Our Founder and Director, Cathi, spoke to Money Marketing about taking suitability to the next level – catch up on the article below…

“Paraplanning is about much more than suitability reports, but there is no denying they are a fundamental part of the role and one of the trickier elements to get the right balance on.

Unfortunately, it is still the case that paraplanners have the conflicting challenge of creating something that:

  • Each client can refer back to, and fully understand exactly what has been recommended;
  • Is considered compliant (bearing in mind this will mean different things in different firms) and covers all regulatory requirements;
  • The adviser is happy with. Each adviser will also have their own preferences, which is understandable given this is the written representation of their relationship with the client.

So it is not surprising there is no one-size-fits-all approach to suitability reports. However, paraplanners should consider the following as a starting point:

  • Know the compliance requirements within a firm, as indicated by either the internal compliance team or external support. This should be broadly fixed and something the paraplanner gets familiar with at the outset;
  • Consider the adviser this report is representing. Are they focused on it being efficient and as short as possible, or are they a detail person and would prefer there to be more information for them to have a more thorough conversation with the client?
  • Think about the client and the advice. An experienced investor doing an Isa top-up will require a different approach to someone getting advice for the first time and consolidating a number of plans which have been accumulated over the years.

Do not be afraid to bring this level of personalisation to each case. The importance of suitability reports should not be underestimated and this approach will help maximise the potential of them achieving their ultimate goal: to put the client in a clear, informed position.

Then ensure the report covers five key elements. Most reports comfortably cover the first three, which are:


Who is the report directed at? Usually straightforward enough, but important to consider carefully where there are multiple clients, powers of attorney or trusts involved;


What exactly is being recommended? This is very tangible; for example, an investment into a general investment account or a transfer of existing pensions;


Where are the funds recommended to go? This will cover both provider and investment strategy.

So far, so straightforward. But there are two more elements, not always covered so comprehensively:


When I started in financial services, suitability reports were called Reason Why letters, and that remains a fundamental factor. Why exactly is this the advice being given right now, for this client? Why the pension transfer? Why that provider over others? Why that investment strategy for their risk profile and objectives?


If the why is a shorter-term consideration, the how is the longer-term issue. How will this advice ultimately meet the client’s objectives? Any recommendation is unlikely to immediately achieve goals, but may be the starting point for setting clients along the path to hitting them. The suitability report should be able to position the advice in that way.

A compliant report will cover the first three points but a really good report, that provides context and clarity, and helps the client understand the advice in relation to their own goals, will cover all five.

The suitability of the advice is not dependent on the suitability report alone; it is based on the whole file and every stage of the advice process. But there is no doubt the report is the focal point that pulls all of these facets together and should give a firm comfort that a client’s understanding has been at the core of the process.

So, a starting point of understanding the compliance framework in which you are operating, tailoring the report to both the client and advice type, as well as the adviser’s preferences, and giving it a final review at the end as to how clear the why and how are covered should help take your reports to the next level.”

Recently, our Head of Quality & Operations, Jo, wrote an article for Nucleus as part of their series on suitable advice. Catch up below…

“Can I ask you to cast your mind back to 2014 for a moment; we were all reeling from Gwyneth and Chris ‘consciously uncoupling’ and England being knocked out in the World Cup group stages.

And if the Ice Bucket Challenge didn’t wake you up, then the announcement that the way pensions were to be taken was to be totally revolutionised, certainly did.

There was mass panic that all of our clients were going to take all of their pension funds at 12.01 on their 55th birthday and buy a super yacht… or a pedalo (depending on the funds available). However, 2015 rolled around and this didn’t happen (well not all the time) and this was due to in no small part to the amount of planners providing suitable advice to their clients.

Yes, my view may be skewed in that I only tend to deal with new model advisers and those planners who offer a great, holistic service but I was encouraged by the common-sense approach so many people seemed to take following their planning meeting.

Taking that into account and while not teaching you to suck eggs in any way, I’d like to share my top five tips for suitable advice around pension freedoms.

Clear and specific objectives.

The FCA hates a generic objective, as do I. The advice must show that it meets specific objectives but if they are absent, it’s much harder to prove you’re providing suitable advice. I’d much rather see a “the client wants to buy a yacht when he’s 68” than “the client wants flexibility in retirement”. Don’t we all? The outcome would be the same. Switching to Nucleus to provide growth until such time they hit retirement, at which point they move into drawdown… but the client (and your compliance) much prefers the specifics.

Cashflow planning.

This should be completed at outset and regularly. Include a variety of scenarios and stress tests. This is invaluable to the client who can be shown exactly what it means to take an income and how a change in retirement date, growth or withdrawals can impact them.

Drop the jargon.

Honestly, clients do not want to hear about how a growth of X% and withdrawals of Y% result in a net loss of Z% to the power of blah. They want to know they can take £10,000 a year from their pension and not have to die earlier than planned. It’s really that simple. Do all of the calculations and formulas you want for your file. When you see your client, keep it simple and straight forward. Avoid percentages and basis points and long words such as decumulation. Can they afford to retire when they want, with how much they want, or not? That’s what they want to know.

Don’t panic.

I see a lot of client meeting notes with people worried about inflation, the global economy and let’s not even touch on the dreaded B(rexit) word. I always say to people, don’t panic. If you have a good plan in place, provided by a good planner, these external things don’t matter. Yes, there will be fluctuations and some turbulence and it might get a bit rocky, but if the cashflow has been tested and stood strong, the plan is likely to be unshaken much over the long term. Keep calm and carry on for wont of a better, less used, outdated phrase.

Risky business.

Risk is a bit of a buzz word for me at the minute. I can see a great plan for a client based upon a generic balanced level of risk. I’m always wary seeing someone who’s need for risk exactly matches their attitude to risk and their capacity for loss. I would like to see a need for risk being more calculated as in, you require £10,000 a year in 10 years time and your based on your current value you would need a X amount of growth. That’s the risk you need to take. The risk you want to take may well be very different. It’s finding a plan that compromises between the two. Capacity for loss is a different being altogether and should not be linked to the above two. I would expect to see further calculations showing exactly how much the client can afford to lose these funds; how much and for how long. This can be easily shown via cashflow, but should be a specific amount, not just a generic sentence such as “low to medium losses can be tolerated”.

I’m off for a ride around on my pedalo now, but if you have any questions, feel free to drop me a line.”

From graduate, to Chartered, award-winning paraplanner…

You may have heard us say once or twice how very proud we are of our team – and recently, we’ve had even more reason to beam with pride, as our Head of Paraplanning, Grant, has not only made the front cover of Professional Paraplanner magazine, he also took home the trophy of Paraplanner of the Year at the Professional Adviser Awards!

The achievements are well deserved, as his career journey is truly inspiring. You can read Grant’s featured article where he talks about his journey into paraplanning and his views on changing profession, here.