There is an area of financial advice which is subject to perpetual testing - suitability of the advice given.
WHY was a particular piece of advice appropriate? What factors were considered, or even discarded, that led to a particular recommendation as being the right advice?
Market risks & contractual interpretations play very significant parts in product performance. The performance of a financial product is generally the trigger event that raises the issue of whether the advice itself was suitable. That is, when a financial product does not perform as the consumer expected, the bulk of the suitability testing falls on the advice component, rather than the product. Not terribly fair, but that is our lot in life it seems.
As an adviser how can one go about determining "why this advice is appropriate"?
Especially knowing full well that the adviser cannot control actual product performance - and that is equally true of investment, mortgage or insurance products. Nor can the adviser remove market risks, or even necessarily begin to cover all risks for a client by transferring every conceivable negative outcome to another party.
This is THE essential step in providing advice that is most likely to be most suitable for the client's situation. The client will often have multiple (and sometimes competing) needs, and it is critical to establish a priority list - something has to be more important to get right than another thing. The something else is second in importance, and so on.
Provided these two critical steps are undertaken AND the client understands that the recommended advice is suitable as it is most likely to produce the desired result, then it should result in advice suitability rarely being seriously challenged.
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