What is the ideal length of a suitability report?

Ed Evans

Last week I started this series of blogs by discussing why it’s important to put the client at the centre of the suitability report writing process. This week I’m going to look at some techniques you can employ to make your reports more reader-friendly and engaging.

With the regulator being deliberately non-prescriptive regarding the ideal length of a suitability report – and rightly so – it has been left up to advisers, paraplaners and compliance officers to debate this matter amongst themselves. Traditionally the industry has adopted the rather “belt and braces” approach of throwing everything and the kitchen sink at a report. Maybe advisers have felt the need to demonstrate their technical knowledge or maybe it’s simply due to a concern that “more is more” in terms of compliance.

On the flip side, I’ve heard it suggested that the average client will lose concentration after the first three pages of a report and that it’s possible to take the client on a whistle stop tour of your recommendations in less than five pages, even though the typical suitability report checklist alone extends to something similar!

Like all things, there’s a halfway house. Reports don’t need to be, and shouldn’t be 50 pages long. In fact the bigger a report is, the less impact it has. So how do you get it right, and provide the client with the necessary information without drowning them in detail?

Cut out the waffle

Avoid bulky, generic paragraphs. They’re unappealing to the eye, frowned upon by the regulator and only serve to zone out the reader.

Tailor

Make sure everything in the report is relevant to the client. Only the other day I read a mortgage suitability report which gave-over half a page to Islamic mortgages. Although it was all technically sound, it had zero relevance to the client.

Sign post

Refer the client to supporting information in accompanying documents rather than bogging them down in unnecessary detail in the report.

For example, you don’t need to include reams of information about the due diligence you performed on your preferred platform or your investment process in the suitability report. As long as you clearly explain how and why the platform and recommended investment strategy is suitable given the client’s needs and objectives, and your due diligence is retained on file – this is sufficient. But if you do think the client would be interested in the finer detail of your research, no problem, create a separate document and refer the client to it in the suitability report.

Divide and rule

Tailor the length of the report to your client’s profile. For more sophisticated clients or more involved cases, you could consider providing a more in depth generic financial plan upfront, followed by a shorter and more punchy suitability report containing the actual recommendations – your client and the regulator will thank you for it.

In conclusion, the primary focus of a suitability report should always be the client’s needs and objectives. It is therefore essential that the report clearly highlights:

• What these needs and objectives are;
• What recommendations you are making to meet these needs and objectives; and
• How your recommendations will help the client satisfy these needs and objectives.

 

Ultimately, your suitability report should be whatever length is required to achieve this and, of course, all the other regulatory requirements.

As we’re focusing on keeping things succinct and to the point this week, I’ll end it there, and leave the summing up to our inestimable former PM, Winston Churchill.

This report, by its very length, defends itself against the risk of being read.

As always, if you got a spare minute, please leave a comment – I’d love to hear your thoughts.

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Many of the concepts I’ll be writing about in this series of blogs are highlighted in our suitability report template. See how you can make your suitability reports more reader-friendly and engaging – download your free suitability report template.

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