Posts tagged Advice process
Focusing on better advice

Smarter Compliance. One of the critical failures of the compliance function is its tendency to identify and publish failures rather than promote and encourage better practices. Their reasons are understandable, but focusing on failures does a disservice to those advisers looking for practical ways to exceed minimum standards. In a break with Compliance’s standard operating procedure, this article will focus on five ways that advisers transcend compliance. Based on our review of 3,000 advice files, we’ve identified the consistent and considered practices great advisers adopt.

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Wants, needs and common confusion: distinguishing between goals and objectives

Smarter Compliance. Your client’s goals and objectives are the foundation on which great personal advice is built. Unfortunately, they are too often confused, used incorrectly or relegated in importance behind a client’s risk profile.  This article explains the difference between Goals and Objectives and provides some simple tips to avoiding common failures.

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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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Money for nothing (and the tricks are fees)

The Royal Commission into Misconduct in Banking, Superannuation and Financial Services exposed conduct - “fee for no service" - that shows contempt for both consumers and the law. Licensees' confected contrition aside, their ‘gold medal’ revenue generation strategies have further eroded their social capital and generated a wave of consumer outrage that is entirely justified. Unfortunately, those advisers that have worked hard to build sustainable businesses supporting their clients and servicing their needs, may find themselves collateral damage in this War of Accountability. This article looks at the FFNS issue, ASIC's response and proposes some immediate actions for advisers and licensees.

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Honesty, integrity and best interests

If you're an advice professional, you know that misconduct, mismanagement and consistently critical media coverage has undermined confidence in our industry and led calls for increased regulation. We have the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and, recently, the Australian Securities and Investments Commission pursued two high profile matters based, to a large degree, on the Licensees' failures to ensure that their representatives complied with the law and complied with their 'best interest' duties. In this article we take a constructively critical look at the duty, the conduct that necessitated it and the practicalities of satisfying your professional duties. (Hint - disclosure is not enough).

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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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Ineffective compliance: 'best interests' and supervision

Smarter Compliance. Since 2012, the Industry struggled first to understand, and then to operationalise, the 'best interest' duty. While the majority of Licensees eventually embraced this fundamental new duty, some participants failed spectacularly. This article considers how competent AFSL should review their compliance arrangements in the wake of ASIC v NSG and ASIC v WRM.

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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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The perils of safe harbours

The safe harbour provisions were intended to provide advisers with clarity about how to satisfy their best-interest duty, instead they have compromised it. In practice, checked steps and repeated commitments “to act in the client's best interests” are substituted for any real attempt to act in the clients’ best interests. Licensees, and advisers, obsessively focus on the “safe harbour” provisions, and how to demonstrate how their advice is in the client’s best interests, rather than obsessively focussing on providing advice that is, in fact, in their clients’ best interests. Safety, and better advice, requires advisers to set a new course. 

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