Good compliance creates a better business

Good compliance enhances processes and creates stronger client relationships, which ultimately leads to better, more sustainable and more robust client-centric advice businesses.

You don’t need us to tell you that there are many rules and regulations you must comply with in order to run a financial advice business. From the best interests duty, to being mindful of things like anti-hawking provisions, to remuneration transparency and more, these measures are in place to help protect consumers. However, we believe they do more than that. We believe that they actually encourage advisers to enhance their business processes and create stronger client relationships, which can ultimately lead to better, more sustainable and more robust client-centric advice businesses.

Creating client engagement

Anti-hawking rules prevent advisers from offering financial products for sale on an unsolicited first contact, and anti-spam laws prevent anyone from sending commercial emails to anyone else without consent. Successful advisers understand that trying to sell someone a product on first meeting them, and/or sending out unsolicited emails, are also not great ways to initiate and build client engagement. A much better step one is to set up a consensual meeting, to engage the client and start building rapport, which ultimately leads to a stronger relationship.

Fact finding

Another core element of creating client engagement and rapport is getting to know all you can about them – from their family, lifestyle and job to their problems, hopes and dreams.

From a legal perspective, this process involves completing a documented fact find and ensuring that all those things are captured in it. But going through the fact find process is an exercise that also supports the business, because it creates a solid foundation for really understanding a client and empowering you to deliver really tailored advice that genuinely meets their needs on an ongoing basis.

A stream of qualified and interested prospects

The Spam Act prohibits unsolicited commercial electronic messages. This means you cannot promote products and services to unsuspecting email recipients – that is, you must have the recipient’s consent to email them, plus offer them the ability to unsubscribe with ease. Creating an effective process for collecting marketing consents will ensure you comply with the act while simultaneously creating a database of prospects and clients who are legitimately interested in your services, and who are therefore more likely to engage you.

Manipulative techniques are illegal – and bad for business

There are a number of unfair selling techniques that are banned by regulations. These include misleading, deceptive or manipulative selling tactics, pressure selling, creating a false sense of urgency and other techniques. It’s not only illegal to engage in these tactics, it’s also bad for business because they are likely to create distrust. On the flip side, forging open and transparent client relationships, and delivering solutions that genuinely meet client needs, helps build trust and in the process, better businesses.

Transparency is the key to trustworthiness

Regulations require advisers to be transparent, particularly in relation to remuneration, and transparency is the name of the game when it comes to building trust. Having open and transparent conversations with clients about fees and charges means they will be less likely to experience ‘bill shock’, and this in itself helps create a deeper level of trust and stronger, more open client relationships.

Leveraging the best interests duty

The “safe harbour” steps within the best interests duty can be used as a roadmap for advisers, and in many ways simply reflect the steps that the really successful advisers are already taking. These steps also prompt you to talk to the client about what other advice or services they may need, but haven’t specifically asked for.

One of the central themes of the best interests duty is the way that it constantly reminds you to consider the client, their circumstances and their wants and needs, at every step of the advice process. Keeping the entire process client-centric also helps minimise the effect of potential conflicts of interest, such as referral payments and commissions.

At the end of the day, compliance is not something that you need to overcome or feel overwhelmed by. In fact, the regulations can serve as supportive tools to help you improve what you are already doing, from marketing to building client engagement and relationships, right through to delivering quality advice. Compliance not only helps protect your clients, it also helps you create a better advice business.


 Michael Jones is the compliance manager at Synchron

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