Posts in Professionalism
Keep holding on: FASEA's delay and deferment

Smarter compliance. If you were registered on the adviser register prior to 1 January 2019, and preparing for the exam or the qualification, you’ve been given a temporary reprieve. The Assistant Minister for Financial Services, Superannuation and Financial Technology, Jane Hume, has thrown you a lifeline by announcing a 2-year extension for the FASEA qualification to 1 January 2026, and a 1-year extension for the FASEA approved exam to 1 January 2022. This article explores the deferment and its practical impact. It even offers practical solutions for those advisers hanging on by their fingertips and wondering how to move forward.

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Hang on: Reacting to FASEA exam results

Smarter Compliance. After months of apprehension and uncertainty, almost 600 advisers sat the inaugural FASEA exam and over 90% passed. This result would normally be interpreted as a positive one, but many people have simply seized on the result and dismissed the exam entirely. The high pass rate may be reassuring, disappointing, both or neither but there’s a high chance that it can be misleading. This article explains why most advisers should continue to prepare for a challenging examination of their knowledge and capability.

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Care Factor?: FASEA's view of "Client Care and Practice"

Smarter Compliance. Professional advisers understand that they’re now required to commit to a programme of Continuing Professional Development (CPD) that is consistent with FASEA’s requirements to “develop, maintain and apply a high level of relevant knowledge and skills”. Standard 10 of the FASEA Code of Ethics articulates expectations reinforced by FASEA’s FPS004 CPD Policy outlining mandatory competency areas. One of those competency areas is “Client Care and Practice”. We’ve been deluged by advisers asking what this means in practice. In addition to offering Licensees a practical perspective this article outlines how an innovative reg-tech compliance platform, OpenAFSL, can optimise their approach.

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No "bad moon rising": The FASEA Exam

Smarter Compliance. Some advisers seem to fear the FASEA exam even more than the inevitable Zombie apocalypse. Their apprehension is understandable but only legitimate if they ignore their deep, practical understanding of the the financial services laws and the challenges of dealing with retail clients. Any adviser currently authorised by a responsible Licensee should have the the knowledge and the practical wisdom they need to satisfy FASEA. This article addresses advisers’ apprehension and provides some tips for managing it.

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Where FASEA gets it right: Training and Competency

Smarter Compliance. Effective education and ongoing training is the bedrock of every profession. So how can an advice profession emerge from an industry that prefers validation and convenience over development, engagement and deliberate practice? In our view, it can’t. In this article, we explore Continuing Professional Development from a different perspective - the sustainability of advice businesses - and argue that FASEA are right to push for tailored, engaging and challenging CPD.

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Regulatory "jazz hands": FASEA's Code of Ethics

Smarter Compliance. FASEA Code of Ethics is more a “set of principles and core values” than detailed rules, but it’s a principles based model that provides the parameters for ethical and professional conduct. It’s driven by admirable intent but the ambition and inchoate aspirations of the Code of Ethics threatens the sustainability of the profession it hopes to shape and confirm. This article ponders the inconsistency between the laws and the Code and highlights three ways that its more impractical provisions may affect the emerging advice profession.

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FASEA: Changing CPD requirements mid-flight

Smarter Compliance. The new Continuing Professional Development (CPD) Standards released by the Financial Adviser Standards and Ethics Authority, provide useful guidelines for transforming the profession. Unfortunately, depending on your perspective, they were delivered either too late or too early for most licensees. One could complain, but, when you’re in mid-flight, your only real option is to adapt to the conditions and do everything you can to ensure you stick the landing. Sure, the flight metaphor is overworked but the article quotes David Bowie and is packed with the analysis and insights you need to operationalise these requirements. Hurry, 31 March 2019 will be here before you know it.

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Why most SMSF advice sucks: Five common errors

Smarter Compliance. Since their introduction in 1999, the popularity of the SMSF has remained relatively constant despite the ups and downs experienced within the share market, housing market and industry. We review a lot of advice. While our experience with SMSF doesn’t entirely accord with ASIC’s view that 90% of SMSF advice is ‘poor’, we have noticed some common issues in the advice we have reviewed. This article discusses five elements you need to address to ensure that your SMSF advice doesn’t “suck”.

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The examined life: FASEA, facts and the future of advice

Smarter Compliance. We are now on the eve of the implementation of the Corporations Amendment (Professional Standards of Financial Advisers) Act. FASEA and this legislation will significantly change the training, education and ethical standards for financial advisers and reshape the advice profession. This article explores the significance of the proposed change in education standards, maps out the practical differences and draws on similar examples to highlight the facts that advisers will need assured support to weather these changes.

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Advice, file-notes and adverse inferences

Despite the emphasis on regulated documents, and the increasing use of technology, advice has an oral foundation. Unfortunately, memory is imperfect. In reality, a failure to appropriately document client conversations, answers or agreements can challenge your credibility and expose you to additional risk. Poor file-noting may not be fatal for you, but in the event of a claim or dispute, courts may draw adverse inferences from scant or non-existent file-notes. This article addresses these risks and suggests ways you can avoid undercutting your professionalism or prejudicing your defence.

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FASEA's proposed exam: Looking for a complication

The popular view of acceptable 'training and education' for financial advice professionals seems to increase with each new licensee failure and public scandal. While most advisers admit the initial base was quite low,  expectations have increased dramatically. Now, with new education standards looming on the horizon, the landscape of financial advice looks to change forever. This is a great outcome for the emerging advice profession but FASEA’s proposed examination requires careful consideration.

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Don't do all the dumb things: Look (twice) before you leap

One of the biggest decisions made as an adviser will be choice of Licensee. The recent closure of Dover may not have come as a surprise, but the speed in which it occurred still came as a shock to many observers. As we have previously argued, choosing the right Licensee is perhaps the most critical decision an adviser needs to make. This article explores the questions advisers should ask of their prospective licensee and identifies the signs by which an adviser can identify the right time to leave their current licensee.

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Ask, and Ye shall receive: Better questions, better advice.

As an advice professional, you know you need to actively consider your client’s needs, objectives and relevant circumstances. You understand your Best Interest Duty but remember that this requires more than a basic understanding of your client or a superficial acknowledgment of their needs.Good advisers don’t just listen to their clients, they ask better questions. This article explains how (and why you should emulate them).

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Presentation Notes: The rise of reg-tech and the 'art' of the SoA

In a four-state tour in March 2018, one of our team, Sean Graham, spoke at the ifa Business Strategy Day on "The rise of regtech and the art of the SoA".

Positioned as an "update on the compliance and legislative landscape", the session challenged industry assumptions about disclosure, independence and professionalism and demonstrated why an investment in regulatory technology is critical for sustainability.

Here are the notes. 

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ASIC and the ‘art’ of the SOA

Licensees and advisers frequently complain about the Statement of Advice but, for a variety of reasons, few make any effort to find solutions. ASIC try to steer professionals in the right direction, but embracing clarity and accountability is too risky for those accustomed to hiding behind paper shields of disclosures and disclaimers. There is a solution to dull, dense and depressing documents but it requires advice professionals to transform a disclosure document into an article of accountability. 

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"What wound did ever heal but by degrees": FASEA, Professionalism and the future.

Those that attended the 2018 ASIC Forum were left in no doubt that the most popular remedy for the harms done by the financial services industry, is increasing advisers' education and competency. Abandoning ASIC's previous focus on culture in favour of a new focus on competency, care and ethics, a succession of Presenters criticised the industry's lack of professionalism and asserted that a "greater level of professionalism" was needed to restore trust. While there's still an alarming lack of clarity it's apparent that Financial Adviser Standards and Ethics Authority Limited (FASEA) is the blunt instrument intended to force the transformation of the advice industry.

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The problem with choices: Recommendations and alternative strategies

Previously, we've addressed aspects of the advice process including Goals and Objectives and File Notes, but with ASIC's recent focus on vertical integration (Report 562), we thought we’d discuss the perennial issue of alternate strategies.Cynics might suggest that alternative strategies are only included to make the advisers’ recommendation appear more considered, less biased and more reasonable. So, why do advisers need to ‘waste time’ thinking about and recording strategies and products that are inferior to what they recommended?

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It's the elephant again: Vertical integration and conflicts of interest

Vertical integration isn't necessarily a problem but successive ASIC reports tend to suggest that it is. Report 562 casts shade both on vertically integrated advice businesses and the effectiveness on their compliance resources. Report 562 summarises ASIC's review of "Australia's largest banking and financial services institutions" and notes that 75% of the advice reviewed was "non-compliant advice". Read the report to understand how vertical integration, the elephant in the room, needs to be addressed if an advice profession is to emerge.

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"We don't need no education": Reflections on competency, training and education

The popular view of acceptable 'training and education' for financial advice professionals seems to increase with each new licensee failure and public scandal. 

While most advisers admit the initial base was quite low,  expectations have increased dramatically. Now, with new education standards looming on the horizon, the landscape of financial advice looks to change forever.

This is a great outcome for the emerging advice profession.

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"What the hell am I doing here?": Goals, objectives and great advice

Your client’s goals and objectives are the foundation on which personal advice is built. Unfortunately, they are too often confused, used incorrectly or relegated in importance behind a client’s risk profile.  In other cases, they’re reduced to generic and undifferentiated statements that lack detail and the reflect the planner’s recollection rather than the client’s relevant personal circumstances. Practically, the most powerful statement of your clients’ goals and objectives are the ones that come from the clients and are recorded in as close to their own words as possible. After all, isn’t the fundamental purpose of personal advice to deliver what the client needs and wants? 

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