Advisers told to make disclosure easy
Advisers have been told they should make public information more easily accessible for their clients.
Thursday, February 9th 2023, 10:17AM 
1 Comment
by Eric Frykberg
Financial Advice professional development manager Leigh Hodgetts says public information had to be easily available in just one hit.
“People should not have to go through three different clicks to find information, because that is not very helpful,” she said.
Nor should customers have to scroll right to the bottom of a page to find out what they need to know.
“If consumers don't know much about (financial advice) they need to be able to find stuff quite readily.”
Hodgetts said this position had been supported by the Financial Markets Authority. “They are looking for clear wording, consumer friendly material, just the one click.”
Ethical Investing NZ director Peter Lee said one way to do this when there was a range of information was to have a basic document that could be easily expanded out so more details can be accessed.
Tony Lane, the chief risk officer from Squirrel, said his group had done a re-design of its website because it had not been as easy as it should have been for the customer.
“I do like (the new website) - in customer language, people know where to go.”
When it came to disclosing information to a potential client this could be made in many formats, such as by email or in a personal meeting with a would-be client.
Lane said when it was done in a personal meeting it was important to take notes to have a clear record of what took place.
Information from that and subsequent encounters were kept on a portal, so everything was on record and was easy to find.
Lee added a complication, saying for his firm, disclosure was as much an art as a science.
“You wind up dealing with clients’ hopes, dreams and so on, so the conversations can be all over the place,” he said.
“Initially it is almost always a phone call….and this is purely to see what customers are looking for, and then we try to schedule a personal or a Zoom meeting, and that is where we start to get into things in a little bit more depth.”
Lee said meetings were usually not recorded, but there would usually be two or more advisers at each meeting because advisers could sometimes have a different interpretation of language. After further discussion, a summary would be sent out to the client with a clear understanding of the situation and what the likely costs would be.
“That way, a client will know exactly what we have got.”
Hodgetts said in her experience advisers very often handled their disclosure obligations well.
She the key requirements for advisers included:
- Having a user-friendly website
- Making sure clients have received the disclosure they are entitled to
- Making sure that disclosure is recorded
- Making the most of technological aids.
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But we're doing obscene things to spiders here...
A significant body of clients never goes to advisers' websites, let alone read them when they're there because they're only looking for a phone number or email address. (existing clients mostly)
I hear this from clients all the time, and my own website stats reflect the traffic path from landing on the front page and clicking on contact information...
I even know a few advisers that don't have websites and have no requirement to cover any of this public disclosure stuff.
By and large, the issue is not the public website disclosure information; it is the assumption that clients have seen and read the public website disclosure, which hasn't been covered directly with clients in the rest of their process.
I have had many discussions with advisers about it, and all of them have assumed that because the public stuff is out there, they don't have to cover it again in their advice material...
Completely opposite to the original intent expressed by the FMA and CWG, disclose as you go with the required level of disclosure needed to ensure the client(s) are appropriately informed. (and you're not oversupplying information or confusing them like the original AFA 25 pagers were!)
Which is all about providing the minimum level of information for complete disclosure understanding for the client specific to their personal situation.
To assume that clients have seen and read website disclosures is fraught, and even worse, from a professional perspective, assuming they have is negligent.