Three quick tips to ensure financial advisors comply with the requirements of the FAIS Act and the General Code of Conduct
Act, at all times, in the interests of your clients. As an authorised professional this means that it is your duty to understand both the circumstances, needs and objectives of your client and the financial products, including any associated risks, which you are able to offer as possible solutions to your clients. In instances where products are not regulated, a greater level of due care and diligence should be exercised as these often carry a greater degree of risk than products which are regulated.
Keep a record of all your interactions with your client. Documenting the information that you gathered from your client and assessing and analysing this information will enable you to comply with legislation and to substantiate the reasons for your recommendation. Keeping a detailed account of all the discussions and decisions made together with your client will reduce any misunderstanding in the future. In our experience, this is one of the areas where advisors fall short. It is not enough to say that this was done if you cannot prove it to be so from your client records.
If one product option is proposed, provide the client with a clear reason. Advisors should present clients with a choice of products, where this is possible, to enable the client to make an informed decision. It is important that when only one product option is proposed as a solution to the need of your client, a reason for this is made clear to your client. Clients should be given the opportunity to consider the choice available to them even if they rely on your guidance as their trusted advisor in the final selection.
Although record keeping can be tedious and time consuming, the value of maintaining meticulous records will not only become evident in the event of a client complaint, but also when conducting a review of your client’s financial plan or demonstrating to your client the value which you add as financial advisor.