Every brokerage has gone about reinventing its advice process in a slightly different way over the past few years, but as we progress rapidly through the new regime, experts say that sticking to this process may start to become more of a challenge.
According to Compliance Refinery CEO Steve Burgess, many of the advisers he’s worked with have set high standards and goals for themselves when it comes to dealing with clients – however, those goals have also had a way of slipping down the list, and, ultimately, not getting done at all.
He said one of the main things advisers will need to do in the next few months is set some ‘strong controls’ in place, and also ensure that they are keeping solid records of every client interaction, as this will be key to every part of the advice process.
“We find quite a few advisers are very aspirational in what they communicate to clients, but when we look at it, they’re not actually meeting those obligations in terms of their review cycle,” Burgess said.
“It’s happened quite frequently where people say they’ll review their clients every six months or every year, and it’s turned out that it’s actually rarely if ever done, or it might have been a very passive offer of a review.”
“This is where things like file notes become very important,” he explained. “You need to have them incorporated into your record keeping, and every adviser should think about how they’re going to keep a record of the conversations they’ve had.”
Burgess said that keeping good records will help with drawing up advice documents, conducting reviews, and also setting up training – something he said is going to become increasingly important to stay on top of, particularly for larger FAPs overseeing large numbers of advisers.
“One of the things about the advice process is that you want to be able to take it from the beginning to the end, and understand every stage,” Burgess said.
“File notes are a very important part of that – that can be texts, emails, messenger apps, etc. Consider how they integrate into your record keeping policy, and make sure you’re able to pick them up when needed.
“When you’re being innovative around how you’re delivering your advice, you should bear in mind that you’ll need to do some training around that and have some strong controls in place. FAP directors need to stay on top of that training, and test your advisers to ensure they are sticking to it.”
Commenting on the future of the advice process, Strategi Group managing director David Greenslade said that all advisers should be looking to be as innovative as possible, and not to let the monitoring and review side of their businesses slide.
He said advisers can get a lot more creative with how they choose to do this, and that, ultimately, regular reviews can be a great way of up-selling and cross-selling different products.
“Whichever way you slice it, you still need to do the six step advice process,” Greenslade said.
“What we’re encouraging people to do is to think creatively. Start reaching out to your clients and asking how they would like their advice provided – both initial, and ongoing. Increasingly, you’ll see a change towards digitisation.”
“We also need to take reasonable steps to ensure our clients understand the nature and scope of our advice, and also the advice itself,” he explained.
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“Trying to put everything into one big advice document is therefore counter to what we need to do from a duties perspective, so segmenting stuff out and making it available as and when clients need it is a much easier way to go. We’re really encouraging people to be progressive.”
Burgess said that instead of having a single advice document, advisers could think about using video recordings, texts or a series of emails to provide information as and when needed, provided that this all exists within a strong framework with a good level of oversight.
“You can use whatever medium is going to work for you and your clients, provided you have some kind of audit trail around that,” he said.
“As an industry, we’ve done really well around identifying suitable products for clients when we first engage with them, but we haven’t really focused on that ongoing monitoring.
“What we need to be doing now is asking how we can jazz up our monitoring to make it more effective, and if you’re doing it really well, it can become an amazingly effective tool for cross-selling and up-selling, and building more meaningful and valuable relationships with your client.”
