Rhett Das wants advisers considering becoming a responsible manager to know it’s not as simple as it may look and that it is incumbent upon them not only to know the rules but also to immerse themselves in the licence they are running.
Speaking on a panel at the Financial Planning Association’s Professionals Congress 2018 in Sydney today, Das said the trend towards self-licensing had spurred many advisers to consider expanding their role into acting as a responsible manager for more than one practice.
“A lot of advisers come to me and say, ‘I’ve been asked to be an RM, should I do it?’ ” Das said, “And I tell them, ‘Only if you’re going to be a part of that business.’ ”
Das, who is a director at Integrity Consulting Group and helps firms apply for their own financial services licence, said he was often approached to act as an RM.
“I say, ‘I’m happy to do it but I need to be working in your business in some sort of capacity, so unless you can pay me at least a day a week, I just can’t do it,’ ” Das said.
Australian financial services licensees must have at least one responsible manager, though the regulator prefers at least two. Recent proposed regulation, if passed, would require at least one of them to meet the same education and ethics standards the Financial Adviser Standards and Ethics Authority prescribes for advisers. Professional Planner looked at the effect this change might have on the role of responsible managers, who may be split into qualified and non-qualified tiers.
Das said it was important for RMs to know exactly what was going on in the business. He shared an anecdote about an ex-client – a larger licensee that was in “big trouble” with ASIC. It was subsequently revealed that not all of the licensee’s responsible managers were aware of the extent of the trouble.
“That didn’t go down well with ASIC, because, while the [RMs are] responsible for the day-to-day running of the business, they are also the moral compass of the business,” Das said.
Claire Mackay, who is a responsible manager at independently licensed advisory firm Quantum Financial, said RMs should focus on knowing the rules.
“If you’re playing netball and you don’t know the 3-feet rule, you’re going to get caught out constantly,” Mackay explained. “It’s about knowing the rules and knowing where the line is.”
She said that if RMs are diligent in staying on the right side of the line, they should have minimal contact from the regulator.
“My view is that I don’t want the regulators to know my name,” Mackay said. “I want them to know that each year I sign my form, I submit my financials and they don’t call me for the next 12 months. I don’t want to be playing right near the rules, I want to know that my business is well and truly doing the right thing by my clients and by our community.”