Chapter 3 - The Advice Process and Documentation
Understand what constitutes a client review and the documentation requirements.
Determine whether review obligations exist and determine what to do if a review is not provided.
Understand the types of fee and service agreements and the requirements.
What Is a Client Review?
A review is an assessment of the strategy and products previously recommended to the client to ensure they remain appropriate for the client’s circumstances and will continue to meet the clients’ needs and objectives.
A review is a reciprocal arrangement in which the client is a part of and engaged in the review process with
the adviser. They may also examine and report on investment performance over the review period. Reviews
are an integral part of ongoing advisory services provided by advisers.
A review should include the following, depending upon type of strategy:
Review and update the client’s goals and current situation or confirmation of no significant change,
Review of investment portfolio including asset allocation compared to risk profile,
Review of the client’s insurance needs, policies, and confirmation of affordability,
Confirmation that client remains on track to meet their goals and/or where adjustments are needed recommended changes (such as a rebalance recommendation, adjustment to income/pension payments).
Ancillary Services
Reviews can be distinguished from ancillary services that advisers offer that don’t involve personal financial advice, such as:
portfolio reports
newsletters, education and financial literacy services
execution transactions e.g. withdrawals, reinvesting term deposits.
Centrelink support and completing forms
estate planning services
The Review Process:
Offering a review - A review offer should be the primary purpose of the communication
Fact Find (FF) & Risk Profile (RP) - The review must be based on up to date and accurate information. You should reconfirm the client’s relevant personal and financial situation including objectives and risk profile. This may include making a file note, or a reverse fact find or completing a new FF or RP if appropriate.
Research and conduct review - Review the strategies and products. Assess if the client is on track to meet their goals and what new advice and/or adjustments to the client’s strategies and products are required.
Documenting a review - An SoA or RoA is required.
The following should be used to document and evidence a review:
Statement of Advice
Record of Advice
Review Report
An RoA can be used where, a previous SoA has been provided. The client’s personal and financial circumstances have not significantly changed; and the basis of the advice has not significantly changed.
What If A Review Is Declined:
Where a client declines an offer of review (and a review has been agreed to) you should:
Document the reason the client declined the review in a file note e.g. they are travelling; there is no change and are happy to review next year; they do not see the value in a review, and
Reschedule the review if appropriate (e.g. if they are travelling for their return); or
Offer an alternative arrangement (e.g. advice on demand), refund and turn off fees; or
Disengage the client, refund and turn off fees if the client does not want to continue the ongoing arrangement.
No Response To Your Review Offer?
Where the client does not respond to an offer of review (and a review has been agreed to) you should:
Document all follow up attempts on file, and
Send a Disengagement Letter, refund and turn off fees.
Failure to disengage and notify the client can result in ongoing responsibility and risk for failing to provide reviews and services.
Refunding Fees
Refunds of fees should be provided to the client when an annual review has not been provided or cannot be sufficiently evidenced (if a review is included in the service agreement).
If a review has been missed, you should provide the review immediately. If the review cannot be provided promptly, you should refund fees.
A full refund should be provided if the client only received ancillary services (such as newsletters and portfolio valuations) during the relevant period.
If reviews were not provided and a client still elected to renew an arrangement this does not negate the need to refund fees for the relevant period.
You must notify your Compliance Manager where a refund is required.