Advising (not) for dummies

Of course, an experienced adviser does not need telling how to do their job. But with busy lives, even the best of us can commit the occasional oversight when dealing with a client. Here’s a refresher guide to the simple steps that lead to good advice.

  1. Identify yourself!

Make sure your client knows who you are, exactly what you do and what they can expect to pay you for it. Have a business card ready, plus disclosure documents: a client agreement, service proposition and fee agreements.

  1. Identify your client

Just as important is knowing who you are dealing with. You should have a set document with nice boxes to record the necessary information such as proof of identity and address. An important (and too often unused) part of the form is a box relating to the source of investment funds

  1. Get to know your client

The most important step of all. Record all necessary information in a ‘fact-find’ document to make an overall record of the client’s circumstances. Don’t just jot things down in an unstructured manner. Verify information from the original documents and keep copies on file where possible.

Test the level of your client’s financial knowledge so that you know that you are being understood – or when you need to explain things more clearly. Assess what financial arrangements they have currently in place, so you can see how well these align to their goals (see below).

  1. Client goals

Your client’s goals are the reason they are meeting with you. People generally have short, medium and long-term aspirations. You need to help them decide, in each category, which goals are priorities, and how achievable they are. With your help they should be able to readjust their sights so that their goals are within reach of their budget. Record all of these discussions on your fact-find document.

  1. Attitude to risk

Make sure your client understands what is meant by risk, in this context. For instance, what is the risk of having inadequate life cover? Or the risk involved in buy-to-let mortgage borrowing? You should cover all such areas in addition to the risks involved in any investment asset class or investment product. Investment risk in funds can be covered by the normal basic attitude to risk questionnaires, but only as the basis of a more detailed discussion that should be recorded on the fact-find.

  1. Giving advice

By now your fact-find should be nearly complete. Now the advice process can start. This may involve producing a detailed report. Your client can use this to consider your advice and any available options, in their own time. It will also let them frame the right questions to ask, and make an overall informed decision.

  1. Undertaking research

Start by identifying the details of any products already in place. Then you can ascertain any shortfalls or unaddressed objectives. If a new product is required, record whatever process has been used to identify the most suitable product to meet an objective. The more consistent this process is, the greater the chance of making the right choice. This filtering will start with the suitability of a product. A bond or a NISA? Pension or a SIPP?

Then comes the choice about providers. On a platform? Other providers for specific products? There may also be a further choice within the product. In the case of mortgages, what scheme? For investments, what funds are to be used?

As usual, keep a record of all this research in your fact-find document.

  1. Paperwork

It is good practice to assist your client with the completion of documents and/or online applications. Don’t ever ask them to sign blank forms, and never depend on information from a previous application. Get the client to check the forms are correct before signing the documents. Chase any applications that are made, and keep your client informed of progress.

  1. Suitability letter

This letter should provide a clear outline of the advice you are giving and how it helps to achieve a certain objective. You should present it to your client to help them decide whether to proceed with a certain course of action, or as soon as possible after the business is written. Risks, pros and cons and other potential consequences should be clearly stated.

The FCA is keen for this document to be succinct and written in plain English. It should also be clear about charges, including ongoing costs, and about the cancellation rights for any product. Finally it should confirm whether ongoing financial reviews will be provided, and details of the costs etc. of these.

  1. Ongoing advice

Ensure your client is aware of any further service they can expect from you, and any associated costs. Record any reviews in the fact-find (or in a similar document). The FCA gives high importance to promised reviews actually being provided, and at the promised time.


Did you spot the theme throughout this article? Of course you did: record, record, record. Information must be recorded at all stages of the process, so that every file is as complete as possible.

This is not just to please the FCA. It is mainly about giving the client the best possible outcome. More information means more confident decisions, and a greater probability that these will lead to a positive result. Furthermore, a complete file is a solid defence against possible future reviews or complaints. Only written information counts in these situations. So a complete file is both the best route to success – and the best mode of defence if that turns out to be necessary.

I hope you found that good advice!

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