The Wisdom Tooth, Simplicity and the impact of ‘regulatory disconnect’

There are certain parts of the human body which as we’ve evolved have been rendered virtually useless.

Among them a the appendix, the male nipple and a body part I’ve recently had removed…

The Wisdom Tooth.

Before this weekend I’d never had a wisdom tooth removed before. The pain you suffer for the following few days after the removal isn’t particular pleasant however the interesting thing for me was the process.

I arrived at the dentist. Read through a 2 page document with important information written in plain English. One page on the operation and after effects and one page on the impact of sedation.

10 minutes later I’m in the chair. The dentist reiterated the important points contained on the document and then I’m under.

The next thing I know, and after about an hour and a half after arriving at the dentist, I wake at home in bed.

The process was simple, straightforward and with the minimum of fuss.

Back in the office on Monday I found myself preparing for an upcoming client review. Looking at the documents we’d received (and we know the client had received a copy of) from some of this particular clients product providers one thing sprung to mind…

If I can have a surgical operation (although a pretty minor one) with so little fuss, giving me the information I need and reassuring me where appropriate…

Why is the information we produce and some of the processes we have for our clients often so complicated?

I’m looking at this from two point of views…

Firstly from an intermediary acting on behalf of my clients and the work we do with providers. Whilst there are providers out there who have worked hard on straightforward, streamlined processes many seem to do the opposite. Their documents are complex, their processes are clunky beyond understanding and when looking for clarification on certain issues are intentionally vague.

Secondly whilst some of the financial planners and advisers I get to speak to are some of the best communicators of ideas and concepts I know, the documents we feel the need to produce to justify our recommendations and ensure we communicate all pertinent points have the potential to result in what we want from our client communication….

Helping our clients understand.

In our own business our reports are still too clunky for my liking and whilst we’re always looking to improve the quality, consistency and clarity of our reports we’re still a million miles from where I want us to be.

Interestingly the FCA have been increasingly vocal about the need for more clarity and simplicity in documentation. I saw Rory Percival express this at the PFS conference this year. During the Q&A the following question, although paraphrased, was asked:-

“If the FCA are looking for both intermediaries and providers give documentation which is more ‘user friendly’ why are so many financial planners and IFA’s still being told to write 62 page suitability letters?”

It’s an interesting question and it clearly shows the disconnect between the desire of the FCA for both intermediaries and providers to provide clearer documentation and the potential preconceptions of those working day in day out with clients who still feel the need to cover all the bases by supplying long and sometimes convoluted literature.

When I look at our professions relationship with the people we should be serving, where it could be argued that confidence has seemingly diminished over the past few decades, I can see a number of potential reasons.

One of them might be the fact that reading a document from a product provider (or even from a financial planner or adviser) seemingly requires a degree in economics and a PHD in statistics.

I know you could argue that the reason for this is that financial products are complicated and therefore require these documents to explain their intricacies. I get this but asking this question kicks the hornets nest of legislation and product design which is worthy of another article. However suffice to say there’s some value in not only considering simplicity in documentation but also in legislation and product design.

In an ideal world financial documents should be simple, straightforward to understand.

In an ideal world the purchasers of financial products should be able to understand at a glance what they’ve got.

and

In an ideal world the days of verbose, confusing and counter productive literature, from both providers and planners alike, should be over.

Clear, plainly written and straightforward documentation is massively helpful in the battle to help our clients understand what they’ve got.

However much of the information which is issued today, complex, confusing and off putting information as well as damaging trust in our profession and it is ultimately a bit like my wisdom tooth…

Virtually useless.

What do you think?