Our report that most FAPs are over-complicating the job of meeting their regulatory compliance obligations struck a chord with Riskinfo readers this week…
Most FAPs are running compliant businesses but making hard work of it. That’s the view of Strategi Group’s Executive Director David Greenslade based on a raft of compliance reviews his firm has completed.
Greenslade says: ”The vast majority of FAPs are genuinely doing a good job at staying compliant, but they are often taking a more challenging route, which could gradually impact productivity, profitability and client engagement.
“FAPs have yet to grasp the flexibility of the new advice regime, which fosters innovation and simplicity through suitable technology.”
In a blog post, Greenslade points to Strategi’s six-step advice process (below) that includes clients taking the lead – with advisers serving as coaches and guides rather than sole repositories of knowledge – and creating advice documents that are visually appealing and easy to read.
Does your FAP need a stronger focus on record keeping?
- No (53%)
- Yes (42%)
- Not sure (4%)
Loading ...Greenslade says FAPs need a stronger focus on record keeping.
“If the FMA asks for client files you should be able to provide these quickly,” he says.
“Anyone in a FAP who is appropriately qualified to handle a client enquiry should be able to go into the file – hopefully electronic – and be up to speed on the client within minutes.
“If it takes more than a few minutes to recreate the client history and interactions, then the CRM and file storage systems need urgent attention.”
He says disclosure is still being unnecessarily replicated.
“We are seeing too many FAPs having three stand-alone disclosure documents – publicly available, nature and scope, plus when advice is provided,” he says.
“The disclosure regulations permit progressive disclosure. If you have already disclosed the prescribed information earlier, then you don’t have to disclose it again.
“This means that by the time you get to the statement of advice, the only things usually needing to be disclosed are the fees/commissions specific to the recommended products plus any specific conflicts of interest.”
Greenslade also says ongoing client servicing is not hitting the mark in many cases. And this, he says, is often caused by the client file lacking detail, meaning it is hard to determine if the existing advice/products are still suitable.