Get SURFing: 4 steps for checking financial documents (and why it’s so important)
In my last post I explored some of the inner workings of financial institutions that give rise to errors.
Errors and omissions happen all the time, and can’t be avoided completely. But you can form habits to minimise any errors or omissions in financial documents that affect us—whether they’re our fault or someone else’s.
Financial documents play a big part in our lives. A mortgage is one of the largest financial commitments anyone will make in their lifetime. Unfortunately, errors can creep in such as:
- spelling mistakes in names and addresses
- autocorrect mishaps
- ‘fat finger’ errors where someone selected the wrong option or hit the wrong key
- good old-fashioned miscommunication (you said “Fixed Interest Only, Interest in Advance” and got “Fixed Interest Only”, which can be very costly to reverse).
Most of these mistakes can be fixed easily without much financial cost. But it still takes time, and when time is of the essence there’s very little room for error.
So how can we find and fix these errors before they become major headaches?
Introducing the SURF method
Most people fall into one of three types:
- Skimmers – “I’ve gone over it and it looks good.”
- Lay lawyers – “Give me a week to go over everything.”
- Too busy to be either – “Where do I sign?”
I’d like there to be another type—the SURFer. The SURFer makes it a habit to selectively Skim, Underline, Review and Focus on each document, and then double-check them before they’re signed. I call this the SURF process, and here’s how it works.
Step 1: Skim
While skimming can take many forms, it’s main purpose is to let you cast your eyes over a large amount of information and pick up anything important nestled in the text.
You should never sign or agree to anything without at least skimming it first. Make it a habit to skim everything—even the dreaded ‘Software Licence Agreement’. You’ll be surprised at what you’re actually agreeing to.
Step 2: Underline
During the skimming process, use a pencil to underline any information that catches your eye and you want to review. And yes, it’s important to use a pencil (rather than a pen or highlighter) so you can erase the pencil marks and not void the document.
Use parentheses to highlight schedules or large sections you want to come back to. These will typically contain large chunks of information relevant to the selections or options of your loan.
Identify the relevant places where you or other parties need to sign. But hold off on signing until you’ve completed the SURF process.
Step 3: Review
The review is the second most important part of the process, and involves thoroughly double-checking everything that was underlined.
Make sure you’ve underlined everything you want to focus on. If you have any doubt, underline it.
Step 4: Focus
Having skimmed and underlined everything you want to review, it’s time to focus on it without any distractions. Focus only on what you’ve underlined or highlighted with parentheses. You need to trust yourself that having gone through the Skim, Underline and Review steps you don’t need to look at anything else.
Using a separate sheet of paper, note any sections that need corrections or further explanation from your adviser or a legal representative.
Having completed the Focus step, and knowing you’ve done your best to check and understand what you’re signing, it’s time to do the actual signing. Don’t leave anything blank. Complete any sections that apply to you, and put a line through anything that doesn’t (as much as the document will allow you to).
Finally, sign the document. But don’t sign anything until your questions have been answered and any necessary corrections have been made.
Once you’ve completed the SURF process, there’s just one more thing you need to do: double-check the documents you’ve just SURFed through to make sure you’ve signed and completed everything.
Now that you know how the SURF process works, try using it whenever you need to sign anything—a binding nomination for your superannuation, your tax return, or even the disclaimer for a charity fun run.
This might all seem like overkill. But learning to SURF is less about the application and more about the habit. If you regularly sign documents without reading (or even knowing) what you’re agreeing to, it’s only a matter of time before you’re facing a situation you don’t want to be in.
Forming the SURFing habit will help you understand what you’re signing, and save you a great deal of stress and financial loss in the long run.