Holding your own licence does provide some significant benefits but it does also bring additional obligations. So what work is involved?
Providing advice and navigating the compliance obligations will continue to be where you spend most of your time. The obligations where you provide advice remain the same whether you operate under a dealer group or hold your own licence. You would follow the same advice process:
- Client engagement
- Understand the needs, objectives and circumstances of your client
- Apply your skills and experience to determine your advice
- Communicate your advice to your client
- Provide your client with an advice document (SoA or RoA)
- Undertake regular reviews to keep your client on track
Holding your own licence does however provide the opportunity to improve your advice processes and documents. This is a significant benefit for many financial planning practices as they can significantly reduce compliance risks and costs.
Importantly, they are also able to improve the advice experience and documents for their clients eg providing an SoA that clients are more likely to read and understand.
There are two new challenges for practices holding their own licence:
- Being aware of the licensee obligations and potential changes
- Designing compliance arrangement to efficiently and effectively meet those obligations
AFSL Compliance can guide you through this and design a compliance program tailored to your practice. As part of our licence application service, we will provide you with a Responsible Manager training session and a licensee compliance manual which sets out your compliance arrangements.
Many practices will find the licensee obligations formalise many of the functions that they already perform:
- Implement and maintain systems and processes to support the provision of advice
- Identify and review your preferred advice solutions (eg strategies, products, services)
- Professional development for you and your staff
- Monitoring and supervising your staff
- Preparing cash flow forecasts and managing financial resources
- Managing the risks of your business
- Hold PI Insurance
- Manage any complaints
- Manage any failings (breaches) in your advice process or business
- Manage conflicts of interest
- Manage your service providers
- Ensuring the practice has adequate resources (people and IT)
Where there is likely to be additional work is in the preparation of documentation to demonstrate the obligations have been met. This should not however be overly difficult or time-consuming, and we will provide support to make it easy and straightforward.