There are a number of steps practice owners can take in order to improve their compliance processes and culture
In No More Practice 4, Sam Henderson is on a journey to grow his SMSF practice. A key part of my role in the show involves advising Sam about the compliance aspect of this process as well as the changing landscape of SMSF advice and what this might mean for his business.
Regulatory change is a constant in the field of financial advice and especially in the SMSF space. As such, developing a culture of compliance is something that will assist practice owners in staying ahead of these changes and there are a number of steps that will assist in developing true compliance cultures within financial advice businesses.
From a licensee perspective, building a culture of compliance must come from the top down. I would encourage all licensees to make sure that every single staff member is aware of their policies and procedures. They don’t need to know the ins and outs of how to manage a breach – but they should be aware that there are policies on breach management, complaint management and ideally a whistleblowing policy – and they should understand where to go should they require any information on these policies.
In terms of finding out what’s going on in a practice from a compliance perspective, the best area to look is the paraplanning unit. This is where the strategic advice is written off the back of the fact finding that advisers conduct with clients, and as such the paraplanning unit is usually the first to see what’s going on as to whether or not advice is suited for the client.
Ongoing communication with both administrative staff as well as clients also plays an important role in addressing any concerns, and whether these should be elevated for discussion at higher levels.
If practice owners are struggling to cope with compliance obligations, outsourcing the process can help reduce administrative burdens. In particular, it is a good idea for new businesses when they first acquire their AFSL to outsource their first one or two years’ worth of compliance work, so they understand patterns of behaviour as well as requirements that an external provider needs to meet. In addition to this, it is a good idea for practices to conduct monthly or quarterly compliance meetings to keep everyone in the business on the same page with regards to expectations, potential issues as well as regulatory changes.
After this period of outsourcing compliance work, practice owners may choose to continue along this route, or take it upon themselves to either employ someone internally for the work or actually run the business from a compliance perspective as well.
