Disclosure and the New Regime: How Our Boxed Solutions Help You with Disclosure
The new regulations have brought about some changes to how advisers need to handle disclosure – once seen as a two-step process of primary and secondary, it now relates to many different stages throughout the process.
At OMNIMax we have built compliance into the DNA of our solutions and so when the regulations changed, so did we. This progressive disclosure mandates that you disclose why you are doing something at the time you are doing it. We’ve defined this in four stages, at each stage the disclosure gets deeper, and we’ve integrated this into our boxed solutions.
Public Disclosure – Before you engage with a potential client.
In our boxed solutions the first step in the advice process is a fact-finding mission and at the beginning of this process, when your client embarks on their fact find, the first screen that they see handles this stage one of disclosure. Here you can detail the information that is being gathered and why, the providers you might use and a link to your public disclosure that covers your qualifications and experience, the services that you provide, the companies and products you might use and your remuneration.
Before your client proceeds, they will acknowledge this information and that they have read the disclosure statement, this is recorded in the system with date, time, and their IP address.
Scope of Service / Engagement – Your client has filled in their details and is at the end of the fact find discovery.
Before they submit their information to you, and you start the advice process you define the scope of service. Whether it be KiwiSaver, Investment, or a more comprehensive financial plan this is detailed to the client and can include any fees that may be applicable.
Your Recommendation – After you have assessed a client’s needs and are making your recommendation.
At stage three you need to disclose such things as any commissions and other incentives, your fees, as well as detailing your duties as a financial advice provider. In our boxed solutions this is added to the appendix of the statement of advice by either typing directly into the template or uploading a pdf to display in this section.
If there are different fees for different providers, load these against the provider and the solution will dynamically add these into the document depending on your recommendation. Disclosures for recommended products will also be included in the appendices of the document.
At this point it is also possible to add your complaints procedure into the statement of advice, we like this option as it keeps all of your disclosure within the system.
For your client to acknowledge these stages three and four continue through the advice process by authorising the advice and creating an authority to proceed within the system.
Your client will then log in and authorise you to proceed with the advice (or not proceed). They will acknowledge that they have read and understood the SOA, that they have read your disclosure, the product disclosure and have disclosed their correct information.
They can make any additional comments here, and as with all stages within the process, as the client finishes the date, time and their IP address are recorded for your records and compliance.
There’s a lot to consider with the new disclosure and we hope this gives you some idea how yours could be setup. If your disclosure does need some work to meet the new regime, get in touch for some instruction.
Megan Murdoch – Marketing Manager
The Top 5 Tips to Helping Clients Understand Your Advice
As we navigate our way through transitional licensing and the new legislation, a major focus has been on making sure that clients understand the financial advice they are given, which brings us to the question “what do you do to help your clients understand?”. We put this question to some of our adviser clients and here’s what they came up with…
1: Visuals are king. Research has proven that we ingest more quickly and retain information better with images as opposed to words. Humans are visual creatures, when you look at pages of text with no pictures there’s little chance you’ll actually sit down and read it.
2: Provide clear and balanced comparisons of existing and new products. If you are comparing apples with pears how can the client get it?
3: Try not to use industry jargon that the client will not understand. Keep it in plain English – you may have a tertiary education in finance but most likely the client doesn’t. Which leads to our next tip…
4: Consider the client’s level of education in finance matters; a younger couple may not be as financially savvy not having been round the block as many times.
5: Talk through your recommendations with your clients. It may come as a shock but not everyone will sit down and read your 50-page SOA to the end. So, having a face to face to explain why you think your recommendations are right for the client is so important.
The term fintech refers to technology that enables parts of the financial services world to be automated. For advisers, it means using software to digitise and automate such tasks as portfolio rebalancing, data aggregation and keeping tabs on the particulars of each client’s financial situation. The result – less time spent crunching numbers, entering data and analysing spreadsheets and more time to connect and better understand clients.
Technology is rapidly changing the way clients engage – software can visually give clients a picture of their financial position with automated charts and scenarios. It also allows advisors to visually show clients comparisons between providers.
Advisers have found that digital advances have increased their ability to both serve clients and increase their client base. Fintech has created more time to advise clients, more time to discuss things like… starting a business, home reno projects, rental properties and just life in general. Fintech has also freed up time to enable a higher client to advisor ratio and therefore a more efficiently run business. So efficient we can even advise without the need to do anything – Roboadvice.
So, have we reached a position where the adviser will become obsolete? While this Fintech is increasingly more important, it remains that advisors are the key part of the financial services ecosystem. There are still things that a computer algorithm can’t advise on, there is definitely value in the human financial advisor.
Why not technology? These days we see technology everywhere, its an everyday thing and we now tend to notice when its not there rather than when it is. The financial services industry must continue to adapt and implement technology, it is important to incorporate both digital and human interaction to best serve clients.
Ewen Cameron – Financial Adviser
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