FEATURES | REGULATION
Regulation Focus 2021 2021 is set to be a year of changes for financial advisers. While change can be unnerving to some, it can also present new opportunities. To help you succeed in the year ahead, the compliance experts at Rosewill Consulting have put together some of their top tips to tackle the new regime with ease. Demonstrating the new Code in the advice process It will no longer be enough to stick to the fundamentals outlined in the six-step financial advice process. The time has come to analyse each of those steps and determine how you can demonstrate the new Code of Professional Conduct for Financial Advice Services. For example, you cannot demonstrate Code Standard 1 to “treat clients fairly” without understanding the client’s financial literacy and previous experience with the specific financial product(s) you are advising on. Be sure to identify any vulnerabilities that could be lurking beneath the surface and develop a 26 | ASSET 01 | 2021
strategy to manage them. Above all, be sure that you can document how you are putting the client’s interests first. By delving deep into the client’s current situation and their risk tolerance, you will be able to demonstrate Code Standard 3 and “give financial advice that is suitable”. A common issue we see is where the adviser jumps straight to “solution mode” without spending enough time analysing the client’s existing circumstances against their goals and objectives. One adviser we visited in 2020 always calculates the client’s growth in their equity and plots this against their long-term goals. In most of the adviser files we review, the actual financial advice given needs
to be clearer. There is a big difference between providing product information and giving competent financial advice. It should be completely clear what the recommendations are and why they have been given. Too often, an adviser will recommend a new product provider but not demonstrate their analysis of existing cover and its strengths and weaknesses.
Educating your clients (actual and potential) While you have been giving ample time and attention to the regime change over the last couple of years, the public at large will be blissfully unaware of the significant changes to financial advice
