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1 in 2 advice files contain breaches and miss revenue đź’° opportunity

This is the experience coming out of The Risk Store’s remote advice file review service says The Risk Store’s Founder and Technical Manager, Sue Laing.

"The headline alone doesn’t truly explain the full picture though. Firstly, a breach could be regulatory, legislative or Code-related. Secondly not all breaches affect the client’s advice, but many will still be subject to registration, if not reporting, by the licensee. What it does very clearly support is the cry by all practitioners that giving advice these days is very complicated and there are many items advisers and paraplanning teams need to be cognisant of. Ninety nine percent of the breaches we pick up in our regular file reviews evidence the complexity has the potential to divert attention from delivering quality advice.”

Missed revenue đź’°opportunity is another under-the-radar issue for advisers according to The Risk Store. “I have lost count of how many times an adviser has short-changed a client on needs analysis, product structuring or ownership options, many of which in turn translate into missed revenue for the business. This can be fixed with adviser coaching."

Of course fixing it doesn’t mean it's acceptable to have shortcomings in the first place. So how does a business go about ensuring these breaches and missed opportunities are minimised as much as possible?

“Having robust advice processes and procedures - including religious adherence to checklists” says Sue. “That is the difference between those who never learn, repeating the same errors, and those who do thereby minimising technical failures and delivering a better client experience and outcome”.

What would you recommend should be the key steps for an advisory practice to address this issue?

“It is all part of the ongoing process of working on one’s business” reckons Sue. “There are three steps to addressing this and our clients go for one, two or all three".

"First you need to identify if there are any advice issues, especially ones being repeated and with no remediation. A basic random file review of a minimum number of files, to get the broad picture to management. Any systemic issues reported will have an offer of back-up consulting attached, as these need to be acknowledged and fixed ASAP. Online contact and support and remote server access in recent years has enabled these services to be delivered at a much reduced rate from days of old".

For optimum outcomes and to avoid reversion to old habits, ongoing remote monitoring is a wise strategy; training of compliance personnel can achieve this if outsourcing doesn’t appeal long term. “There is no point going to the expense and time of implementing the initial steps, without then demonstrating the permanent commitment to quality as well as compliance.”

“The key message is never to assume your advice files pass muster and are perfect. I’ve had to deliver disappointing reports to licensees whose external audit programmes failed to pick up on the nuances of life insurance advice - very few pure compliance businesses understand life insurance, let alone how to fulfil best interests in this space. The potential vulnerability to an ASIC audit is obvious, given that ASIC has learned from experience how to audit life insurance advice. That aside, the revenue gaps are worth searching out regardless!"


Sue Laing can be contacted on 0412 265 822 or via The Risk Store contact form >

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