ActivityTracker

Glossary

What is a fact-find? The hard facts, the soft ones, and what MAS asks for

A fact-find is the part of the advice process where a financial advisor collects and records a client's personal and financial details, goals and attitude to risk, so that any recommendation that follows is based on the client's own circumstances.

How it works

It's usually done at the first meeting, on your firm's fact-find form or app. There are two kinds of fact. Hard facts are the numbers: income, assets, debts, monthly outgoings and the cover they already have. Soft facts are the rest: what they're worried about, what they want for their family, and how they feel about risk. The hard facts say what's possible. The soft ones say what matters.

In Singapore, MAS Notice FAA-N16 lists what you have to take reasonable steps to collect and record before recommending a product:

  • financial objectives and risk tolerance
  • employment status
  • financial situation, including assets, liabilities, cash flow and income
  • the source and amount of regular income, and financial commitments
  • current investments, including any life policy
  • whether the amount to be invested is a large part of their assets
  • for a life policy, the number of dependants, and how much support each needs and for how long

The fact-find is also checked afterwards. The first non-sales KPI in MAS's balanced scorecard, in Notice FAA-N20, is understanding the client's needs. Your firm looks at whether you collected and recorded everything relevant, whether you did it before or after advising, and whether you influenced the client's answers. For an advisor paid on commission only, 60% of each quarter's variable income is measured against these KPIs, and a poor grade reduces it.

Worked example, with a made-up client: a couple in their thirties with a child of two and a home loan. The hard facts take about 20 minutes: two incomes, the loan balance, S$30,000 in savings and one employer group policy. The soft facts come out when you ask what would happen if one income stopped. They want the loan paid off and their child's school fees covered. That answer, not the savings figure, is what the recommendation has to meet.

Where it shows up in your week

What a client tells you at the fact-find matters again at every review. The CRM keeps every message, meeting and note about a client on one page, so it's there next time you meet.

Questions advisors ask

Sources

Ask the soft questions too.

They're what the recommendation has to meet.

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