When you work with one of our financial advisers, an important part of the process is ensuring that anything we recommend genuinely suits your needs. A financial advice suitability assessment helps ensure that any recommendation supports your goals and aligns with FCA expectations.
What is a financial advice suitability assessment?
The Financial Conduct Authority (FCA) requires regulated firms to do this carefully so that any advice given to you matches your goals, your finances, your capacity for loss and your attitude to risk.
Suitability assessments initially happen during onboarding when our adviser is getting to know you, but are also a part of our ongoing review process.
Here’s how we typically approach checking the suitability of advice given to you:
1. How financial advisers assess suitability during the onboarding process
Before one of our advisers can give you any meaningful guidance or advice, they must understand three key areas about you:
• Understanding your financial situation
This includes your income, savings and debt. Your adviser needs this information so we don’t recommend anything that could cause you hardship if markets fall.
• Reviewing your investment experience and knowledge
The FCA requires advisers to ask about your knowledge and experience to make sure you’re not offered products you may find confusing or too complex.
• Your goals and capacity for loss
Are you investing for growth, income or long-term security? How comfortable are you with fluctuating market trends? Remember, investment planning is a long-term strategy, and you should usually consider a timeline of at least 5 years.
This information is usually gathered through a conversation, questionnaires, and our fact find form that will be included in your onboarding pack at your initial meeting.
2. FCA suitability rules explained
Once your adviser understands your situation, we will use it to check whether a product or investment is suitable. The FCA makes it clear that advisers must only make recommendations that fit your objectives, risk profile, and ability to manage potential losses.
As a regulated Independent Financial Adviser we are obligated to obtain necessary information from you regarding your knowledge and experience in the investment field that is relevant to the recommendations provided.
3. Ongoing suitability checks in financial planning
Suitability isn’t something that’s checked once and then forgotten. We will keep our understanding of your circumstances up to date and review your situation on a regular basis.
Depending on the level of service you have with us, your annual or twice-yearly reviews help ensure:
• Your personal financial plan still fits your goals
• Your investments remain appropriate
• Any major life, and legislation changes are factored in
Why suitability asessments protect you
Regularly reviewing suitability allows us to ensure that you understand what you are investing in. If the suitability changes, i.e. you have had a change in your circumstances, we can ensure you are not exposed to unnecessary risk, this is why it is important that your recommendations are tailored to you.
Although suitability assessments are an FCA requirement, the added benefit is that you are protected by regulatory standards, and will have clear, well-documented advice every step of the way.
Making your future possible
Our financial planning process is designed to give you confidence that your adviser’s recommendations support your long-term goals. To learn more about our process, click the button below, or get in touch if you have any questions.
