How to improve your AA review

Hayley Carless

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How to improve your advice assurance review

1. Common areas of issue from advice assurance reviews2. Common areas of incidents and complaints3. Lessons learnt on issues and how to reduce them4. The advice process and corresponding relevant documents

Top 5 areas of issue – Advice Assurance reviews

Issue Why is it important?

The advice file does not contain adequate file notes and are of a sufficient quality • ‘Tells the story’. • Can assist if a complaint is received.• Can assist in demonstrating evidence of best interest.

The adviser has taken appropriate steps to conduct relevant product research • Evidences how the strategy of the advice is linked to, or might be achieved by the product recommendation.

• Demonstrates compliance with ‘safe harbour’ requirement for best interests duty.

The advice is likely to be in the best interests of the client • Clients who rely on personal advice can suffer financial detriment if the advice is conflicted or not of good quality.

• The client may not achieve their needs and objectives in the short/long term.

The advice document does not contain discussion on the expected advantages and implications of the recommended strategy

• Will assist the client to make a fully informed decision regarding the recommended strategy.

Implementation has not been carried out as agreed with the client (including accurately completing the application forms)

• Failure to implement correctly can lead to a financial detriment to the client and the client possibly not achieving their goals in the short/long term.

80% of top 5 issues are operational or ‘process’ related.

Common areas of complaints and incidents in 2014/15Internal office administrative errors

• e.g. delay/incorrect purchase of investment• Ensure advice is implemented in line with what is documented in the advice

document. If there is any variation to this, this needs to be noted on the file and the client should sign and acknowledge the variation.

Late issuance of FDS• FDS required to be issued annually where there is an ongoing fee arrangement• FDS must be issued no more than 30 days after the end of the 12 month period.• Root cause for late FDS is often failing to update FDS dates in Xplan or when a

new book of business has been purchased.• Your Practice Coach can help

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Common areas of complaints and incidents in 2014/15Exceeding superannuation contribution caps• Root cause can often be due to incorrect and/or insufficient research into

client’s superannuation contribution history. This includes insufficient fact finding.

Alleged inappropriate advice• Client not aware of certain features of strategy, costs, not invested in

accordance with preferred risk profile

Lessons learntSome Tips for minimising these types of issues:

Use available templates and follow the advice process

File note conversations and meetings with sufficient detail

Use checklists and cross reference investments when implementing advice

Use Xplan threads

Stay up to date - Ensure you are aware of current business rules and standards. Seek assistance when you are not sure of requirements.

The Advice Process and DocumentsThe Advice Process The Documentation

Engage and Understand the Client • FSG (record date of issuance, version and mode)• Letter of Engagement• AML – client ID (certified copy to be retained)• File Notes

Undertake reasonable enquiry/data collection (Understand the client and explore client options)

• Confidential Fact Find (signed and dated)• Investor Risk Profile• Product Research (existing and new)• File Notes

Document and provide advice • Statement of Advice• Record of Advice• Product Disclosure Statement (record client consent if issuing

electronically)• File Notes

Implement advice • Signed Authority to Proceed• Signed and accurately completed application forms• Confirmation of implementation• File Notes

Ongoing service • Copy of service agreement• Financial Disclosure Statement• Opt-In renewal notice and client written response (from 1 July 2015)

Need Assistance?

Self help – resources

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RI Adviser Services Compliance/Policies and Professional Standards

Need Assistance?

Assisted help – Contact Details

Your Practice Coach or Regional Practice Development Manager

Professional Standards TeamT: 1300 722 923E: AdviceDeliveryCompliance@anz.com

Senior Advice CoachPhil Broadbent