Building a new advice process – Start With A Question

I know that is not a foregone conclusion, and there are other possibilities, even no change remains possible. However, assuming you are one of those that would need to make the change. What are the big changes that need to be made?

There are two main categories of change. One we’ll call technical: get a level five qualification, write an adviser business statement, complete authorisation, and associated tasks. I know a lot of RFAs are some part of the way through the process. Of course it will be easier for those that have virtually completed the qualification and already investigated authorisation. But even if you have not taken any steps in that direction there will be adequate time to address all those issues.

It is the other category of change that is more interesting. That’s the operational changes required in your business to deliver effective, compliant, insurance advice. Meeting the requirements of the six step advice process are not that hard. There will be people that try to make it seem so much more complicated than it actually is. There will be those that insist that very complex computer systems will be required to manage the process. While they may be helpful they are not, strictly speaking, essential.

What is completely essential is good record-keeping. The more extensive, detailed, relevant, and retrievable your records are the better. Because any improvement you want to make in your advice process is best when it is built on data about your business, as well as, and not limited to, the standard advice process. It is the gap between the two which describes the operational changes that are required to meet the standard. Sure, you could just choose a ready-made advice process and conform to it. The problem is that you probably won’t like it. It is unlikely to represent exactly what you think represents good advice. You don’t want compliance form-filling somehow separate from what you believe is important. You really don’t want a kind of two-track process where you carry on giving advice the old way, and then resentfully ask the client to sign some paperwork to ‘please the regulator’. That kind of ‘split personality’ nearly always leads to trouble.

I suggest you start the process of review by keeping really good records. Start now. Whatever form of advice you give keeping great records starts building up the data necessary to analyse your own advice process. To do that I recommend the following question: how can I prove why I did that?

For everything you say or write in your statement of advice you should start by finding an externally verifiable reason for it. Then keep documentary evidence of that. If you are tough on yourself and run down an answer for every part of every recommendation you will quickly establish both good records and a great insight into your own philosophy of advice.

Comments from our readers

On 29 June 2016 at 1:04 pm Richard Pykett said:

Well said Russell. Trouble is that it's a mindset which goes against the grain of most salespeople. I know that in our own insurance practice, we have been process focussed for many years – generally 3 appointments, all advice in writing, logging of all communication etc… When we started to adopt these practices probably 25 years ago now, our number of cases per year dropped slightly, but when measured over a couple of years, our API went up, our persistency went up, spontaneous referrals went up and overall our operating costs went down. We don’t have an anally complex advice process, but with the E-Broker software we have written around our methodologies, we run a tidy and profitable ship. It’s not hard, but it does involve a change of thinking for many.

Building a new advice process – Start With A Question

Just say for a moment that one of the outcomes of the Financial Advisers Act Review is that most RFAs will have to meet the requirements of the AFA Code of Practice.

Tuesday, June 28th 2016, 11:37AM 1 Comment

Comments from our readers

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