Lack of documentation and evidence of how financial advisers derived their advice for clients was a key focus of the Hayne Royal Commission, says Jon Scukovic.
The 14-year industry veteran, who worked in compliance and audit roles with ANZ and had files discussed before the Commission, says lessons from this experience have informed his own financial planning practice, founded with three ANZ colleagues last year.
“It’s probably one of our areas that we focus on,’’ he says. “We wanted to make sure that how we operate and the processes we wanted to develop were really strong before we started, before we even saw clients.’’
Park Lane Advice Group’s principal adviser told Professional Planner’s Ethics for Advisers podcast that one of the most challenging areas, outlined by FASEA’s standard 8 in the Code, is documenting alternative strategies discussed with clients.
“We document that in our statements of advice but again it’s the work that goes on behind the scenes before it even gets to a statement of advice,’’ he says. “You really need to spend that time with the alternatives that you have considered.
“That’s where I saw a lot of financial advisers breaking down and that’s where I spend a lot of my time when I’m creating a file and working with a client.”
Asked about the difficulty of standardising documentation, Scukovic says he turns to the process, particularly if he has a variety of clients with different needs.
“Our biggest takeaway from our business is to at least have a process defined that we can track and one we can come back to; a step in our process that we tick off,’’ he says.
“Again, it can be different documentation and different research that goes into that step. As long as we have that step there it’s the level that we need to standardise it to.’’
Meanwhile Scokovic turns to his colleagues when ethical dilemmas emerge.
“I don’t think, in today’s world with financial planning, you can ever go on your own,’’ he says.
“If there’s anything that we do need support on, we reach out to each other as a practice and we always draw on all the support and experience that we have whether that’s through a product provider, through our technical team or through our clients team. There are so many avenues.”
Western Sydney University School of Business associate dean of engagement Dr Michelle Cull, who joined academia after 10 years in financial and management accounting positions at ASX100 companies, says the importance of documentation is featured in her soon-to-be-released book – Ethics and Professional Practice in Financial Planning.
“What we’ve tried to do in the book is cover both the theory, the Code and professional practice and a lot of the things Jon was talking about, ie compliance,’’ Cull says.
“We’ve also incorporated a number of cases and real life examples so it brings that theory and the Code to life.”
Ethics requirements were part of industry education before FASEA’s Code, with the Financial Planning Education Council (FPEC) that accredited financial planning courses which has informed how the university teaches aspiring financial advisers, she says.
“We did an analysis of all the programs and how many ethics units were included in those courses and we came to a number of different ways that ethics are taught in courses,’’ she says.
This includes a standalone ethics unit as well as ethics integrated across the curriculum where students apply ethical behaviour to scenarios.
“I don’t think that has changed too much other than the bridging study that’s required for those financial planners that may have already done their qualifications,’’ Cull says.
“If you can have both, that’s the best. Pull apart the Code and get involved but also having a look in each other unit, how you would apply the code and having it integrated, so it becomes a habit,’’ she says.
