A financial services legal specialist has identified limiting the scope of advice being given as the biggest compliance hurdle with which advisers currently have to contend.
“How do we limit the advice and how do we continually limit it because you can’t give advice on everything,” Alexis Compliance and Risk Solutions founding director Christina Kalantzis told delegates at the financialobserver Compliance and Risk Management seminar held in Sydney earlier this month.
“We’ve got to really concentrate on enlisting the client’s involvement in that process so everyone is clear what products and strategies the adviser can provide advice on.”
Kalantzis singled out cash-flow considerations as another problematic area and one many advisers may not address with sufficient detail.
She suggested advisers use the guidelines published by the Australian Securities and Investments Commission to glean an understanding of how onerous the data collection required is.
“For example, the adviser needs to communicate to the client, and document, their intentions, such as ‘I’m going to recommend for you to take out insurance, I’m going to recommend how to pay for the insurance premiums, I’m going to recommend superannuation contributions strategies to offset the effect of the insurance and inform you of the impact of these arrangements on your cash flow and superannuation benefits’,” she said.
“That’s a lot of stuff to put in an SOA (statement of advice) just on affordability and cash flow.”
According to Kalantzis, if licensees feel they need guidance on the typical amounts of money involved in these situations, they can access the ASIC website to glean what the average reasonable person would spend on the recommended elements involved.
