He's right, the PHS shouldn't be necessary just to get their materia. (Their equipment, however, is a loss if you don't take it off them. Well, a loss at least until next they're in your party!) Just click around the little buttons beside your materia slots during selection, and one of them will pull down into a menu that has the options "arrange" and "exchange." Exchange gives you a full character list with all their materia slots open for the plucking.
Of course, I think it's the triangle button that allows you to simply unequip the materia or accessory in a single click.
