Preparation key to staying compliant in the EOFY rush

Now in the thick of the end of financial year (EOFY) rush, MIntegrity co-chief executive Amanda Mark said “strategic foresight and proactive client service” can make a significant impact when it comes to avoiding excess stress.

Unfortunately, for those who have left things to the last minute this year, Mark said “the single biggest mistake an adviser can make is leaving communication too late”.

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“By early June, your clients should already know what, if anything, they need to do. A last-minute email on 25 June about a super contribution is not advice; it is a recipe for stress and potential errors,” she added.

Although most advisers should have at least made a start on their EOFY checklist at this point, for those who haven’t, Mark said they will need to ensure they are prioritising accordingly because “not every client needs an urgent pre-30 June action”.

As such, she said advisers will need to assess each individual client and determine whether they have any specific EOFY actions – there will, of course, be some who don’t – or if they will need a call or a meeting to get their accounts in order or simply an email to confirm the current strategy.

“Starting this process early gives you breathing room to book meetings, prepare documentation, and for clients to arrange their finances without feeling pressured,” Mark said.

Looking at some more specific areas to consider, Mark said that superannuation is the “low-hanging fruit of EOFY advice”, however, due to the complex nature of the super system, she explained that it is “riddled with compliance traps” that could trip up those who try to rush through.

“Whether it is maximising concessional (pre-tax) contributions using the carry-forward rules or making non-concessional (after-tax) contributions, the advice needs to be rock solid, specific to the clients’ circumstances and documented,” she said.

“Before you pick up the phone to suggest a last-minute contribution, ask yourself: why this is appropriate for the client, is this part of their existing strategy, what records do I need to keep? This is where a record of advice or, if the strategy is new or significantly different, a statement of advice becomes critical.”

While email will be a key tool for advisers as they wrap up client strategies for the year and communicate any final changes, Mark noted that they still need to be clearly articulating what they are advising clients to do.

“Your advice document must clearly outline the contribution type, the amount, the source of funds, and how it aligns with the client’s goals and financial situation. It must also include the necessary warnings and disclaimers,” she said.

“Remember, the regulator does not care about your intent; it cares about the best interest duty you have to clients and the evidence recorded on the client file.”

Meanwhile, for clients approaching retirement, advisers should consider how they can maximise final super contributions as it may be their last chance to use the higher contribution cap. This is also a key time to consider transition to retirement strategies ensuring they meet the needs of the client.

Mark added that the EOFY period is not only a time for client reviews, but also a good opportunity for advisers to assess their own performance, suggesting they should also be reviewing what services they charged for and what they were actually able to deliver on.

“Go through the client ongoing fee agreements. If these include a portfolio review, investment monitoring and an annual strategy meeting, ensure these services have been provided and that there is evidence of file notes, meeting minutes, review reports,” she said.

“If a service was not delivered, fees cannot be charged.”

And while there is a lot for advisers to wrap up this time of year, Mark provided a final reminder to make sure all admin and documentation is up-to-date and meets the regulatory requirements.

“If advisers embrace a structured and compliant approach, they can avoid the June scramble and enter the new financial year with greater confidence and integrity,” she said.