AF8 and Assignment 3
Ah the dreaded suitability report or indeed Assignment 3!! AF8 is not an essay. It is not a series of questions. It is not an academic paper. It is however, a suitability report. Squeezed tightly into 3,000 words (this is not a lot)!
So, what you need to do is distil the nitty gritty. What is your advice and why is this advice right for this particular client/s?
This is one assignment with 3 questions. There is no need for you to refer back to your Assignment 1 or Assignment 2. Keep your referencing back to Assignments 1 and 2 as low as possible. Focus on answering the question.
In becoming a Chartered Financial Planner, developing your ability to give suitable advice at the highest levels, involves a deliberate, disciplined thinking process….and that is what the AF8 exam requires.
If you are writing anything that is not answering the question you are wasting words.
Layout matters
Refer to the CII’s AF8 exemplar : Click here to view the CII AF8 Exemplar
The layout of your report is important. We believe in brevity and focus.
The first few pages should outline what the client’s goals are, what you are recommending to help them achieve those goals and why. As an adviser what are you asked to do? You are asked to recommend this product, this ISA, this strategy for your client and you need to justify it by explaining why it meets your client’s objectives.
We will keep going back to the fact that you are writing a suitability report and you need to focus your answers on the questions being presented to you.
You do not need to list every single option that would be available to the client to meet their needs and explain why certain products are not being recommended. If it is not in the question do not include it.
Each case is based on individual needs and in addressing your case study, it is not about copy and pasting from a template for all advisers to follow in a strict and formulaic manner. Tailor your advice specifically to the needs of your clients. It must be specific to the individual client/s, with things like ‘we are recommending X because you said you wanted Y’, making it clear that it is a personal recommendation.
There are four main things that need to be in suitability reports according to COBS : Click here to view the FCA handbook COBS 9.4 Suitability Reports
The suitability report must, at least:
- specify, on the basis of the information obtained from the client, the client’s demands and needs;
- explain why the firm has concluded that the recommended transaction is suitable for the client having regard to the information provided by the client;
- explain any possible disadvantages of the transaction for the client; and
- in the case of a life policy, include a personalised recommendation explaining why a particular life policy would best meet the client’s demands and needs.
The FCA in COBS 19 annex 4A, provides some ideas of the critical evaluation and analysis expected by advisers – and similar should be used in your assessment. Click here to view COBS Annex 4A Appropriate pension transfer analysis
Write your report and then ask yourself these questions:
Why I have made these recommendations for my client (am I meeting their objectives), is it crystal clear to them what I am trying to achieve (why is it suitable for them) and why am I making these recommendations (what are the risks involved/possible disadvantages)?
You are evaluating the best option for the client, with reasons-why, based on facts and reasoned assessments (based on the client-specific details).
And that’s exactly what you do as a Chartered Financial Adviser – and you do it through your suitability reports (SR).
If you have met these objectives, then you will have met the criteria of making your suitability report individual and personal.
Conclusion
Our AF8 course doesn’t focus on teaching technical concepts. You are already Level 4/6 qualified. You know technical. We focus on technique: critical analysis; sound financial planning; cash flow modelling; and the application of technical concepts.
