Prepared for the NEW Financial Markets Conduct ACT?

Terminology we’ll use:

1.      FAP (Financial Advice Provider)

2.      FA (Financial Adviser. No more AFA or RFA’s).

3.      Nominated Representative (NR).

4.      Regulated Advice.

5.      Transitional Licence – a license to continue to practice as you are currently for a two-year period during which you:

5.1.    Get the Qualifications you’ll need.

5.2.    Will have to comply with the new Code of Conduct (Code).

5.3.    Will have to comply with all other sections of the FMC Act and any regulations that relate to an FA to provide regulated advice.

6.      Associated Entity.

What are your options once the new Act and Regulations are in place?

Options:

1.      Prepare for your application for your own Transitional License and with the view of becoming a FAP yourself as an individual or as an Entity with others.

2.      Become a FA or NR of another FAP.

3.      Transition out of your business by the end of the Transitional Licensing period but be prepared to comply with all other sections of the FMC Act and any regulations that relate to an FA to provide regulated advice.

We encourage everyone to read this regardless of which option you choose as there will be things that can be started now that are common to all. We will highlight these for you.

 So, in the interests of keeping this brief we’ll comment on Option 1 in two parts in separate articles (sorry but those in the other two options will need to be patience). We will be producing future articles on option 1, 2 & 3 over the next 3 months.

You will often see a reference to “Stay Ahead of the Pack” and by this we mean "Don’t handicap yourself by starting at the back with the MASSES".

STAY AHEAD of the PACK

Option1 steps (the first xx apply to options 2 and 3):

1.      Prepare a budget. Yes, there will be a cost. Both financially and your time. Your most valuable asset is your time. Keep in mind the wise words of Peter Drucker (Peter Drucker is world-renowned for his innovative thinking in the ways of business management. – google him if you haven’t heard of him). He said, “Do what you do best and outsource the rest”.

2.      Get your house in order by doing the following:

·        Write a business plan (FMA will likely want to see one when you apply). If you’ve got one great, if not then I’d suggest that following the FMA guide for writing an Adviser Business Statement. It’s a great template and you’ll get brownie point if you use anything FMA has produced as a Guide.

·        Check your records management systems. Are they easy for others to find information? Do you keep only hard copy, soft copy (computer based) or a combination of both? If you’re only using hard copy you may find it valuable to start using computer-based filing and records systems.

·        When did you last review your standard documents? Do you have a standard Client Agreement in place for new and existing clients? Doc fact gathering data forms have the correct Privacy Act content for signing by all your clients? Every client file should have a sign off regarding privacy of information. There should be a clause in there stating who else may have access to client’s details eg FMA, your compliance provider etc.

3.      Review current practices. (details will be in the next article)