Improving your Client Files

29th October 2021 Adam George

Although we specialise in paraplanning and suitability reports at PowerPlanner, we do acknowledge, of course, that there's much more that an adviser needs to have to ensure client files are compliant and easily audited.

In this post, we present a few handy hints and tips that can help you get your client files organised.

Choose Short-Term Pain for Long-Term Gain

Most financial advisers, if honest with themselves, will probably have to admit that too often they choose to avoid spending that extra 5 minutes on a fact find to ensure that it's completed clearly and correctly.

If a complaint is made against you, or an FCA investigation is held and you can't provide evidence for the advice you've given then defending any recommendations you made will be tricky. Your rationale may have been sound and you may have followed your firm's advice process properly, but without a proper record of the client-specific facts that formed the basis of your decision it'll be hard to make your case.

It's so tempting to cut corners just to get it "off your plate" when the pressure's on, but 5 minutes spent up front will pay dividends later on. Even if you don't get investigated, the extra clarity will benefit your administrators and paraplanners by saving their time and, in turn, your costs.

Make Sure you Record Protection Discussions

Often, when a case is focussed on pensions or investments, the discussion within the client meeting tends to be around financial goals, investment risk and cash flow modelling. However, irrespective of the client's circumstances or objectives, you should always discuss protection provision.

At PowerPlanner, we see a fair few fact finds where the protection section has been filled in with "client did not want to discuss" or, even worse, just "not applicable - investment advice". If a financial adviser's being paid to deliver holistic financial planning, and if that client unexpectedly dies without adequate protection in place, then it's going to be hard to put up a defence if a complaint is raised and your fact find reads like this!

Of course, discussing protection doesn't necessarily mean selling a protection plan. You may have a discussion with the client and hear back from them that "protection is too expensive and despite the risks I don't want to pay the premiums" or words to that effect. That's fine. Put that in the fact find. Indeed, quote the client's comments verbatim and put that on record.

The client is allowed to be dismissive of protection, but the adviser isn't, so make sure the fact find doesn't come across that way and has a robust record of the conversation that was had, even if it's as brief as that.

Keep your Research Up-To-Date

Research is one of those industry terms that means different things to different people, but one thing it undoubtedly does cover is justification for recommending a financial product or service.

Having information on file to back up your rationale and advice process is vital, although it's not just about ensuring you pass an investigation. In the same way that a clear fact find can help your paraplanners write better suitability reports, providing detailed research helps you present your recommendations to the client, and gives them confidence in the advice as they can see the diligence with which you've gone about your work.

The means by which you keep your research up-to-date is down to you. If, like many, you favour an investment platform for the majority of your clients, then there are many good platform research tools out there that you can use periodically to ascertain whether your clients are still getting the best deal. We recommend having a look at The Lang Cat for cost-effective platform research.

Use a Consistent File Naming Strategy

Few of us envy the task of a file reviewer at the best of times, so it's not hard to imagine how much more time consuming and error-prone the file reviewer's job becomes if key evidence is hard to find because files are all over the place and have meaningless names generated by the office scanner! As such, having a sensible structure to the documents held on file is really useful.

Whether you use a back office system like Intelliflo Office or if you just keep files on disk, one of the most useful things is to name your files using a consistent convention.

This convention should include the date of the document, the client name, provider and a hint as to the content. For example, you may have downloaded a document called client-statement.pdf but this default file name gives no clue as to what the document actually represents. Instead, a name like Smith - Aviva - valuation - Oct 21.pdf makes it obvious, so when a colleague is looking for the valuation on Mrs Smith's Aviva plan, it's easy to find.

Summary

There are loads of small things you can do that, when combined, really make a big difference to the quality of a client file.

Just bear in mind that the file is not just for the FCA, but also for your administrators, reviewers and paraplanners. Making their lives easier saves you and your firm time and money in the long run, so it's worth putting in place a proper process and ensuring advisers spend that extra couple of minutes to follow it.

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