Partner Insight: Flora Maudsley-Barton, managing director of Parsonage Financial and Kerry Nelson, managing director of Nexus Financial met in London recently to discuss the criteria laid out by the Financial Conduct Authority (FCA) with regards to the adviser-client 'suitability' requirements.
In the fourth video of the series (see above), Flora Maudsley-Barton and Kerry Nelson talk to Julian Marr, Editor of Professional Adviser about what is suitable for that individual client, client objectives and the main concerns of the regulators - the FCA and the Financial Ombudsman Service (FOS).
Kerry Nelson says: "Suitability is such a hot topic now. The [financial] regulator wants us to explain what is suitable for the client, the client's needs and make it relevant to that particular client."
Nelson admits that it is hard for some of the advisers to "get a handle on" these suitability requirements laid out by the FCA.
Maudsley-Barton agrees that advisers are under pressure to meet the FCA's suitability requirements when it comes to the client's objectives, to review these and the individual products recommended for a particular client.
The FCA has made it very clear that a standardised investment approach should not be viewed as a one-size fits all solution.
"The suitability criteria we use at Nexus [Financial] is a process called ‘buddy check.' The report written by our para planner about an individual client is passed to the adviser - it is a sort of ‘sense check', then the adviser can recommend what the client wants."
Nelson adds: "I think when it comes to suitability requirements, the main thing the FCA worries about is the concept of a centralised investment proposition (CIP), how this works and outsourcing to DFMs.
"I think what the regulator wants us [the adviser] to do is to explain things better in terms of what we are doing, demonstrate due diligence in the solutions we are putting together for the client, whether it is a (CIP) or part of outsourced systems."
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