Pet hates of a file reviewer – the sequel

The top pet hates of a client file reviewer

October 2020

Alistair MacDougall

Technical Manager, ATEB Consulting

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Risk Disclaimer

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

It has been produced for information only. Views and opinions should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned. No action must be taken or refrained from being taken based on this content alone.

Key takeaways:

  • Understand how improving the access to relevant files can increase the speed and efficiency of file reviews by making it easier to find relevant paperwork
  • Understand the benefits of clear file labelling to help the process of reviewing client recommendations and avoiding creating a “needle in a haystack” situation where different filing systems are adopted within a firm
  • Gain a third-party perspective on the impact of poor or inconsistent file labelling and recording

Our article “Pet hates of a file reviewer” contained our top 12 pet hates, in reverse order. It was half in jest, and a bit in earnest. Since then we have identified a few more grumbles related to file checks, so we thought it was about time for a sequel! This time, the emphasis has shifted a little and is now almost entirely earnest – with not a lot of jest.

Find the needle – part one

In the dim and distant past, before we all started pretending that offices could be ‘paperless’, file reviews used to be done on actual paper-based files. Everything the file reviewer needed – client agreements, illustrations, research, suitability report etc. – was right there for the taking, easily found and nicely contained in a neat cardboard folder of some sort.

In this digital age, we, as external file reviewers, usually have relevant client files presented to us as soft copy – files loaded up to Office365 or emailed or made available by whatever other secure mechanism we agree with the adviser firm. While this does not provide the same tactile experience as a good old paper file, it does have the advantage of enabling file reviews to be done remotely rather than on site.

However, we often find that files are provided from the firm’s back office system, the system that is intended to result in that long dreamed of paperless office but which usually fails miserably to deliver that result. Many, if not most, of those files are in PDF format. This is not a problem per se but can create difficulties for reviewers when the PDF has been created in a non-searchable format. PDF files can be created with varying levels of ‘security’ by using optional settings in the save menu. Making the file non-searchable and non-editable means that we cannot readily find particular pieces of text in the document using the normal Ctrl F function, a frustration at the very least when, for example, the suitability report is often 40-50 pages long. And, if we do find the desired piece of text, we cannot copy paste that text into our file check feedback to support our findings.

Find the needle – part two

As if that isn’t bad enough, sometimes firms combine multiple client documents into one massive PDF document. We have even seen the whole of the client file stored in this fashion. Of course, such documents only have one filename, so it is not possible to tell what is in there until you look through it. Is the fact find there or elsewhere? What about the research? And the combined PDFs are usually several hundred pages long. If it is searchable, we have a fighting chance of finding what we need … eventually. If it is not searchable, then not only does it take a very long time to find the needle in the haystack, but we are not certain that the needle is in the haystack at all! And with a cryptic filename, we might not even know we are looking in the right haystack.

Find the needle – part three

But wait – it gets worse! Sometimes firms believe that the best way to give ATEB access to client files for review is by letting the file reviewer use their back-office system – either on site or remotely. That sounds very sensible … but it isn’t.

Sure, our access to client data can be controlled and data protection rules satisfied. And every piece of evidence we might want to see is bound to be there on the client record … somewhere. However, in practice, we find that ‘somewhere’ can be anywhere and nowhere. If the document exists, we need to know how and where to find it. If it is not there, we can spend a fair amount of time in a pointless search for it.

And, despite having fast broadband access, a back office system that runs pretty smoothly and quickly onsite, usually runs very much more slowly for the remote reviewer whose access is via several layers of security and software. With remote access, everything runs at what might generously be described as a very leisurely pace. It would be an exaggeration to claim that there is time to make a cup of tea while a document opens remotely but there is certainly time to count up to 10, 20, 30 … or more!

Snapshot

No point supplying documents simply for ‘good measure’ (the kitchen sink approach), we need documents that give the full picture succinctly. We sometimes see multiple documents with no explanation as to which one is the right one to check. For example, a second (almost identical) SR with an important change on page 25 but no sign posting to this, or several illustrations with no indication of which was actually provided to the client. We look for a succinct ‘snapshot’. ATEB has a standard format for requesting files – one that we have used for 20 years that allows us to get to the nub of the advice rapidly. Ill thought through systems (sometimes designed by the software supplier) create additional work for everyone. The software tail should not wag the efficiency and compliance dog! There is a risk that supplying too much distracting information or information in a poor format will result in the file reviewer missing something important.

Navigation

As business consultants (that includes conducting external reviews), we cannot be familiar with every back-office system out there, so navigating our way around a system we have never used before, or only use occasionally, means that everything takes longer to find. If emails or notes form part of the KYC then they should be stored as part of the ‘snapshot’ as KYC. If an email is sent as part of suitability confirmation, then it should be clearly noted that this is part of the ‘snapshot’ and stored with the client record.

Label

However, even where the reviewer knows the system, different firms, and often different individuals within the firm, have their own way of labelling files and their own idea of where a particular document should be stored. One firm we worked with had lots of documents that were simply named ‘scribble1.pdf’, ‘scribble 2.doc’ etc. It was impossible to guess what the document contained without opening it first. Very time consuming. Sometimes it turned out to be a handwritten note of a telephone call or meeting. Other times, it would be a scan of an illustration or even something irrelevant and random. A logical folder structure and a consistent file naming convention would not have been rocket science.

Risk Disclaimer

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

It has been produced for information only. Views and opinions should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned. No action must be taken or refrained from being taken based on this content alone.

Our view

If all this all sounds like a grumble (and maybe it is), there is a lesson here. By trying to simplify things, are we over complicating matters and creating another risk. If the file reviewer is left to ‘join the dots’ in our view it will create a significant risk that things are missed.

If giving external reviewers access to the firm’s back-office system is genuinely believed to be the best way to provide client files for review, then do not expect the reviewer to be an expert on your system or to know how different admin staff name and store files. Provide all the files in a folder named ‘File review’ or similar! Even we can work that one out!  Produce documents for that folder based on what the compliance company has requested and not necessarily on what the software company suggests.

Make PDFs searchable. That makes the file reviewer’s life significantly easier, but it also has benefits for firms. First, the less time it takes us to do the review, the less the cost of the review. Second, you never know when YOU might want to find something specific in the client file and it’s too late then to wish you had saved the PDF as a searchable file.

We reckon that, on average, the situations described here can add at least 30 minutes to the time it takes to do each review. Remember, the longer the review takes, the less efficient and more costly it is for all concerned.

Contact your usual ATEB Consultant if you would like to discuss our file checking services or contact ATEB here.

ATEB Consulting is a trading name of ATEB Business Solutions Limited Registered in England & Wales Reg. No: 5075208. Registered office: Evolve Business Centre, Cygnet Way, Houghton-le-Spring, County Durham, DH4 5QY.

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