moneyblog

Challenge questions for advice suitability

Tony Vidler has a series of challenge questions for advice suitability in this piece. His list is focused on an investment advice situation, below is my version, focused on an insurance advice situation. 

1. Does the advice address the scope agreed between you and the client? 
2. Did you gather sufficient information to ensure suitability?
3. Is the advice consistent with evidence-based approaches or academic consensus about this problem?
4. Is the advice, or recommendations, based upon research and analysis?
5. Is the balance between risk retention and transfer consistent with client tolerance for risk?
6. Does this take into account existing resources and/or insurance? If not, why not?
7. Has client desire to either consume or maintain capital been considered? 
8. What assumptions or calculations underpin it?
9. is the ownership structure appropriate, and have all existing ownership entities been captured and considered?
10. are their specific tax liabilities or advantages which are material to the recommendation? If so, what impact would a change in the taxation position have upon the recommendation?

 

 

Need to find a FAP?

From an adviser:

I was at a meeting with a group of advisers last week, when an adviser who has been in the industry for many years asked:

"How do I find a FAP?  Do I just google FAP?"

Everyone else in the room was like "Nooooo - whatever you do, don't google that!"

Might get an education if they did...

 

Australia: another study shows people are better off with advice

According to anew report issued by Russell Investments in Australia states that financial advisers add at least 4.4% or more every year to clients - and a total of about $560,000 better off overall. Rather than see this as another shot-fired in the 'active' versus 'passive' debate, I prefer to focus on the behavioural aspects that financial advisers bring to the relationship - that applies to risk management, to insurance, to home loans advice, and debt repayment, and holistic financial advice. Readers will know that I am made keen on technical aspects of our industry: policy comparison especially, but also financial performance, price, underwriting, and digital advice. All these matter, but the central territory for advice is helping clients change. 

The study worked with a number of advisers from US, Canada and Australia for the past 20 years and identified five key areas of financial advice in the report: annual rebalancing, preventing behavioural mistakes, planning and additional wealth management services and tax-smart investing. Click here to read more.