How to nail a good client file

Many planners and paraplanners have regular squabbles with their file reviewers around what good advice looks like. And in actual fact, there are an awful lot of myths that float around the financial planning world when it comes to good client files.

In this piece we will aim to give pointers on the fundamental areas to focus your efforts.

First, is to define what we mean by “a good client file”.

A good client file is where everything you hold — either electronically, on paper, on video or audio recording — demonstrates what your advice is and, most importantly, why it is suitable for your client.

The “what” and the “why” must also be clear to a third party, who does not know you or the client, if they ever review the file.

One of the common mistakes is to confuse a client file with a suitability report. They are not the same thing, and that is a key point to remember. 

The detail about your clients and everything that goes with those conversations is what makes a good file

A client file is everything that evidences and articulates what your advice is. A suitability report is a single part of a client file that articulates your advice to the client. 

The reason it is so important to split the two out is because the suitability report should not include absolutely everything you have done in relation to the advice. That is not its purpose.

And there are many things that will sit on the wider client file that never make it into the suitability report. That is fine; in fact, that is good.

A common downfall across financial planning companies is where they throw everything at the suitability report.

Writing a good suitability report is an art that is difficult to master. Writing a bad suitability report is easy, and writing a terrible suitability report is even easier, you just throw the whole client file at it.

Where to start

The foundation to every single piece of well-documented advice, and the cornerstone to being able to write a superb suitability report, is your fact finding.

It sounds so cliché — and you are probably sick to the back teeth of hearing it — but we cannot escape it.

The detail about your clients, what they want to do, how much they need, what they think about risk, and everything that goes with those conversations is what makes a good file.

If that bit has been skimped on, you will struggle to get your file and reports to anything better than borderline mediocre.

So how much detail is really needed?