Advisers must put client bases under the microscope
Risk advisers with old portfolios need to go through their client bases and dig out any investment income, according to The Risk Store founder Sue Laing.
Advisers whose practices are solely risk-based will not be required to send out fee disclosure statements from 1 July this year, said Laing.
But there will be the "odd superannuation rollover" amongst most advisers' client bases, and advisers need to ensure they know how those clients will be treated in the new regulatory environment, she said.
"What we've been saying is: 'Go back into your client base, find any client that's got any kind of investment policy at all, identify them, flag them, and get ready'," she said.
Advisers should go through their client base with a "checklist" of questions, said Laing - the first being 'do I have any clients with investments?'.
If the answer is 'yes', what kind of remuneration are those clients providing to the adviser - and will the adviser be required to send them a fee disclosure statement when they conduct their client review post-1 July?
The next question is 'will any investment commissions be grandfathered?', said Laing.
"Advisers have to move forward at the moment on the assumption that grandfathering will not be all-encompassing, or will not happen at all. Time's running out to be waiting for the Government to clarify grandfathering in totality," she said.
Finally, advisers need to separate out the clients who do not need to be sent fee disclosure statements, Laing said.
"How many [clients] do I have who are purely risk who I do not get one cent of remuneration from that does not from a life company - even if it's via my dealership?" Laing asked.
These are the clients who, for the moment, advisers can "ignore", she said.
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