Returned suitability reports are the cheapest management information a small advice firm has

Every advice firm I know of runs a quiet loop. An adviser meets a client, a paraplanner drafts the suitability report, the file goes to checking and a proportion come back. The paraplanner reworks the report, the adviser reads it again and it rejoins the queue. Each return is handled as a one-off: this file, this adviser, this client.

In the decades after the Second World War, W. Edwards Deming spent much of his working life pressing a point that manufacturers found strangely hard to accept. Inspection at the end of the line tells you what went wrong. It does nothing to stop it going wrong again, and a factory that relies on it pays for the same defect over and over. File checking in an advice firm is inspection at the end of the line.

That is the frame I would bring to returned reports. The easy reading of a return is that someone slipped, and sometimes that is exactly what happened. More often the same issue turns up across several advisers, because they share the same habits, copy the shape of the same old report or work without an agreed structure at all. When three advisers blur attitude to risk and capacity for loss, the gap sits in what the firm has written down and taught rather than in three separate heads.

The loop also carries a cost that rarely appears anywhere. Rework takes paraplanner hours, adviser attention and time from whoever checks the file. Nobody budgets for it. So nobody sees it add up.

The remedy is almost embarrassingly simple. For one quarter, every time a file comes back, someone writes one line in a shared spreadsheet: the date, the adviser, the type of case and the reason in plain words. At the end of the quarter, sort it by reason. I'd expect a short list to account for most of the returns, and in most firms it will be a familiar one.

The reasons I keep hearing about share a family resemblance. Attitude to risk and capacity for loss are treated as one conclusion, with no worked stress test behind the capacity judgement. Objectives are written so loosely, "plan for retirement" being the usual example, that almost any recommendation could be justified against them. And the reasoning often explains why the firm's CIP suits a segment of clients when the report needs to explain why this client should hold this solution, while alternatives turn out not to be real alternatives, doing nothing goes unmentioned on a switch and disadvantages are set out in language the client would struggle to follow, which sits badly with the consumer understanding outcome.

Each of those has a place where it starts, and that is where the fix belongs. Where the report structure has one heading for risk and capacity, split it and put a stress test prompt in the capacity section. Where objectives arrive vague, the fact-find needs to ask for an age, an income and a date. Where the reasoning section is assembled from stock paragraphs lifted from the CIP document, open it with the client's timeline and capacity instead, and make an alternatives line compulsory, with doing nothing always considered on a switch.

None of these changes asks an adviser to try harder. They alter the fact-find, the report structure or the checking notes, so the next file starts in a better place. That matters for morale as much as for throughput.

In a small firm this work tends to fall between people. Compliance sees the returns but doesn't own the report structure. Paraplanners own the drafting but not the fact-find, and advisers own the meeting but not the template. So give it one owner, often the lead paraplanner or whoever checks files, with a short slot each quarter to read the log and agree one or two changes.

The following quarter's log then does something inspection alone never could. It shows whether the change worked, because the reason either stops appearing or it doesn't.

The suitability report won't get shorter or more formulaic because of any of this. The per-client thinking still has to be done, and a shared structure is a scaffold rather than something to paste into. What changes is that the firm stops paying for the same mistake many times over, and gains a plain record of where its advice process catches, drawn from its own files rather than from general guidance.

Quality was never going to be inspected in.