Originally published |19 April 2019

We all know the saying, the definition of insanity is doing the same thing over and over again and expecting different results.

This is what it can be like in compliance teams around the country.

Take my team for example, our program of vetting advice for newer advisers to the license sees us providing feedback and improvements on the quality of advice.

But at times, it feels as though there is an insanity to the process. Why is that?

My belief is that it comes back to the advice process that a financial adviser is following.

Most advisers I deal with seem to be on safari, they are out in the savannah scoping out their next kill. Whoops, did I say kill? I did, and in reading some advice that’s what it feels like.

There are still advisers that are more concerned about the revenue they can make from a client then the quality of the advice. These types of advisers are the catch and kill type, the advice looks very transactional and is heavily product related. Then we have the advisers that are looking at strategy and they will attempt to utilize the client’s existing products more. These are the catch, tag and release advisers.

There is an understanding with the catch, tag and release advisers that their clients will be more engaging and will meet with their adviser more frequently.

What does this have to do with insanity, I hear you ask.

If we go back to the way some document their advice, you can see the insanity in their process. An adviser who is only looking for the quick kill will generally produce an advice document that is heavily templated, and doesn’t link clearly to the client’s goals, objectives or financial situation. These types of advice documents are sent to my team and come back with lots of comments for improvements.

Transactional advice is ok, and has a place, but you still need to follow a sound process in documenting advice.

Think back to when you were at primary school and being taught to write a story. As well as being taught that a story needs a beginning, a middle and an end, we were all taught about the where, the when, the how, the what and the why.

An advice document is exactly like this.

If your compliance team can’t clearly see the where, the when, the how, the what, and especially the why, how do they know you have acted in the client’s best interests? And if they can’t see it, how will your client?