Recording the alternatives you rejected
How to record why you did not recommend the obvious alternative, in four lines on the file.
How to record why you did not recommend the obvious alternative, in four lines on the file.
A file review looks for the reasoning behind a recommendation, including the options that were considered and rejected.
The report says what was advised and why it suits. Check whether it also says what the obvious alternative was, why it was considered, and why it was rejected. A reviewer, a complainant or a buyer’s due diligence team will look for it.
At the time of the advice the reasons seem obvious. You know why you did not recommend the transfer, the annuity or the consolidation that was popular that year. The reasons are in the conversation and in your judgement, and writing down something you did not do can feel unnecessary.
Three years later the reasons may not be obvious to anybody, sometimes including you.
In a complaint, nothing on file shows the alternative was considered, and that weakens the firm’s case even where the advice was right. In a file review it shows as a gap. In due diligence it becomes a question, and the buyer may reduce the price to allow for it.
There is also a cost at handover. The next adviser inherits a file that records what was done without the reasoning behind it.
The note can be short. It needs four sentences:
The last line remains useful for longest. It tells whoever reviews the client next, including the adviser who takes over from you, what to look for.
It is one of several things that make a firm transferable, and it takes little time. Write the four lines at the point of advice, while you still know the reasons.
If there is no time in your week for it, moving paraplanning and compliance across frees that time.
Preparing for the change in your working life after the sale, as well as for the transaction.
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How the change to inheritance tax on pensions affects your own pension and the timing of your exit.
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The relief is still there, at a higher rate than before, and whether it applies depends on what is sold, by whom, and how the money reaches you.
Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.