Adviser audits: big brother online

The requirement under Financial Services Reform (FSR) to audit advisers is an expensive business for dealer groups and a potentially stressful one for already overworked planners, concerned that their heads could be on the block.

Updating technology is one way to ensure processes are consistent across a dealer group, to take the pain out of the process for planners and dealers.

In particular, keeping tabs on advisers in rural areas is a major priority for dealers, after last year’s statement by the Australian Securities and Investments Commission (ASIC) that it considered rural planners a greater risk to consumers because they don’t get the same attention from dealer groups.

As a result, financial planning groups in regional areas are facing a stricter program of regulatory spot checks to ensure they are meeting paperwork requirements under FSR and not exceeding their authority in giving advice.

Guardian financial planning head of distribution Paul Forbes says his company is currently on the lookout for some new software to simplify adviser audits, but admits the group has not yet looked at all the possibilities and is “doing things the old fashioned way” by going to see the advisers in person.

In the past three months, Guardian has had three employees working the field and grading its 170 planners on their performance from one to four, with one being the highest score.

“There are some smarter ways to do this, but so far we have not found the technology to provide the rigour we need. Relying on a statement of advice and a phone conversation is not as good as seeing them one-to-one,” he says.

Forbes hopes to eventually implement technology to enable the group to monitor some advisers remotely, although new advisers will still receive visits.

FS Partners managing director Peter Fysh has recently installed auditing technology in his group and says it has significantly reduced the cost and time commitment of auditing.

His dealer group uses software by Safetrac, which has been customised to allow FS Partners to test advisers’ compliance and ensure they have absorbed continuing education courses.

“It means the adviser can log on at their own convenience and complete the requirements for the audit process, in the same way that they can now do online education. We can also test their knowledge and if they don’t get it right the first time, they can do it again until they do understand a topic. Of course, we supplement this with field visits and also go and check files,” he says.

Dealerships now have the tools at their disposal to roll out consistent processes across the country, according to IWL financial advisory solutions executive general manager, Ross Johnston.

“There should be no reason why a regional planner should be more of a compliance risk than a planner in the city,” he says.

IWL’s Bizmax system offers a step-by-step compliance process that enables dealers to audit every client of a financial adviser.

As well as practice management tools, the system also offers business strategy tools and can create a diagnostic practice audit and evaluate opportunities through ‘what-if’ scenarios, including client pricing and profitability, practice acquisition, cash flow, staff capacity and productivity.

Dealers can use the tool to create key performance targets for the individual business and create benchmark reports.

“Desktop systems used to be confined to the desktop but now dealers can see all the information centrally and act as Big Brother,” Johnston says.

Financial planning software provider Xplan offers the opportunity for paraplanners to view plans remotely and can put a hold on statements of advice being released while the adviser is being reviewed.

Its Centrepiece product offers flexibility — it can be run on desktop or web interfaces and will support new technologies that become available for interacting with users, including palm-held devices, wireless networking, and SMS.

Dealers can use the product as a 100 per cent dealer-hosted web solution or can distribute the technology to advisers to provide central data storage and administration.

Xplan’s Client Focus tool is an integrated data collection model and incorporates a task management system to allow advisers and support staff to stay on top of scheduled tasks. It has been designed to allow individual users to manage their own work and co-ordinate complex workflow across an office or dealer group.

O’Donnell Software managing director David O’Donnell says all his company’s financial planning software now includes the option to save an illustration of a client’s financial situation and the financial advice given to a non-editable PDF.

Previously, this information would have been printed out and filed, but providing a PDF means the adviser and the client have a permanent record of the advice given at that time, and the dealer group can keep a record.

“It is a simple process but it means that if, for example, your client’s income is not what he said it was, you would have a record of what he told you and could show that based on that information you gave a reasonable recommendation.”

O’Donnell also recommends Microsoft Business Contact Manager, which can store e-mails and track appointments.

The raft of technology products on the market might offer a great way to organise a business, but they can also provide some other benefits. Advisers who are not cutting the mustard can be spotted earlier and given help, rather than being given the elbow at audit time.

However, Guardian’s Forbes admits that sometimes redundancies are a necessary evil and he has had to let advisers go following one-to-one audits.

“We hate to lose any commercial adviser, however, we have to be very disciplined with our compliance,” he says.