The (source of) truth shall set you free
While compliance has always been an integral part of the advice process, it’s fair to say that the post Royal Commission reform pipeline has dramatically increased the amount of work required to stay on the right side of the law. Whether it’s due to FASEA, the new breach reporting regime or annual renewal of ongoing fee arrangements, advice businesses have to adhere to a staggering amount of new obligations and keep track of enormous volumes of client data in order to stay compliant in 2022.
Compounding this, the rapid – and seemingly permanent – shift in working arrangements as a result of COVID-19 has put stress on traditional compliance processes, many of which were founded upon the notion that the vast majority of client and adviser information would be accrued and managed on site.
Without those guardrails, rigorous compliance controls could easily fall by the wayside. So what can advice businesses do to ensure the strength of their compliance process – while actually still having time left over to work with clients? According to Darren Smith , managing director of Financial Advice Matters (FAMG), it comes down to your single source of truth.
Based in Queensland, FAMG employs 34 staff (including 13 advisers) as well as support teams focusing on technology, client service, paraplanning, administration and accounts. It offers a wide range of services to clients, including goalsetting, budgeting, investing, tax, debt management, superannuation, insurance, retirement and lifestyle planning and estate planning.
While Smith says FAMG had previously “dabbled” in the digital space – “We’d held a few virtual meetings and so on,” he explains – COVID-19 required the business to accelerate its digital strategy “virtually overnight”.?
“We had to throw a lot of our assumptions out the window,” he says. “For example, it changed our ideas about the oldies versus the younger clients and which of them took to virtual advice. We had to work out how to increase the efficiency of doing this digitally while also trying to ensure the advice remained an engaging experience.”?
“COVID made us throw a lot of assumptions out the window. For example, it changed how we thought about which clients - older or younger - would take to virtual advice.”
Overall, Smith believes being forced to address the digital channel has led to a range of benefits for the business. For one, he says, “it’s opened doors for us to a different audience.”?
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He explains: “For those who are time-poor, say, going to an adviser is kind of like going to the doctor. It’s a formal environment, you have to prepare and the lead-up can sometimes feel more daunting than the actual experience ends up being.”
Of course, greater flexibility in the delivery of advice – even if it’s a win for the client – inherently complicates the compliance process. Digital communication introduces its own vulnerabilities and ensuring consistency across all channels requires a lot of forward planning.?
In some ways, FAMG had a headstart in this regard thanks to the multiple locations throughout Queensland where the business operates. “We have the advantage of having been a corporatised business,” Smith explains, “and the benefit of using our Xplan solution – with one core process and lots of threads driving our activities – is that no matter where our team come from, we have this backbone of a system; our one source of truth. Our team adds the colour and the personality, but our core process is the same whether?you walk into our Townsville office, our Robina office or you’re talking to an adviser online.”?
Refinement of the business’s digital capabilities through COVID further increased efficiencies in this system. “We were using Docusign all through COVID,” Smith explains, “and clients have absolutely loved it. It’s been much easier for them.”
If there is one remaining bottleneck that’s outside of Smith’s control, it’s that the rest of the industry has yet to catch up with these changes. “We can efficiently get authority from a client,” he says, “but there are service providers with different standards in terms of forms and digital signatures.”
Ultimately, Smith believes the next step in terms of advice efficiency is to develop an industrywide standard for these kinds of activities. “COVID helped with that a bit,” he says, “but if we can develop a single solution across the industry for identification, consent and client information, we’ll be able to save a lot of time.”
According to Smith, the benefits of achieving this can be demonstrated through FAMG’s success: “From an efficiency perspective, we’re cutting the post out of the picture. You’re saving a week or more in turnaround time with a lot of client forms.”?