What do you do with your commission statements?
- Check how much you got paid this month, file it
- Check you got paid for that large insurance deal, file it
- File it, deal with it later
- Give it to your admin staff and forget about it
- Manage within a specialised commission management and invoice system, reconcile, report, analyse, disclose
If you selected number five, you are within the minority of planners and dealer groups.
Invoice material and commission management information, critical compliance and client data, can be handed to you on a silver platter, so long as the correct systems are used.
Aversion to spending money on compliance related systems that provide direct and immediate benefits may be a system weakness with the business process. It is naïve to think otherwise, particularly given the recent events that have taken place across the financial services industry.
There are several factors to consider when analysing commission statements:
- Are your advisers advising within the scope of their accreditation?
- Are the appropriate fees being recognised, collated and reported correctly by your commission system for the purpose of fee disclosure statements and as an engagement tool for your clients?
- Does the amount received in commissions reconcile to the cent to the amount paid out?
- Are your dealer group’s fees and deductions being recorded and reconciled?
- What income is missing, how much, from whom, and when? Where is that income?
- What amount of income have you lost out on through an adviser’s inability to close or through declined insurance business?
- Are your referral partner payments correct? How do you know they’re correct?
- Are your invoice methods prohibiting settlement?
This is by no means an exhaustive list, just some of the key considerations you must make.
Increasingly more important, is whether the commission system you have chosen provides an auditable trail. Much like an excel spreadsheet, data in some commission systems can be altered and transaction dates amended. Even if you do find yourself in a position of perfect reconciliation, how can you prove that data was not ‘made to fit’? Did you notice the $50.00 transaction on line 1,382 of your commission payments file? Probably not.
Investing in a system that’s performs multiple tasks will not only save you money in the long run but also mitigate compliance risks. Delaying this process, is delaying the inevitable and you may very well be flushing money down the toilet.
Graham Chee is the director of Revex Solutions. Revex is able to help manage the day to day and ongoing process of revenue and fee management for dealer groups, financial planning practices and individual advisers.
