A suitability report is the document that records a personal recommendation to a retail client and explains why it is suitable for them. To be compliant and useful, it must state the client's demands and needs, explain clearly why the recommendation meets their objectives, financial situation and risk profile, set out the disadvantages and risks fairly, and, under the Consumer Duty, be written so the client can actually understand it. The best reports are specific to the individual, not templated boilerplate, and AI is increasingly used to produce the first draft while the adviser retains judgement and ownership.
Key takeaways
- A suitability report is required for a personal recommendation to a retail client and must justify the recommendation.
- The core sections cover demands and needs, the recommendation and why it's suitable, risks and disadvantages, costs, and next steps.
- The Consumer Duty adds a hard test: the report must be genuinely understandable to the client, not just complete.
- The most common failure is generic, templated reasoning that isn't clearly linked to the specific client.
- AI can draft a strong first version in minutes, but a qualified adviser must review, exercise judgement, and own the recommendation.
What is a suitability report for?
Two audiences, one document. For the client, it explains what is being recommended and why, so they can make an informed decision. For compliance and the regulator, it evidences that the firm assessed suitability properly under COBS 9/9A and acted in the client's interests. A good report serves both, a bad one serves neither, being too dense for the client and too generic for the file.
The anatomy of a strong suitability report
1. Introduction and scope. What advice was sought, what this report covers, and, importantly, what it does not.
2. Your circumstances (demands and needs). A concise, accurate summary of the client's situation: objectives, time horizon, income and expenditure, assets and liabilities, existing arrangements, capacity for loss and attitude to risk. This is the foundation; everything after must connect back to it.
3. The recommendation and why it's suitable. State clearly what you recommend, then explain why it meets this client's objectives, fits their financial situation, and matches their risk profile. The reasoning must be specific, a reader should see the thread from the client's stated goal to the recommended solution.
4. Risks and disadvantages. Present the downsides fairly: investment risk, charges reducing returns, loss of existing guarantees or benefits, flexibility trade-offs, and anything the client should weigh. Balance builds trust and is a regulatory expectation.
5. Costs and charges. What the client will pay, initial and ongoing, product and advice, and the value the ongoing service delivers (a Consumer Duty price-and-value point).
6. Alternatives considered. Where relevant, why other options were discounted, showing the recommendation was a genuine choice.
7. Next steps and how to proceed. Clear, plain-English actions.
Write for the client, not the file
Under the consumer understanding outcome, comprehension is part of compliance. Practical habits:
- Lead with the client's goal, then the recommendation, then the reasoning.
- Prefer plain English; explain unavoidable jargon.
- Use the client's own numbers and words where possible, it proves the advice is personal.
- Cut anything that exists only to look thorough. Length is not rigour.
Common mistakes to avoid
- Templated reasoning that would read the same for any client.
- Objectives that don't drive the recommendation, captured, then ignored.
- Weak capacity-for-loss and risk linkage, the biggest source of upheld complaints.
- Burying the disadvantages or omitting them.
- Impenetrable prose the client cannot follow, a Consumer Duty failure regardless of technical accuracy.
How AI is changing suitability reports
Suitability reports are time-consuming, often the single biggest drain on paraplanning and adviser time. AI has changed the economics: a well-designed system can draft a full, structured report in minutes by pulling from the fact-find, analysis and recommendation, in plain language.
The critical guardrails:
- Human in the loop. The adviser reviews every report, checks the reasoning, and owns the recommendation. AI drafts; the adviser decides. This also keeps you outside restrictions on solely automated decisions under GDPR.
- Grounded in the client's data. The draft must reflect this client's actual circumstances, not generic filler. Report quality depends on the quality and structure of the underlying data.
- Secure by design. Client data should stay inside a platform built for regulated firms, not be pasted into a public chatbot (see our guide on data security for AI).
Used well, AI removes the drudgery and frees advisers for judgement and client relationships, while producing reports that are, if anything, clearer and more consistent.
Frequently asked questions
Is a suitability report legally required?
For a personal recommendation to a retail client, yes, the firm must provide a suitability report explaining why the recommendation is suitable, under COBS 9/9A.
What must a suitability report include?
At minimum: the client's demands and needs, the recommendation and why it is suitable, the risks and disadvantages, the costs, and how to proceed. It must also be understandable to the client under the Consumer Duty.
Can AI write a suitability report?
AI can draft a strong first version quickly, but a qualified adviser must review it, apply judgement, and own the recommendation. AI assists; it does not replace the adviser's responsibility.
How long should a suitability report be?
As long as needed to justify the recommendation clearly and no longer. Excess length reduces client understanding and is not evidence of rigour.
How do I make a suitability report Consumer Duty compliant?
Ensure the client can genuinely understand it: lead with their goal, use plain English, present risks fairly, and evidence the value of any ongoing charges.