THE FINANCIAL ADVICE PROCESS

Question 1

THE SIX-STEP PROCESS

THE SIX-STEP PROCESS is derived from wich international standard?

Answer 1

ISO 22222 Personal Financial Planning. The standard is an international benchmark for best practice.
The Standard has been designed to provide confidence to
retail clients that an ISO-accredited adviser is competent and ethical in the provision of advice to clients.

Question 2

THE SIX-STEP PROCESS

Name the steps

Answer 2

1. Establishing & defining client/adviser relationship
2. Gathering client data and determining goals and expectations.
3. Analysing and evaluating the client’s financial status
4. Developing and presenting the financial plan
5. Implementing the financial planning recoomendations
6. Monitoring the financial plan and the financial planning relationship

Question 3

THE SIX-STEP PROCESS

Step 1 - What does involve establishing and defining client/adviser relationship?

Answer 3

Introduction to whether a financial adviser can assist a client to achieve their
financial goals and objectives.
Asking open-ended questions
allows the adviser to lead the client through a conversation about their current financial situation and what they want to achieve from the financial adviser/client relationship.

Question 4

THE SIX-STEP PROCESS

Step 2 - What does involve gathering client data and determining goals and expectations?

Answer 4

Identify goals and objectives and barriers. Identify financial concers.

Clients have every right not to answer a particular question or disclose a particular situation to their adviser. Therefore, having a structured approach to gathering data ensures that no crucial piece of information is left out. Good data gathering techniques include the ability to explain to a client why a particular piece of information is required, to ensure a holistic approach to planning their financial future.

Where investment advice is to be provided, a crucial data collection tool is
the capturing of a client’s risk tolerance.

Question 5

THE SIX-STEP PROCESS

Step 3 - What does involve analysing and evaluating the client’s financial status?

Answer 5

The financial adviser identifies financial problems and issues which
helps drive the limitations of the advice being provided.

Once this analysis has occurred, the adviser will then research a suitable product that will meet the client’s needs, goals or objectives as set out in step 2.

This is where the financial adviser uses the knowledge, skills and experience necessary to perform their professional obligations for each of their clients.

Question 6

THE SIX-STEP PROCESS

Step 4 - What does involve developing and presenting the financial plan?

Answer 6

A good plan is one where the written recommendations link the recommendations to the client’s goals and objectives. It includes the following:
1. Product comparisons must be documented when recommending switching products or product providers.
2. Clearly defined scope, as well as the advantages and disadvantages of each recommendation
3. Any limitation of the advice should be made clear to a client.
4. shows real value-add for the client and highlights the benefits of a professional relationship with an adviser.
5. A PDS (if applicable)
6. clear explanation of the fees and costs
7. disclosures: licensing, duties, services, fees, conflicts of interest, complaints handling and, where necessary, disciplinary history, convictions or other proceedings, or bankruptcy proceedings

Question 7

THE SIX-STEP PROCESS

Step 5 - What does involve implementing the financial planning recoomendations?

Answer 7

The client confirming they understand the advice and recommendations being made, and agree that the adviser works with them to implement the agreed-upon plan.

The use of an implementation plan or table, where the agreed next steps are allocated to the parties involved in the advice process with due dates, helps keep the process on track.

It may also include the involvement of other specialists (e.g. legal or accounting advice).

Question 8

THE SIX-STEP PROCESS

Step 6 - What does invoves monitoring the plan recommendations?

Answer 8

The adviser proactively completes a review of the client’s current circumstances after the advice has been implemented. There may be a requirement to revise the original advice or assumptions within the plan to keep the client on track.

There is a Privacy Act requirement to keep information up to date and therefore contact details should be checked at each review.

You might want to consider asking for changes in:
* health
* carrer/study
* insurance needs
* asset ownership structure
* bonuses or inheritance
* changes to legislation
* changes to economic environment