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Business Relief often comes into the conversation when clients want two things that do not always sit easily together.

They want to reduce a potential inheritance tax liability.

But they also want to keep access to their money.

That is what makes BR interesting.

For the right client, it can offer a route into inheritance tax planning without making an outright gift, setting up more complex arrangements, or relying on the seven-year gifting rule.

The headline is usually easy enough to explain. Qualifying investments may benefit from inheritance tax relief after two years, provided they are still held at death.

That is the bit clients tend to remember.

Two years.

Potential IHT relief.

Capital still in their name.

But in practice, the suitability conversation is rarely that simple.

Because Business Relief is not just an inheritance tax planning tool. It is an investment. And that means risk, access, liquidity and understanding all need to be properly worked through.

 

What makes BR attractive?

BR can be useful where a client has a genuine IHT planning need, but gifting does not quite fit.

That might be because they are not comfortable giving money away.

They may want to retain control.

They may be concerned about future care needs.

They may want the option of accessing capital later.

Or they may simply feel that a seven-year planning horizon is too uncertain.

In those situations, BR can look like a helpful middle ground.

It can give the client a way to plan for IHT while keeping the investment in their own name. Some solutions may also allow access, although this can depend on the provider, the underlying assets and market conditions.

That flexibility is often where the appeal lies.

But it is also where the advice needs care.

 

The access point is not as simple as it sounds

One of the most important questions with BR is not just:

“Does the client want access?”

It is:

“What kind of access do they think they have?”

There is a big difference between money being technically accessible and money being quickly, easily or reliably accessible.

That is where misunderstandings can creep in.

A client might hear “you can still access your capital” and take comfort from that. But if the underlying investments are in smaller or unquoted businesses, selling may not be instant. Liquidity may be limited. The value may move. Access could take longer than expected.

That does not make BR unsuitable.

But it does mean the access conversation needs to be very clear.

In day-to-day advice work, this is the bit I think needs more attention.

Not just whether the client says they are happy with the risk, but whether they understand what that risk might feel like later.

Especially if circumstances change.

A client who does not expect to need the money today may feel very differently if care costs arise, family circumstances shift, or they simply become less comfortable with investment risk as they get older.

 

When the tax benefit starts leading the conversation

There is another point worth pausing on.

Business Relief can be attractive because the tax benefit is clear and easy to quantify. That can make it tempting for the tax outcome to become the main focus of the recommendation.

But tax efficiency on its own is not suitability.

The file still needs to show why this solution fits the client’s wider position.

That includes their objectives, their attitude to risk, their capacity for loss, their need for access, their understanding of the investment and the alternatives considered.

A useful sense-check is:

If the IHT relief was removed from the conversation, would there still be a coherent reason for this client to hold this type of investment?

The answer does not always need to be yes. IHT planning can be a valid objective in its own right.

But if the whole recommendation only makes sense because of the relief, the advice probably needs more careful framing.

At the very least, the client needs to understand exactly what they are accepting in exchange for that potential tax benefit.

 

What advisers and paraplanners need to evidence

For advisers and paraplanners, BR cases are often less about explaining the rules and more about evidencing the trade-off.

That means being able to show:

The client has a clear IHT planning objective.

Gifting, trusts or other planning options have been considered.

The need for access has been explored properly.

The client understands that access may not be immediate.

The investment risk is suitable for their circumstances.

The client understands capital is at risk.

The recommendation is not being driven by tax relief alone.

None of this needs to be overcomplicated.

But it does need to be clear.

Because if a case is ever reviewed later, the question will not just be whether BR was technically available.

It will be whether the recommendation was suitable for that client at that time, based on what they needed, what they understood and what they could afford to risk.

 

The practical takeaway

The strongest BR conversations are often the ones where the benefits and limitations are given equal weight.

Not in a way that scares the client off.

Just in a way that keeps the advice balanced.

BR can be a valuable planning option. But it should not be presented as a neat fix for inheritance tax.

It is better understood as a trade-off.

Potential IHT relief.

Retained control.

Some access.

But with investment risk, possible liquidity constraints and a need for proper client understanding.

That is where the real advice work sits.

Not in knowing that the two-year rule exists, but in making sure the client understands what sits behind it.

Over the next few weeks, I’ll be looking at BR, AIM portfolios, VCTs and EIS as part of our Tax Relief Isn’t the Whole Story series.

We’ll be sharing the full guide at the end, but for now the main point is this:

Tax relief matters.

But suitability is where the real work starts.

 

There is a line we see on files more often than you might think:

“The client has a low capacity for loss because they do not like the thought of losing money.”

At first glance, it sounds reasonable.

Most clients do not like the thought of losing money. Some feel genuinely uncomfortable when they see a fall in value on a statement. Some will say they would rather avoid volatility altogether.

But that does not automatically mean they have a low capacity for loss.

It may mean they have a low attitude to risk.

And that is not the same thing.

This is one of those areas that can look fine at first read, but when you look more closely, the file has merged two different points together.

The FCA’s suitability guidance refers to the risk a customer is both willing and able to take. It also describes capacity for loss as the customer’s ability to absorb falls in the value of their investment, particularly where a loss would have a materially detrimental effect on their standard of living.

That wording matters.

Because capacity for loss is not about whether the client likes risk. It is about what would actually happen if the risk became real.

 

Capacity for loss vs attitude to risk

In plain English:

Attitude to risk is how the client feels about taking investment risk.

Capacity for loss is whether the client could financially absorb a fall in value.

They are connected, but they are not interchangeable.

A client can have a low attitude to risk but a high capacity for loss.

For example, we might see a client with significant wealth, no debt, guaranteed pension income, and more than enough secure income to meet their day-to-day needs.

They may still be cautious by nature.

They may still hate market volatility.

They may still say they would feel very uncomfortable seeing their portfolio fall.

But if that portfolio fell significantly, would their lifestyle actually be affected?

Would they need to reduce essential spending?

Would they have to change their retirement plans?

Would they be forced to sell investments at the wrong time?

If the answer is no, then their capacity for loss may not be low.

Their attitude to risk may be low. Their emotional tolerance for volatility may be low. But financially, they may have a higher capacity for loss than the file suggests.

That distinction is important in suitability reports.

 

Why this matters in the advice file

From a paraplanning and suitability point of view, the issue is not whether the client ends up in a cautious portfolio.

There may be a perfectly valid reason for the adviser to recommend a cautious approach.

If the client does not want to take more risk, that matters. The recommendation should reflect what is suitable for them, not what they could theoretically afford to do.

But the reasoning needs to be accurate.

If the client has high capacity for loss but low attitude to risk, the file should say that.

It should not say the client cannot afford to take risk if the real reason is that they do not want to.

That small difference can change the whole tone of the suitability report.

 

Weak wording vs stronger wording

A weak explanation might look like this:

“The client has a low capacity for loss because they are uncomfortable with investment losses.”

The issue here is that it uses the client’s feelings about loss to evidence their financial ability to absorb loss.

A stronger version might be:

“The client has secure income and sufficient assets to absorb a fall in the value of this investment without materially affecting their standard of living. However, their attitude to risk is low, and they have stated they would be uncomfortable with significant volatility. The recommendation has therefore been shaped by their preference for a lower-risk approach, rather than a financial inability to absorb loss.”

That is clearer.

It separates what the client can afford from what the client is willing to accept.

And that is often what is missing.

 

The opposite can also happen

The reverse situation can be just as important.

A client may say they are comfortable taking risk. They may have investment experience. They may understand markets. They may even say they are happy to take a long-term view.

But if they are relying on that money for essential retirement income, or if a significant fall would put their plans under pressure, then capacity for loss may be the limiting factor.

In that case, the client’s willingness to take risk does not override their financial ability to withstand it.

The FCA’s more recent retirement income advice findings highlighted this point in a decumulation context. It found that some firms were not revisiting attitude to risk or adequately assessing capacity for loss as clients moved into decumulation. It also said firms should assess capacity for loss and attitude to risk consistently to help identify suitable solutions.

That is where the file needs care.

Not just “what score did the client get?”

But “does the recommendation make sense when their objectives, income needs, assets, expenditure, time horizon and reliance on the money are all considered together?”

 

Cashflow can help, but it does not do the thinking for you

Cashflow modelling can be useful when assessing capacity for loss.

It can show whether a fall in value would affect income, spending, sustainability, or the client’s wider financial plan.

The FCA has highlighted good practice examples where firms simulated market falls to understand the impact on clients and the risk of running out of money later in retirement. It has also pointed to the importance of tailoring cashflow modelling to the client’s circumstances and objectives.

But the model is only part of the story.

The suitability report still needs to explain what the result means.

A cashflow that still works after a market fall may support a higher capacity for loss. But if the client would be deeply uncomfortable taking that level of risk, the recommendation still needs to reflect that.

Equally, if the client is comfortable with risk but the cashflow shows their income would be under pressure after a fall, that needs to be addressed.

The point is not to let the tool make the decision.

The point is to use the tool to support better reasoning.

 

A few questions worth asking

When we are preparing or reviewing files, these are the types of questions that help sense-check whether capacity for loss has been properly evidenced:

• If this investment fell in value, what would actually change for the client?
• Would essential spending still be covered?
• Is the client relying on this money now, soon, or much later?
• Do they have other secure income or assets available?
• Would a fall create a practical problem, or mainly an emotional one?
• Has the client’s position changed since the last review?
• Are we describing their ability to absorb loss, or their feelings about loss?

That last question is often the most revealing.

Because many weak capacity for loss explanations are not really about capacity for loss at all.

They are attitude to risk comments wearing a different label.

 

FAQ: capacity for loss in suitability reports

What is capacity for loss? Capacity for loss is the client’s financial ability to absorb a fall in investment value without it materially affecting their standard of living, income needs, or financial plans.

Is capacity for loss the same as attitude to risk? No. Attitude to risk is about how the client feels about investment risk. Capacity for loss is about what would happen financially if the investment fell in value.

Can a cautious client have a high capacity for loss? Yes. A client may dislike risk but still have enough secure income, assets, and financial resilience to absorb investment losses.

Can a confident client have a low capacity for loss? Yes. A client may be willing to take risk, but if they rely on the money for essential income or near-term objectives, their capacity for loss may be limited.

How should capacity for loss be evidenced in a suitability report? It should be linked to the client’s actual circumstances, including income, expenditure, assets, liabilities, time horizon, objectives, reliance on the money, and what a fall in value would mean in practice. A brief explanation is fine, as long as a more in-depth assessment is evidenced on file.

 

The practical point

For me, the biggest risk is not that firms forget to mention capacity for loss.

It is that they mention it, but do not quite evidence the right thing.

A client’s attitude to risk tells us how they feel about taking risk.

Their capacity for loss tells us what would happen if the risk became real.

Both matter. But they answer different questions.

And when the two point in different directions, that is where the file needs the most care.

A cautious client may still have high capacity for loss.

A confident client may still have low capacity for loss.

It is worth checking the wording before it becomes a suitability issue.

If this feels familiar, or if you are seeing the same thing come up in files and reviews, it may be worth taking a closer look at how capacity for loss is being evidenced across your advice process.

 

There’s a phrase I think advisers are going to hear a lot more this year.

“I’d quite like some exposure to AI.”

It sounds straightforward enough.

And to be fair, it’s not an unreasonable thing for a client to ask. AI is everywhere. It’s in the news, in workplace tools, in market commentary, in fund updates, and probably in half the conversations clients are having outside the advice meeting too.

But from an investment point of view, “AI exposure” is a much messier phrase than it first sounds.

Because what does it actually mean?

Does it mean buying the big technology names building the models?

The chipmakers supplying the kit?

The cloud companies hosting the workloads?

The data centres housing it all?

The energy infrastructure powering it?

Or the newer GPU cloud providers trying to rent out capacity to anyone who can’t get enough from the usual hyperscalers?

All of those could sit under the AI banner.

But they are not the same investment.

And that is where this starts to become a proper advice conversation, rather than just a topical investment theme.

 

The bit under the bonnet

For a while, most of the AI conversation was about what the models could do.

Could they write? Could they code? Could they analyse? Could they replace jobs? Could they make businesses more efficient?

That was the exciting bit.

But now the conversation is shifting slightly.

Because the more AI gets used, the more obvious the infrastructure problem becomes.

AI needs chips. It needs memory. It needs data centres. It needs cooling. It needs huge amounts of power. And it needs companies willing to spend a lot of money before the full commercial return is completely clear.

McKinsey has written about how AI workloads are changing the way hyperscalers think about capacity, power and data centre design, with inference expected to become a much bigger part of demand over time:

The next big shifts in AI workloads and hyperscaler strategies

That’s the part I think is easy to miss.

Training a model is one thing.

Running it constantly, for millions of users and businesses, is another.

And once you look at it that way, AI stops being just a software story.

It starts looking a lot more like an infrastructure story.

 

Big spending doesn’t automatically mean easy returns

The numbers being quoted around AI infrastructure are huge.

IDC has reported that AI infrastructure spending reached around $90 billion in Q4 2025, and expects spending to keep climbing sharply over the next few years:

AI Infrastructure Spending Caps Historic Year at ~$90 Billion in Q4 2025; 2029 Spending to Eclipse $1 Trillion

That sounds exciting.

But big spending cycles are not always clean investment opportunities.

Someone has to fund the build-out.

Someone has to take the risk on demand.

Someone has to buy the chips, lease the space, secure the power, upgrade the network, and hope that future AI revenues justify what is being spent today.

And that is before you get into the question of valuations.

A client might hear “AI infrastructure” and think, “Great, that sounds like a sensible way to invest in the theme.”

But it may still come with a lot of the same risks as other specialist themes:

concentration,

high expectations,

expensive assets,

fast-moving technology,

and the possibility that the market has already priced in a lot of good news.

It might be a good investment.

It might not.

But it definitely needs explaining properly.

 

The overlap problem

This is probably the most practical bit for advisers.

A client may think they are adding AI exposure for the first time.

But they may already have quite a lot of it.

If they hold a global equity fund, a US equity fund, a passive index tracker, or a growth-focused multi-asset portfolio, there is a fair chance they already have exposure to the big AI names.

Microsoft.

Nvidia.

Amazon.

Alphabet.

Meta.

Maybe not directly in huge standalone positions, but enough for the theme to already be influencing performance.

So when a specialist AI fund, infrastructure fund, or data centre-related investment is added on top, the question is not just:

“Is this a good theme?”

It is:

“What does this add that the client does not already have?”

That is a slightly less exciting question.

But it is the one that matters.

Because without that check, “adding diversification” can quietly become “doubling up on the same story”.

 

Where the chain gets longer

The other thing I find interesting is how wide the AI value chain has become.

At one end, you have the familiar technology names.

But behind those, you have:

· chip designers,

· semiconductor manufacturers,

· memory suppliers,

· cloud providers,

· data centre owners,

· cooling specialists,

· energy companies,

· grid infrastructure,

and even private credit or infrastructure vehicles funding parts of the build-out.

That doesn’t make the theme bad. If anything, it shows how significant it has become.

But it does mean advisers need to be clear about which part of the chain a client is accessing.

Because buying Nvidia is not the same as buying a data centre operator.

And buying a listed infrastructure fund with some data centre exposure is not the same as buying a pure AI thematic fund.

They may all benefit from the same broad trend.

But they will behave differently.

They will carry different risks.

And they may suit different clients for very different reasons.

 

A better client question

Instead of asking:

“Do you want exposure to AI?”

I think the better question is:

“What part of the AI story are we trying to access?”

That changes the conversation.

Because then you can separate out:

the exciting bit,

the infrastructure bit,

the valuation bit,

and the suitability bit.

For example, a client might say they want AI exposure because they believe it will drive long-term growth.

 

That could be reasonable.

But the file still needs to show why the chosen investment is the right way to access that growth, why the level of risk is appropriate, and how it fits with everything else they already hold.

The FCA’s Consumer Duty work on consumer understanding is useful here. Clients need information they can actually use to make informed decisions, not just a neat label on a fund:

Consumer understanding: good practice and areas for improvement

And with specialist themes, that matters even more.

Because the client may understand the headline.

They may not understand what they are really exposed to underneath it.

 

A few simple checks

Before recommending or documenting an AI-related allocation, I’d want to be able to answer a few plain questions.

What does the investment actually hold?

Not the theme. The underlying exposure.

Is the portfolio already exposed to the same companies elsewhere?

If it is, are we comfortable with that?

What role is this playing?

Is it a long-term satellite? A growth tilt? A thematic allocation? Something else?

What could go wrong?

Not just “markets can fall”. More specifically, what happens if AI spending slows, energy constraints bite, chip supply improves, valuations reset, or revenues take longer to arrive?

And finally:

Could the client explain it back in normal language?

That last one is easy to underestimate.

But if the client can only describe the investment as “AI”, we may not have gone far enough.

 

The line I’d be careful with

I’d be cautious about simply saying:

“This gives you exposure to AI.”

It might be true.

But it is a bit too neat.

A clearer version might be:

“This gives you exposure to companies involved in building and supporting AI infrastructure. That could benefit if demand keeps growing, but it also increases exposure to a concentrated and fast-moving theme.”

Less catchy.

Much more useful.

And probably easier to stand behind later.

 

Final thought

AI infrastructure is a genuinely interesting area.

It may well create long-term investment opportunities.

But it is not as simple as “AI is growing, so this should do well”.

There is a lot sitting underneath the theme now: capital spending, energy, data centres, chips, memory, cloud capacity, valuations, and client expectations.

So when clients ask about AI exposure, the most useful thing an adviser can do may be to slow the conversation down slightly.

Not to put them off.

Just to make sure they know what they are actually buying.

Because “AI exposure” is not one thing.

And that is exactly why it needs advice around it.

“This all sounds positive… so why doesn’t it feel straightforward?”

That’s the tension I keep coming back to when reading outlooks for this year.

Most of them are broadly upbeat.

Growth holding up.  Rates easing.  Investment flowing into the system.

Even the Tatton outlook points to a supportive backdrop, at least in the first half of 2026

So on the face of it, this should be a relatively simple environment to advise in.

But it isn’t.

 

What’s actually going on

The short version is this:

Markets are supported. But they’re not moving together.

You’ve got three big forces all happening at once:

1. Central banks are easing (slowly)  That supports asset prices generally.

2. Governments and companies are spending again  Infrastructure, defence, AI. There’s real money going into the system.

3. That spending is very concentrated  Not everything benefits equally.

 

Which creates a different kind of market

Instead of everything rising together, you get:

• Some sectors pulling ahead

• Others lagging or drifting

• Performance that looks inconsistent across portfolios

Tatton describe it as “rotation”, but in practice it just feels uneven.

And that unevenness is what’s catching clients off guard.

 

The conversations this creates

You’ve probably had versions of these already:

• “Why are we not more exposed to X?”

• “Why has this part underperformed when the market’s up?”

• “Why did we move away from something that still looks strong?”

And the honest answer is usually:

“Because the market isn’t rewarding everything equally anymore.”

That’s a harder conversation than:

“Markets have gone up/down.”

 

Where portfolios can drift (without anyone noticing)

This is the bit worth paying attention to.

In this kind of market, portfolios can slowly become:

• Overexposed to what’s worked recently  (because it’s hard to argue against it)

• Underexposed to areas that might benefit next  (because they haven’t started moving yet)

• More concentrated than intended  (especially around big themes like US tech or AI)

Tatton make the point that capital is being pulled into specific areas, which can leave others behind

That’s exactly where drift creeps in.

 

A simple way to sense-check positioning

Not a full portfolio review.

Just a quick check you can do this week.

1. Where is performance actually coming from?  Is it broad, or is it a handful of positions doing the work?

2. If those areas pause, what happens?  Does the portfolio still feel balanced?

3. Are you holding anything mainly because it hasn’t “had its turn yet”?  Be honest on that one.

 

What I’m seeing work well

The advisers who seem most comfortable right now aren’t chasing the themes.

They’re doing a couple of things consistently:

• Keeping portfolios properly diversified, even when it feels boring

• Being clear with clients that returns won’t look smooth across everything

• Explaining that rotation is part of the process, not a problem to fix

It’s less about predicting what wins next.

More about avoiding being too exposed to what’s already won.

 

A small shift in how you explain it

One thing I’ve heard work well with clients:

Instead of:

“We’re positioned for growth”

It becomes:

“Different parts of your portfolio will perform at different times. That’s deliberate.”

It sounds simple, but it sets expectations properly.

And it avoids the constant comparison to whatever’s doing well this month.

 

Final thought

2026 doesn’t look like a bad year for markets.

But it does look like a year where:

• Returns are less evenly distributed

• Client expectations need managing more actively

• Portfolio discipline matters more than predictions

Which, in reality, is where good advice shows up.

If this is the kind of thing you’re running into with clients, you’re definitely not on your own.

You don’t need me telling you that there’s lot of noise around AI in advice right now.

FCA testing. Big firm involvement. Oversight, governance, all the right words.

Important, yes.

But most firms aren’t there yet.

They’re still trying to get comfortable with something much simpler…

Their own advice process.

And AI has a habit of exposing that pretty quickly.

 

The bit that doesn’t get said out loud

Ask a firm how their advice process works, you’ll get a solid answer.

Ask how consistent it is across advisers…

That’s where it gets a bit vague.

Because in reality:

• Two advisers can take completely different routes to the same outcome
• Two paraplanners can justify it in different ways
• Two QA reviewers can score it differently

And it still passes.

We’ve all seen it.

It’s just been… manageable.

Until now.

 

Why the FCA is leaning into “oversight”

This isn’t about the FCA suddenly getting excited about AI.

It’s about removing wiggle room.

If tech is helping produce advice faster, then firms should be able to:

• Show how decisions were made
• Demonstrate consistency
• Actually evidence suitability, not just describe it

That expectation didn’t start with AI.

Consumer Duty already set that direction.

AI just shines a light on where things don’t quite stack up.

Understanding the advice market: financial advice firms survey 2025

 

Where things start to slip

We’re seeing versions of this more and more.

An adviser uses AI to sense-check a recommendation.

It comes back well written. Clean. Logical.

They tweak it. Send it through.

Job done.

But when you slow it down:

• The client objective is a bit loose
• The risk discussion could apply to anyone
• The product justification sounds right, but doesn’t quite prove anything

The document looks better.

But the thinking underneath hasn’t really changed.

That’s the bit that matters.

 

Where most firms actually are

Not behind. Not ahead.

Just… in the middle.

• Trying bits of AI
• Not fully embedding it
• Slightly unsure how comfortable they should be

While still:

• Relying on QA at the end
• Accepting variation between advisers
• Fixing things after they’re written

That’s fine at a certain scale.

It gets harder when everything speeds up.

 

The shift that actually matters

The firms getting this right aren’t the ones shouting about AI.

They’re the ones tightening what sits underneath it.

Things like:

Making advice logic explicit Not “this feels suitable”, but why, in a way someone else would land in the same place.

Reducing interpretation Less room for “it depends who reviews it”.

Catching things earlier Not waiting until QA to find the gaps.

Taking consistency seriously Because that’s where most of the real risk sits.

 

This isn’t about being ahead

It’s about not drifting behind your own output.

AI speeds things up.

If your process doesn’t keep up, the gap between what you produce and what you can confidently stand behind gets wider.

Quietly at first.

Then very obvious.

A better question to ask

Instead of: – “Are we using AI properly?”

Try:

• Would we stand behind this advice if someone challenged it line by line?
• Can we explain the logic without leaning on how nicely it’s written?
• Would two different reviewers land in the same place?

If the answer is “depends”, that’s probably where the work is.

 

Bringing it back to reality

Most firms don’t need an AI strategy deck.

They need a tighter, more consistent advice process.

Because once that’s in place, AI helps.

Without it, it just makes things look better than they actually are.

If this feels familiar, don’t worry, you’re not the only one.

These conversations are happening quietly across a lot of firms right now.

If you’re seeing it too, we’re always up for a chat.

 

I’ve just got back from a week in beautiful Andalucia.

A little bit of sun, no laptop, barely checked emails. For a few days I genuinely forgot what day it was, which feels like a win.

And then straight back into it.

Opened facebook, dipped back into a few of the groups and conversations I follow, and within minutes I was back into something I’ve seen come up again and again recently.

An adviser doing well. Growing. Winning new clients.

But also completely overwhelmed.

Too many reviews building up. Plenty of work coming in. Support in place… but still feeling stretched.

And the question that always follows:

“Should I hire or outsource?”

 

The replies are always interesting, but also… pretty consistent.

Outsource paraplanning. Hire someone. Train a junior. Use AI. Segment your client bank. Reduce new business. Batch your reviews.

All good advice.

Genuinely.

But also nothing most advisers haven’t heard before.

And I think that’s the bit we don’t really talk about.

 

Most advisers already know this stuff.

They know where the pressure is coming from. They know what they could hand off. They know what only they should be doing.

If you asked them to map it out, they’d probably get pretty close.

But in reality… they’re still holding on to more than they need to.

 

And I get it.

Letting go of work you’ve always done is uncomfortable.

Especially when it’s client-facing, or something you’ve built your reputation on.

Paraplanning is a really good example of this.

We see this a lot with firms we work alongside.

Advisers still writing their own reports. Still checking everything end to end. Still involved in parts of the process they don’t really need to be in anymore.

And it feels quicker in the moment.

But zoom out a bit and it’s usually where things start to bottleneck.

 

What’s also interesting is how the advice tends to split.

You’ve got one thread saying:

👉 outsource now, free up time, take the pressure off

And another saying:

👉 hire, train, build your own team properly

And they’re both right.

But they’re solving slightly different problems.

Outsourcing is about immediate relief.

Hiring is about long-term structure.

And most firms are trying to answer both at the same time, while already stretched.

Which is why it feels messy.

 

What no one really wants to do is the bit in the middle.

The slightly boring bit.

Sitting down and properly looking at how work actually flows through the business.

Not in a fancy way. Just honestly.

• Who books the meeting
• Who prepares the file
• Who writes the notes
• Who drafts the report
• Who checks it
• Who sends it

And then asking:

👉 why am I involved in this part?

That’s usually where things start to shift.

 

Because more often than not, the issue isn’t:

“We don’t have enough people”

It’s:

“We haven’t made it easy to hand work over”

So even when firms do hire, or do outsource, the pressure doesn’t fully go away.

It just moves.

 

Paraplanning comes up a lot in these conversations for a reason.

Not as some big strategic overhaul.

Just as a way to create space when things start stacking up, especially around reviews.

Outsourcing reviews. Getting support during peak periods. Taking some of the report writing off advisers’ plates.

It’s not revolutionary.

But it works.

 

Hiring, on the other hand, is brilliant when you’re ready for it.

But it takes time.

Time to train. Time to build trust. Time to get processes right.

And that’s usually the thing firms don’t have when they decide they need to hire.

So you end up in that slightly painful phase where:

You’re busy → you hire → you’re even busier trying to train → everything feels worse before it gets better

 

One thing that keeps coming up in these conversations is:

“Where will you find the time to train someone?”

And that’s exactly it.

Everyone wants more capacity.

But creating it properly takes time and effort in the short term.

 

So the answer to “hire or outsource?” is rarely one or the other.

It’s usually:

Create some breathing space first. Sort the process out so work can actually be delegated. Then decide what you want to build in-house and what you want to keep flexible.

Not very exciting.

But it’s honest.

I don’t think most advisers are stuck.

They’re just holding on to too much for a bit too long.

And I get why.

It’s just usually the thing that needs to change.

It’s not surprising that there’s a lot of confusion about suitability reports. Once you know where to look in the FCA Handbook, the FCA’s requirements for suitability reports are, in reality, relatively concise. Yet over time, reports have grown far longer and more complex – less as a result of direct regulatory demand, and more through layers of industry interpretation and a collective desire to ‘play it safe’. Throw in the influence of Financial Ombudsman Service decisions and their implications for suitability reports, and things start to feel quite complicated.

This can lead to 60-page suitability reports, including everything from the client’s personal circumstances, to critical yield information, to output from your pension switch comparison software of choice.

On the surface, this approach might feel like it’s reducing the risk of being called out by the FCA or a file checker – but in reality, it can leave the client swamped by information and unsure of what they’re actually agreeing to. It also means that the paraplanner’s focus is split across so many areas that the really crucial bits – the parts the FCA say must be included in a suitability report – don’t receive the attention they deserve, and can be treated as an afterthought rather than one of the main building blocks of a good suitability report.

This blog gets back to basics, with a focus on what definitely needs to be included in a suitability report. These are the areas that can make or break a good (and FCA compliant) suitability report.

 

Suitability Report Essentials – According to the FCA

In COBS 9.4, the FCA states that a suitability report must:

• Confirm the client’s demands and needs (i.e. their objectives)

• Explain why the recommendation is suitable for the client

• Explain any possible disadvantages of the recommendation

This has been extended slightly for MiFID business in COBS 9A.3.3, but mainly covers the points above. It also adds that the suitability report must:

• Include information on whether the recommendation is likely to require the client to seek a regular review

COBS9A.3.4 then goes on to remind us to ensure that the report is ‘clear, fair and not misleading’.

For pension recommendations, there are two other points to consider: stakeholder pensions and workplace pensions.

This can be quite hard to believe when you’re used to working with very long suitability reports, but that is a summary of what the FCA rules say must be in a suitability report. I believe that much of the extra material that has become standard in many suitability reports has come from the ‘assessing suitability’ section of COBS, which covers the research needed on file – but not necessarily in the report.

 

Assessing Suitability

This is covered by COBS 9.2 and COBS9A.2, and for most firms with a robust fact finding and information gathering process, this section should be covered by your files – so there is no need to put this information in the report. A part that’s worth looking at more closely in the context of suitability reports is the guidance on replacement business (covered by COBS 9A.2.18 & COBS 9A.2.18A).

This section covers the FCA’s guidance on the comparisons that need to be done when recommending a client switches to a new provider. This is for the file and does not necessarily need to go into the suitability report unless it helps the client understand something, helps explain why the recommendation meets their objectives, or is linked to a disadvantage.

The FCA leaves it to you to decide which comparisons you actually do, and they don’t say it needs to go into the report. Their guidance states that “a firm must collect the necessary information on the client’s existing investments and the recommended new investments and undertake an analysis of the costs and benefits of the switch, such that they are reasonably able to demonstrate that the benefits of switching are greater than the costs.” Notably, this doesn’t just mean a numerical comparison of charges – it includes other non-numerical costs or benefits that might be relevant to the client, such as the flexibility on offer, the investments available, or other ways the plan might help the client achieve their objectives.

 

Consumer Duty

The existing ‘clear, fair and not misleading’ guidance was taken to another level by Consumer Duty, with its ‘Consumer Understanding’ outcome, and is detailed in ‘PRIN 2A.5 Consumer Duty: retail customer outcome on consumer understanding’. This part of the Handbook states that you must “provide relevant information with an appropriate level of detail, to avoid providing too much information such that it may prevent retail customers from making effective decisions.”

Take a critical look at your suitability report templates and whether they’re helping clients make informed decisions. If you’ve got feedback from clients that they don’t read them, this is a red flag that they could be too long or difficult to understand.

This is also echoed by the way the FOS assess complaints. Lack of client understanding or things not being clear are common themes.

 

Conclusion

Ultimately, a good suitability report is about clearly explaining to the client what you are recommending, why it meets their objectives, and what the potential downsides are.

There will always be a place for detailed analysis, comparisons and supporting evidence – but much of this belongs on file, not in front of the client. By focusing on what the FCA actually requires, and using judgement about what genuinely helps the client understand the recommendation, firms can produce reports that are both compliant and meaningful.

In many cases, less really can be more.

War, Energy, and the New Fragility in Supply Chains

This summer has been a reminder of how fragile the global investment environment remains. Conflict and instability in Eastern Europe and the Middle East continue to ripple into energy prices, and the knock-on effect for UK investors is real.

The challenge for advisers is balancing client portfolios against this backdrop of energy vulnerability and disrupted supply chains. For many, the lesson is diversification: resilience doesn’t come from betting on a single sector, but from blending exposures across asset classes and geographies.

Professional Paraplanner recently underlined this point – fragility isn’t going away, so portfolios must be designed to flex with events rather than try to predict them.

 

High Turnover Strategies – A Contrarian Defence?

Another theme sparking debate is the value (or risk) of high turnover strategies. The conventional wisdom is to minimise churn to keep costs and tax drag low. But some managers argue that in volatile conditions, an active, nimble approach can add value.

The question advisers need to ask: is this discipline or reaction? Turnover in itself isn’t a strategy – it must be paired with a clear rationale, whether it’s capturing opportunities in shifting markets or mitigating downside risk. As ever, transparency on cost and risk to clients is the priority.

 

TIME:Advance – A Case Study in Investor Confidence

One of the standout updates this quarter has been from TIME:Advance, which continues to set itself apart in the Business Relief (BR) market.

• Top independent rating retained – Martin Churchill’s 2025 report again placed TIME:Advance as the most highly rated BR provider, noting their avoidance of leverage in renewables and their external valuations via BDO.
• £1.5bn AUM milestone – Assets under management have surged 50% since 2023, underlining both investor demand and confidence in the proposition.
• Rights Issue top-up window – Existing investors can still participate until 17 October (with cheques due by the 15th). Importantly, shares are backdated to the original investment date, which could qualify immediately for BR relief.
• Structured CPD webinars – Their “When BR…” series has attracted over 1,000 sign-ups, reflecting adviser appetite for practical CPD.

Behind these milestones sits a wider story: HMRC’s IHT receipts are soaring. In just the first five months of 2025/26, collections hit £3.7bn, up 5% year on year. Forecasts suggest receipts could exceed £9bn this year and £14bn by 2029–30. Frozen thresholds and rising asset values mean the pressure is only increasing.

For advisers, the question is less about if clients are exposed to IHT, and more about how quickly the exposure is growing.

Market Movers

It’s not just inheritance tax shaping the landscape. UK retail investors withdrew £1.8bn from funds in August, a sixfold increase from the prior month. Whether this is tactical repositioning or deeper nervousness remains to be seen – but it reinforces the need for advisers to keep client communication clear, frequent, and evidence-based.

 

Practical Takeaways for Advisers

• Stress test diversification: Portfolios should be designed to withstand energy price shocks and supply chain volatility, not just short-term market dips.
• Interrogate turnover strategies: Ensure the rationale is clear and the cost/benefit transparent for clients.
• Engage with IHT planning early: Rising receipts are a wake-up call – Business Relief and estate planning solutions remain essential tools.
• Stay close to clients: With retail flows showing volatility, proactive communication is critical to client trust.

Final Word

At We Complement, our role isn’t to tell advisers what to recommend, but to help them frame advice that’s evidence-based, defensible, and clear for clients. Whether it’s BR planning, portfolio structuring, or suitability oversight, the goal is the same: advice that holds up in real life, not just on paper.

If this resonates with what you’re seeing, we’d love to hear from you.

– Paul

 

 

If you’ve glanced at the Spring Statement headlines and thought, “that was fairly uneventful”… you’re not wrong.

No big tax shocks. No sweeping reforms. Nothing that immediately forces a rethink of advice strategies overnight.

But that doesn’t mean nothing’s changed.

In fact, from what we’re seeing across firms this week, it’s the opposite. The calm headline is masking a lot of underlying movement. New allowances, frozen thresholds, and small rule changes are all stacking up into something advisers are going to be talking about with clients for the next few months.

And with the new tax year landing right as everyone switches off for Easter, there’s a bit of a strange gap between “change has happened” and “we’ll deal with it next week”.

So this felt like a good moment to pause and look forward, not back.

 

What’s actually changing this tax year?

A few key updates are worth having on your radar:

• ISA allowance remains at £20,000. No change, but still one of the simplest and most underused planning tools in some client segments.

• Dividend allowance at £500. Now low enough that more clients are drifting into tax without realising it.
• Capital Gains Tax allowance stays at £3,000.  Which continues to pull more everyday investors into CGT conversations.

• Income tax thresholds still frozen.  Which quietly increases tax over time, especially for clients with growing income or withdrawals.

• Pension allowances remain largely stable. But the ongoing conversations around pensions and lifetime planning aren’t going anywhere.

And Neil Jones’ piece in Money Marketing captures the tone well, a calm statement on the surface, but a busy year underneath:

Neil Jones: Spring Statement calm hides busy tax year ahead

 

What we’re hearing from firms

This week has been interesting.

There’s been a noticeable uptick in conversations around:

• Reviewing CIPs and CRPs

• Sense-checking existing client strategies

• Updating templates and assumptions

• Rechecking income, dividend, and CGT positioning

Not because anything dramatic has happened.

But because when you layer these small changes together, they start to shift the shape of advice.

And advisers know that.

It’s less about reacting to one big rule change, and more about asking:

“Does what we’re already doing still land in the right place?”

The bit that tends to get missed

The technical updates themselves aren’t usually the hard part.

It’s what happens next.

Because this is the time of year where a lot of firms fall into one of two traps:

1. Treating it as a one-off update  Quick review, tweak a few assumptions, move on.

2. Overcomplicating it  Trying to rebuild everything at once, just in case something’s been missed.

In reality, most of the value sits somewhere in the middle.

A more practical way to approach it

From what we’ve seen work well across firms, this kind of tax year shift is best handled as a structured check, not a scramble.

A few simple prompts we’ve been using in conversations this week:

1. Start with your existing advice, not new ideas  Where are clients now drifting into tax unintentionally?  Dividend income and CGT are the obvious ones this year.

2. Revisit your “default” recommendations  Are your standard approaches still as efficient as they were 12 months ago?

3. Sense-check client communication  Are you proactively explaining these changes, or waiting for clients to ask?

4. Look at consistency across advisers  Are teams interpreting the changes in the same way, or slightly differently?

That last one is the one that tends to creep in quietly.

Small regulatory or tax changes don’t just affect outcomes, they affect how consistently advice is being delivered across a firm. And that’s usually where the real work sits.

 

Why this year feels slightly different

None of these changes are new in isolation.

We’ve had frozen thresholds before. We’ve had allowance reductions before.

But what’s different now is the cumulative effect.

More clients are:

• Crossing into tax thresholds earlier

• Triggering CGT events more frequently

• Holding assets that need more active management

• Asking more questions about “why this, not that?”

Which means suitability conversations naturally become a bit more detailed.

Not more complicated, just… less assumptive.

And that’s where a lot of firms are focusing their energy right now, making sure the logic behind advice is still clear, consistent, and easy to evidence if needed.

That shift towards clarity and consistency is something we see every day in the work we do

 

One final thought before the long weekend

This probably isn’t something anyone’s rushing to deal with today.

And that’s fine.

But when things pick back up next week, this is likely to be where a lot of client conversations start.

Not with big, dramatic changes.

Just with small nudges that need explaining properly.

Because for clients, it’s rarely about the allowance itself.

It’s about understanding what it means for them.

There’s a moment most advisers have had.

You send something important to a client, maybe a recommendation, maybe documents, maybe something time-sensitive.

And then, just for a second, you hesitate.

Did that go to the right person? What if they forward it? What if it gets intercepted?

We don’t always say it out loud, but there’s a quiet discomfort with how much of the advice process still runs through email.

And the reality is, that discomfort is justified.

 

Email isn’t just outdated, it’s exposed

We’ve got used to email because it’s easy. It’s familiar. Everyone has it.

But from a risk perspective, it’s doing a lot of heavy lifting it was never designed for.

The latest Cyber Security Breaches Survey 2025 makes that pretty clear. Phishing alone now affects 85% of businesses, making it the most common and disruptive type of cyber attack

If you want to dig into the findings, the UK Government summary is worth a read:

Cyber security breaches survey 2025

And this isn’t just the obvious scams anymore.

Attacks are:

• Targeted
• Personalised
• Often indistinguishable from legitimate communication

Some even use AI to mimic tone, writing style, and context.

Which means the weak point isn’t always your systems.

It’s your communication layer.

 

Why this matters more for advice firms

In most industries, a dodgy email is annoying.

In financial advice, it’s something else entirely.

You’re dealing with:

• Sensitive personal data
• Investment instructions
• Life savings, pensions, inheritances

If something goes wrong, it’s not just an IT issue. It’s:

• A client trust issue
• A regulatory issue

The FCA has been increasingly clear on operational resilience and protecting client data as part of good outcomes under Consumer Duty: https://www.fca.org.uk/firms/consumer-duty

And once that trust is shaken, it’s incredibly hard to rebuild.

 

The uncomfortable truth

Most firms haven’t consciously chosen email as their primary communication tool.

It’s just… what’s always been there.

But when you step back, it creates a few problems:

• No real control once it’s sent
• No guaranteed identity verification
• No consistent audit trail across conversations
• Heavy reliance on clients spotting red flags themselves

That last one is the bit that should make everyone pause.

Because we’re effectively asking clients to be part of our security framework.

 

What better looks like (in practice)

This isn’t about throwing everything out and starting again.

It’s about being more deliberate with how client communication is handled.

We’re seeing a shift towards more secure, controlled environments.

 

1. Moving sensitive communication off email

Not everything needs to leave your ecosystem.

Client portals and secure messaging platforms create:

• Controlled access
• Verified identities
• A consistent communication history

For example, this piece on Plannr’s mobile app shows how platforms are evolving to centralise and secure client interaction: https://professionalparaplanner.co.uk/plannr-technologies-launches-mobile-app/

 

2. Rebuilding trust through clarity, not just security

Security isn’t just technical.

It’s also about how things feel to the client.

If a client receives:

• A branded notification
• From a platform they recognise
• In a consistent format

They’re far more likely to trust it, and less likely to fall for something that sits outside that pattern.

There’s also a broader industry push towards improving digital communication standards, something covered well here: https://www.ftadviser.com/your-industry/2024/02/06/how-advisers-can-improve-client-communication/

 

3. Treating communication as part of your advice process

This is the big one.

Communication isn’t just admin. It’s part of suitability.

If a client misunderstands something because:

• It was buried in an email chain
• Sent as an attachment they didn’t open
• Or mixed in with five other threads

That’s not just inconvenient.

It can affect outcomes.

 

A quick sense-check for your firm

If you’re not sure where you stand, these are worth asking:

• Would we be comfortable if every client email we send was intercepted?
• Could we prove exactly what a client has seen and acknowledged?
• Are we relying on clients to identify suspicious messages themselves?
• Do our communication tools reflect the value and sensitivity of the advice we give?

If any of those feel a bit uneasy, you’re not alone.

 

This isn’t about fear, it’s about maturity

Cyber risk isn’t new.

What’s changed is the level of sophistication and the expectation around how firms respond to it.

We’re also seeing a shift in how businesses think about it internally.

The survey highlights increasing adoption of things like:

• Cyber risk assessments
• Formal security policies
• Business continuity planning

But interestingly, only a relatively small proportion of firms consider cyber risk deeply when choosing new software

Which probably explains why communication is still lagging behind.

 

Final thought

Most advice firms spend a lot of time refining:

• Investment strategies
• Suitability reports
• Client journeys

But the way those things are actually delivered to clients often hasn’t kept up.

And that gap is where risk creep in.