When compliance detracts from good advice

Kate Cowling


February 15, 2018

Advisers who are driven by compliance often won’t end up with the best outcome for their client, a financial services lawyer said.

While advisers must comply with various regulations to meet the best-interests’ duty, focusing solely on ticking those boxes can distract from delivering great advice, Holley Nethercote Lawyers partner Paul Derham said.

“Good advice is good listening,” he added. “If we just try to focus on compliance and if compliance drives the way we recommend things to our customers, we can end up with not the best outcomes.”

Kath Bowler, chief executive of Licensing for Accountants, said there are five questions that lead to good advice that is also compliant, which she summarised as follows:

  1. What are you being asked to do?
  2. What additional questions do you need to provide the client with that requested advice?
  3. What would you recommend and why?
  4. Do you need to write/document/model anything to illustrate why your advice is a good idea? (What? Why?)
  5. Is the advice of value to the client?

Bowler said it would be helpful, as a starting point, for advisers to think about what they would give the client if licensing did not exist.

TOPICS:   SMSFA National Conference 2018