RECORD-KEEPING TIPS FOR ADVISERS

BY ERIC FRYKBERG AND KERRY MEADOWS-BONNER

Regulation has doubled down on the need for business efficiency and transparency in record keeping.

With record keeping a fundamental duty of financial advisers, the Financial Markets Authority (FMA) stipulates that, ‘Amongst other things, you must create in a timely manner and maintain adequate records in relation to your financial advice service.’

‘Other things’, in record keeping, refers to all regulated financial advice given to clients, which must be kept safe and accessible for seven years - and available for inspection by the FMA at any time.

Connect Me Mortgages adviser Joshua Logan spoke recently about how easy it is for advisers to omit some of these requirements inadvertently.

“We always have good intentions to upload our records to a CRM [customer relationship management platform]… but the road to hell is paved with good intentions.

“We get busy, we move on to our next business and these requirements may get buried.”

Logan says avoiding such omissions is worthwhile: keeping accurate records of financial advice helps ensure transparency and win trust from clients.

“The first thing to do is look at your current processes: are there any painpoints? Are there any problem areas?”

Once these are identified, systems should be put in place to avoid repeats. Use voice recordings

Mortgages Online adviser Hamish Patel says the sheer volume of things that has to be done is a problem: with new regulations in force or coming, there are many things for advisers to remember.

He recommends using a recording device such as an old-fashioned dictaphone, or simply speaking into the record function of a smartphone, immediately after a client meeting, to ensure a record exists of what the client wanted - before it can be forgotten or overtaken by other events.

“It’s like an airline pilot's checklist before taking off: a way of making sure that each

“Sometimes I am tired after a meeting and I don't want to do it, but I do it because it sets my mind at ease for the next day. I am always surprised at how much information I can put in there.”

Rupert Gough of Maurice Trapp Group focuses on another aspect of record keeping: the need to take notes during a fact-finding encounter with a client.

“This could be done with a laptop or a digital writing device,” he says.

“It does not matter what method is used, as long as the information ends up as high quality, searchable, retrievable notes, and ‘one source of truth’ such as a CRM.”

Gough also stresses the need for backup systems in case of a cyberattack such as ransomware, and upskilling aids to record keeping such as improving typing skills or other forms of technology.

Reminder of consequences

The FMA has also reminded advisers of the consequences of failure to keep proper records, as in the case of an adviser at the centre of a Financial Advisers Disciplinary Committee (FADC) hearing in December 2020.

aspect of a client's wishes is ticked off,” says Patel.

“After your meeting [with a client], do a recording straight afterwards and send an email to yourself or an assistant straight away so you have a date stamp - and then the record is right there.

“I always [make these recordings] with two milestones: the initial meeting with the client but also at the delivery point.

The adviser, who has name suppression, was censured for breaches of two code standards – 12 and 15 of the Code of Professional Conduct for Authorised Financial Advisers – for having failed, in the case of three clients, to:

• record in writing adequate information about a personalised service provided to a retail client

• demonstrate adequate knowledge of the relevant legislative obligations which result from the term ‘personalised service’

The FADC maintained the breaches were ‘less serious’ than those of other cases. There was no suggestion that the adviser improperly benefited at the cost of her client, no disadvantages to the client, and no former misconduct found prior to the adviser’s breach.

Afterwards, the adviser in the case ‘retired’ and wound down her practice.

Good Returns understands that she did not apply for a transitional licence to operate under the new licensing regime, which came into effect the following week.

The case has long been closed, but the FCSL (Financial Services Complaints Limited) disclosed that the complaint could have been decided differently under the new financial regime.

Under the new regime, advisers giving financial advice have more obligations: to not only keep adequate records, ensuring they have met obligations with clients, but also to make certain clients understand the advice given.

The FMA encourages advisers to maintain oversight of record keeping and ensure practices are suitable for the scale and nature of their organisation and advice offering.

While it seems only a small number of advisers may grapple with recent regulatory changes, it is important that full disclosure ensures transparency in the adviser-client relationship and serves to enhance the trust that clients place in advisers’ hands.

The more complex processes are, the easier it is to skip a few steps - so keep it simple.

Solid and consistent record keeping means your business will operate more easily, protecting clients’ best interests. ✚

What You Need To Do

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Take voice notes

“After your meeting [with a client], do a recording straight afterwards and send an email to yourself or an assistant straight away so you have a date stamp - and then the record is right there.

Make written notes

“This could be done with a laptop or a digital writing device.”

Keep backups in case of a cyber-attack such as ransomware.

Upskill yourself

Stay up do date with skills relating to record keeping such as improving typing skills or other forms of technology.