You’re probably not going to like this blog if you still aren’t using a fact find document.

It is time to convince those advisers who prefer relying on detailed notes, rather than a structured fact find form, to use a different, more structured way of working.

At the end of March, the FCA introduced its Retirement Income Advice Assessment Tool (RIAAT). It was developed during the regulator’s thematic review into retirement income advice, but it is applicable across the advice spectrum.

The tool is downloadable from the FCA’s website and we would recommend that you do so. There’s no doubt it will be used as benchmark against which files are reviewed and if your preference is to rely on detailed notes, the information is likely going to be extremely challenging to find.

The legislative landscape

It is worth pointing out here that the COBS rules don’t require a fact find document to be used. They simply specify know your client information. However, the FCA wants firms to understand the methodology behind file reviews, which is why it has produced the RIAAT.

In its own words, the regulator states your files must be “sufficiently detailed for a third-party assessor to:

  • get an accurate and complete overview of the relevant evidence on the client file 
  • form a view – without the need to refer to the relevant evidence – on whether the firm has collected the necessary information to assess suitability and complied with any applicable suitability requirements.”

If you are not meeting the FCA’s expectations and your files are checked as part of an investigation or future thematic review, you are likely to receive a non-compliant decision. This could mean complaints are upheld and redress has to be paid, as the file will be deemed unsuitable or unclear. Without sufficient information on file, how can suitability be fully established?

Why detailed file notes don’t work

Advisers who prefer detailed file notes argue that clients don’t want to complete fact finds and that they are a barrier to building relationships. It is thought of as ‘form-filling’ whereas information gathered in the guise of file notes can be done so conversationally.

We’re not saying you shouldn’t have these chats with your clients, but that they should be done to supplement the fact find document. An informal conversation isn’t likely to cover all of the information the FCA requires in a file review, for example, a sufficiently detailed breakdown of expenditure to establish what is essential to support the cost of living and what is desirable, based on lifestyle.

A fact find is a snapshot of the client’s life at a specific point in time. It can be recorded and saved as a PDF, to provide easily accessible data and then updated at regular intervals. If you’re doing an annual review, or providing a client with new advice, you could consider sending them the existing fact find and asking them to update it if anything has changed. This ensures information that is often forgotten remains current, such as employment status – you’d be surprised how many clients neglect to mention they have moved jobs or had a promotion and their income has changed!

File notes, on the other hand, are unlikely to be updated. More often than not, they are simply added to, making it difficult to extract the required information during reviews and justify how up to date it is.

Yes, the information held within a fact find will change during the course of your relationship with the client, but the document itself can be used to evidence what was correct at a particular moment in time.

Still don’t believe us?

If you feel your method of gathering and recording KYC information meets the FCA’s requirements, we suggest you run a quick test.

Download the RIAAT and ask a colleague to complete it using your file notes. This will establish if they are able to easily and efficiently extract the relevant information and build a clear understanding of the client’s circumstances that allows them to assess the suitability of your recommendations.

Implement changes now

Most firms have access to a fact find document via a back-office system, so we recommend you start using it, if you aren’t doing so already. There is no reason why it can’t be given to the client in paper form if that works best for them and you.

The FCA is trying to improve standards across the consumer investment market and accountability has never been more important. On average, most firms review around 10% of new business files, although we have clients who set much higher levels to ensure all advisers are consistent in their record keeping. Whilst the RIAAT is primarily aimed at retirement planning, the principles of the tool can be applied to all investment advice.

We now have a clear understanding of what the regulator is looking for, following the introduction of the RIAAT and those who choose to ignore it do so at your peril.

For help introducing fact find documents or advice on reviewing past files against the RIAAT, don’t hesitate to contact us on (0161) 521 8641 or email:

Let’s chat