is unlikely these days that many firms create every report from scratch on a totally bespoke basis. That would be very time consuming and probably prone to errors and inconsistencies.
 

Document template
Many firms use some sort of document template, which is then ‘personalised’ for the particular client, often through ‘copy and paste’ from a previous client report. There are several problems with this method. 

  • Formulaic recommendations
    In our experience, there is often insufficient personalisation, leading to the firm’s reports and recommendations appearing to be formulaic, even if they are not.
  • Who is Fred?
    Using templates runs the risk of leaving a previous client’s details in various places. It is not uncommon for us to see a report produced using a template that refers to a previous client, let’s call him Mr. Fred Smith, leaving the actual client, Mrs. Ann Jones, wondering, “Who is this Fred that is mentioned on page 3 and page 5?” and “How come the recommendation is for £X when I want to invest £Y?”

    It is a time consuming and uncertain task to ensure that all the ‘him’s have been changed to ‘her’s and the ‘£X’s changed to ‘£Y’s. This might sound flippant, but in our experience, it is surprising how often we see this type of error. From a risk perspective, it is difficult to defend complaints when the suitability report content is riddled with errors.

  • Out of date content
    A document template is, by definition, a static document. Product technical, tax or legal aspects can and do change … tax rates and bands, new taxes or rules, investment/pension limits, FSCS limits and so on. While out of date news content on a website probably just damages the firm’s professional image, out of date references in a suitability report could lead to client misunderstanding and difficulty in defending complaints.

The solution is simple in theory – make sure the template is updated when required – yet problematic in practice for a number of reasons, including:

  • how do you keep track of changes to variables?
  • who makes the changes to the template?
  • how long does it take?
  • how quickly is it done?
  • are incorrect reports issued in the meantime?
  • what other work is delayed or not done while the individual is doing the updating?

Intelligent report writing software
Using well designed report writing software is the simplest way to avoid all of these problems. ATEB Suitability is not only well-designed from a software point of view but is populated with content created in conjunction with ATEB’s own team of experienced technical and compliance experts. This ensures that the software is easy to use and the output compliant. Now, you‘d expect us to say that of our own product. But it is true! 

More to the point, and getting back to Fred, ATEB Suitability solves the problems outlined above.

Formulaic?
Not with ATEB Suitability. The software guides the user to each section of the report where personalisation is required or appropriate. Some common options are ready to select or the user can enter free text. User hints throughout the report remind the user of what is required from a compliance perspective or desirable for good practice.

Out of date?
Again, no. Prompt updating of regulatory, technical, tax and legislative variables comes as standard. New products, new tax rules and so on are also incorporated so users don’t have to worry about keeping reports up to date, accurate and compliant, saving time and resource that can be better used to serve clients. 

What about Fred?
Don’t confuse the word ‘template’ with ‘generic’. A good template with the ability to personalise in key areas offers structure. A generic template with little options to personalise creates formulaic non individualised output. This will and does lead to the problems outlined above being recreated time and time again! 

However, cleverly structured templates as a framework to support client specific content can significantly reduce production time, increase accuracy, and reduce costs. 

ATEB Suitability comes complete with pre-loaded templates but also allows the firm to create more templates and add firm specific content, so that suitability reports for common scenarios can be produced quickly. Furthermore, these templates are automatically updated with regulatory and legislative updates. 

So, despite the general requirement that suitability reports should be personalised and specific to a client, there are times when it is appropriate to use the same basic report for a number of clients. For example, an end of tax year recommendation to use up the ISA allowance. 

With ATEB Suitability, this is easy. The user creates a robust report for one client, then with one click converts that report into a ‘template’ for use with other clients. The difference is that the conversion automatically strips out all client specific references and then guides the user to the places where the next client’s details should be entered. 

Mrs Jones will never know that Fred exists!

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

The Suitability Report is an essential and core part of the advice process. The ability to create reports that are robustly compliant yet well structured, client focused and efficient to produce is not universally present in all firms.

Firms should consider whether this key element of the business model is done as effectively as possible. Especially if any of the issues mentioned above have been experienced.

Action Required By You

  • You can try ATEB Suitability for free and there is nothing to install – for a FREE TRIAL or to find out more about ATEB Suitability click here;
  • Or call us on 0191 338 8177 or email to info@atebsuitability.co.uk;
  • For any other assistance with your advice process and suitability reports, contact you usual ATEB Consultant or contact ATEB directly.

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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