DOVER FINANCIAL ADVISERS PTY LTD REPRESENTATIVES HANDBOOK Version 5.4 February 2011 Contents ANTI-MONEY LAUNDERING PROVISIONS... 2 APPOINTMENT OF AUTHORISED REPRESENTATIVES... 4 APPROVED PRODUCTS... 5 CLIENT FEES... 6 CONFLICTS OF INTEREST...10 DISCLOSURE...11 FACT FINDING...14 FINANCIAL SERVICES GUIDE...16 PROFESSIONAL INDEMNITY INSURANCES...17 STATEMENT OF ADVICE...18 STATIONERY...20 TRAINING PLANS...22 APPENDIX A: SAMPLE FACT FINDER...23 APPENDIX B: SAMPLE INVOICE...35 APPENDIX C: SAMPLE TRAINING PLAN...36 Copyright 2010. Dover Financial Advisers Pty Ltd. AFSL 307248 The information contained in this document is for the use of potential and actual authorised representatives of Dover Financial Advisers. No part of this document can be reproduced in any form without the express consent of Dover Financial Advisers Pty Ltd. Page 1 of 39
ANTI-MONEY LAUNDERING AND COUNTER TERRORISM PROVISIONS Background In 2006, the Anti-Money Laundering and Counter-Terrorism Financing Act ( the legislation ) was passed in the Commonwealth Parliament. This Act empowers a government body, the Australian Transaction Reports and Analysis Centre (AUSTRAC) to enact the regulations involved in this legislation. The legislation has only minimal influence on the way we conduct our financial planning. Compliance Officer The legislation requires all AFSL holders to appoint an Anti Money Laundering/Counter-Terrorism Financing (AML/CTF) Compliance Officer. Terry McMaster is that officer for Dover Financial Advisers. Relevance to DFA AUSTRAC has issued a Public Legal Interpretation (PLI) regarding Item 54 of table 1 in section 6 of the legislation. Item 54 relates to arranging a service for clients. The PLI can be found here: Public Legal Interpretation No. 2 of 2008 - Item 54 of table 1 in section 6 of the AML/CTF Act Having examined the PLI, we have concluded that the new rules have only minimal impact on our business model. Our reading of the rules and the logic behind them is that our clients are likely to be low risk of being criminals or terrorists. As such, there are three things that we are required to do: 1. Establish a clients basic identity, as shown in the table below: 1 As can be seen, this is not an onerous requirement and advisers typically fulfill them anyway via the normal fact finding process. A generic customer identification form can be found here: AUSTRAC customer identification form 2. Having identified the client, advisers may need to verify this identification, which can be done by making a photocopy of their driver s licence or some other photo ID such as a passport. That said, this second stage (verification) only has to occur if we actually make arrangements for a client to undertake a designated service, such as securities market services or the taking out of a life insurance policy. 1 Source: AUSTRAC Website Page 2 of 39
To make arrangements means more than simply recommending that clients make an investment into such a product; it means completing application forms on their behalf or some other practical assistance. This is shown in the following table: 2 The asterisk does not appear before the preparation of an SOA, it comes after that. So if our involvement ceases upon completion of the SOA, the rules do not apply to us, as we are not providing a designated service under the rules. 3. Report any suspicious matters. If at any time while dealing with a client (from the enquiry stage to the actual provision of a designated service or later) you form a suspicion on a matter that you suspect may be related to an offence, tax evasion, or the proceeds of crime, you must report the matter to Dover Financial Advisers within 24 hours of forming the suspicion. If the suspicion relates to the financing of terrorism, you must report the matter to Dover Financial Advisers within 12 hours. Offences include money laundering, terrorism financing, operating under a false identity or any other offence under a Commonwealth, state or territory law. Please note that suspicious matter reporting is subject to tipping off provisions. It is an offence to let another person or organisation know that a suspicious matter has been reported to AUSTRAC or that a reportable suspicion has been formed regarding a particular matter. Summary In summary, we are confident that our normal fact finding steps will allow us to comply with AUSTRAC s rules. In those cases where we assist clients to complete application forms for financial services, we need also to make a photocopy of some form of client ID to place on file. This copy should be taken within 14 days of completing the paperwork for the investment. In addition, if you note any suspicious matters when dealing with a client, you must report it to Dover Financial Advisers as soon as possible. 2 Source: Ibid Page 3 of 39
APPOINTMENT OF AUTHORISED REPRESENTATIVES In order to be appointed as a representative of Dover Financial Advisers Pty Ltd ( DFA ) individuals will need to demonstrate the following: 1. That they have satisfied and continue to satisfy the educational requirements for financial advisers in Australia (currently described in ASIC RG 146); 2. That they have and maintain a clear police and bankruptcy background. Advisers must demonstrate that they have met the educational requirements. DFA will pay for police and bankruptcy checks on potential representatives. Corporate Representatives For the purpose of limiting the liability of DFA, DFA will appoint a company as its authorised representative. The natural person who meets the two requirements outlined above must be, and remain, a director of this company at all times. This company must not conduct any business other than the provision of financial planning to retail clients through its association with DFA. Page 4 of 39
APPROVED PRODUCTS Authorised representatives of DFA may only recommend products which have been previously approved by DFA. As at today's date, the approved products list is as follows: Any managed investment product listed on the BT Margin Lending List (this list can be viewed at the following website http://www.bt.com.au/downloads/reports/btml_managed.pdf); Any publicly listed security listed on the BT margin lending list (this list can be viewed at the following website http://www.bt.com.au/downloads/reports/btml_securities.pdf); Superannuation funds operated by holders of an Australian Financial Services Licence (please note in your asset allocations you should still refer to the managed investments and securities APL in the first 2 points prior to recommending them with the exception of industry superannuation funds as below); Industry superannuation funds and all standard investment options within the industry superannuation fund; and Life Insurance Products provided by holders of an Australian Financial Services Licence. Additions, 1 January 2011: - Macquarie Cash Management Trust - Bank products such as Term Deposits and cash accounts - Capital guaranteed annuities ( Approved & rated by LifePlan e.g. Challenger, AXA & AMP ) - Sandhurst Common Funds - Cash Common Fund - Investment Common Fund - Select Mortgage Fund - Vanguard Balanced Index Fund & Growth Funds - Self-funding instalments/instalment warrants as long as underlying security is on the APL - Investment bonds specifically Lifeplan Investment Bond, ING Investment Savings Bond, and CBA Education Savings Plan Authorised representatives may apply to DFA to have one or more additional products added to the approved product listing. Dover representatives cannot recommend any financial products which are not on the Dover approved product list. It does not matter whether the financial product is a good investment, or whether the client wants it, or whether another AFSL holder has it on their list, or whether you recommended it with your previous AFSL. Dover representatives cannot recommend any financial products which are not on the Dover approved product list. Specific exclusions to the Dover approved product list include all agricultural products, and derivative products. Reasonable Test Please note that the mere fact that a product is on the approved products list does not mean that it can be recommended in all circumstances. Advisers must be able to demonstrate that any recommendation is reasonable given all the circumstances that apply in a particular case. Page 5 of 39
CLIENT FEES It is a requirement of the Australian Financial Services Licencing system that authorised representatives cannot receive fees or commissions directly from source. Fees and other revenue must first be collected by the licencee. As of the 2 nd April 2008, representatives of Dover Financial Advisers can choose to be paid either directly via fees paid by the client or indirectly via commissions paid by third parties such as insurance companies or fund managers. In the case of either form of payment, the payment must first be received by the licencee. From there, they will be held on trust until the middle of each month, when they will be disbursed to each representative. GST is payable upon financial services. Accordingly, the amounts paid by the client or by a third party will include GST. This GST will also be disbursed each month to the respective representative. The disbursement will be accompanied by a recipient created tax invoice. It is vitally important that clients always be aware of the fees they will be charged before any chargeable work is undertaken. The fact finder, attached to the financial services guide, contains a section in which the adviser nominates whether they will be paid a fee from the client or from a third party. This section must be completed by all clients. A copy of the completed section must be contained in each client file. For situations in which clients are paying a fee themselves, the DFA model asks each authorised representative to issue invoices on behalf of the licencee. All authorised representatives are furnished with the ABN and bank account details for the group. Invoices should request that client pay their fees are electronically by direct debit into the DFA bank account. Where clients do not do this, and instead forward a cheque or cash directly to the authorised representative, that representative must send the cheque to DFA. We have included an example of what your invoice should look like in Appendix B. A copy of invoices sent to your client should also be sent to Dover for reconciliation purposes. Page 6 of 39
Introduction CLIENT FILES The client file is the main way in which you will be able to demonstrate that you have met your responsibilities to your client. Its importance should not be understated. In the event of an ASIC audit, the client file will be the main piece of evidence. Your continued ability to operate under licence will depend upon how well (or otherwise) the client file demonstrates that you have complied with your obligations as an adviser. In addition, client files will be a major part of the compliance audit that DFA provide to you. Thus, the client files allow us to continue to authorise you as a representative. In this Information Sheet, we offer you a suggested system for maintaining your client files. You may choose to follow your own system, but please ensure that your own system includes all of the items discussed below. By doing so, you can be sure that the structure of your files maximises your ability to demonstrate compliance. Note that this information sheet does not refer to the quality of work evidenced by the client file. We assume this will be high. This information sheet is designed to assist you to demonstrate the high quality of your work. The actual quality is up to you. When Is A Client File Required? A client file should be opened for every client with whom you meet. You do not have to open a file for every potential client with whom you discuss the possibility of providing service. Typically, you will only open files for those clients: 1. With whom you meet; 2. With whom you otherwise agree to provide services; or 3. For whom you may need to demonstrate that you maintained yourself as a compliant adviser. The first two situations are quite obvious: if you are going to provide a service, then you need to establish a file. The third is sometimes overlooked, but it can be just as useful when you remember that the file may serve the purpose of providing you with protection as an adviser. An example of this third situation may be where a potential client approaches you for advice regarding their self managed super fund. This client may disclose to you that they intend to disregard the sole purpose test, and use their SMSF to purchase a holiday house. This is illegal, and you should decline to provide services to this client. You may then choose to open up a client file in which you note your decision and the reason behind it. Some advisers choose not to open individual files for such clients, but rather keep one file for all situations in which they decline to act. A note is then made in this file. Whichever you decide, the presence of detailed file notes within a filing system that is obviously being constantly maintained will assist you to demonstrate your own legitimacy. What Should a Client File Contain? We suggest that a file be divided into seven sections, as follows: 1. A register of contacts. This would include a file note detailing every conversation with the client. This file note would also refer to any documents given to client. For example, a file note might state that a Financial Services Guide was given to a client in the first meeting; Page 7 of 39
2. The client s personal information, including a completed fact finder and an authority to proceed with services on the clients behalf. Copies of relevant documents such as bank statements or trust deeds should also be included (you may prefer to store bulkier documents in a separate section at the rear of the file); 3. Worksheets showing how you have responded to the client s objectives; 4. Statements of Advice; 5. Copies of the implementation plan and implementation documents (such as application forms, etc); 6. Correspondence between you as the adviser and anyone else involved in the advice process (the client and third parties such as accountants or stock brokers, etc); and 7. A general section for anything else you consider relevant. Each section should be separated by a tab. Where the client file is likely to be used by someone other than yourself (for example, an ASIC auditor), it can be useful to include an index inside the front cover. This index would allow the reader to quickly identify the part of the file that contains a particular document. The numbered list above might be indexed as follows: 1. Register of contact. 2. Client Information. 3. Worksheets. 4. Statements of Advice. 5. Implementation. 6. Correspondence. 7. Other. How Much Detail Should be in the File? A general rule when deciding whether to include something in a client file is when in doubt, do. Providing that you are being honest and professional, things that are left out of your files are likely to do more damage than things that are unnecessarily added into the file. If you divide your file into the sections numbered above, and then file the contents accordingly, then the file should not become unwieldy. What Should Not be in the File? In thinking about this question, it pays to think about who might read the file. There are five potential audiences: 1. You and your colleagues; 2. The client; 3. DFA as your licencee; 4. A complaints service; and 5. ASIC as the regulator. Each of these readers has a slightly different perspective, and will use the file for different purposes. You should avoid putting anything on file that is likely to offend or otherwise be objected to by any of these readers. This includes material that is personally disparaging to the client, colleagues or other professionals. The contents of the file should demonstrate that you have performed your services with professionalism and objectivity. Can Things be Removed From a Client File? The general answer to this question is no. The discovery that things have been hidden from view will imply dishonesty on your part. If you are acting in good conscience, then there is nothing that will need hiding. Page 8 of 39
After a period of service, a client file might become large and unwieldy. In such cases, the general practice is to open up a second volume of that file. The original material, if regular access is no longer required, can then be archived. How Long Should Records be Kept? ASIC require that client records are kept for a minimum of 7 years. Privacy All states in Australia now have extensive privacy laws covering the gathering and keeping of personal information. Your filing system needs to comply with the relevant legislation. In addition, please be aware of the particular privacy requirements regarding tax file numbers. Essentially, TFNs should only be kept for as long as there is a legitimate purpose for them. Page 9 of 39
CONFLICTS OF INTEREST All professionals must manage any conflicts of interest that may be inherent in the service that they provide to clients. DFA considers that there are two major potential conflicts of interest that may arise in the provision of financial advice to clients. These conflicts are: The potential mismatch of information between the client and the adviser, such that the client may not be able to safeguard their interest by critically evaluating the advice that they receive; and The presence of payments to the adviser that come from some source other than the client directly (ie commissions). Mismatched Information Authorised representatives must ensure that the interests of the client are foremost at all times. DFA will manage this potential conflict of interest by ensuring that copies of all SOAs are provided to DFA (see section on Statements of Advice). The compliance officer will review these SOAs for both the reasonableness of the advice and the appropriateness of the formatting. Third Party Payments Once again, Authorised representatives must ensure that the interests of the client are foremost at all times. DFA will manage this potential conflict of interest by ensuring that copies of all SOAs are provided to DFA (see section on Statements of Advice). The compliance officer will review these SOAs with the specific intention of ensuring that fees paid to the representative are not excessive nor influential on the specific content of the advice. Page 10 of 39
Introduction DISCLOSURE Disclosure refers to the way in which key information about the adviser is related to clients, and potential clients, of the adviser. This key information essentially relates to the adviser s licencing and financial arrangements. Adequate disclosure is a key element of the regulatory regime for financial advisers. The need for disclosure is laid down in various sections of the Corporations Act, 2001. What Documents Require Disclosure? From the adviser s point of view, there are three main documents in which you must make adequate disclosure: 1. Financial Services Guide; 2. Statement of Advice; and 3. Business Stationery. The specific disclosure requirements for each of these documents are addressed in separate sections. Why Is Disclosure Required? The main thrust of the Financial Services Reform Act is consumer protection. Adequate disclosure provides consumers, and potential consumers, of financial, services with various information that is relevant to their decision to choose an adviser and then to follow that adviser s recommendations. What Must Be Disclosed? Many of the decisions regarding disclosure have been taken out of the adviser s hands. The Corporations Act 2001 and ASIC (via their Regulatory Guides) have been quite prescriptive in terms of what must be disclosed. These are addressed in the separate information statements on the three disclosure documents. Nevertheless, there may be times when you need to make your own decisions about what must be disclosed. In making this decision, ask yourself the key question: is this information relevant to a client s decision making? If in doubt about some piece of information, include it. There is little that can go wrong when an adviser gives their client too much information. Page 11 of 39
Example of disclosures: Disclosure of other benefits, interests, associations, or relationships [name of adviser], [Corporate auth rep] and Dover Financial Advisers Pty Ltd have no benefit, interests or associations with the issuers of the financial products/securities recommended that might reasonably be expected to influence the Authorised Representative in providing the advice. An up-to-date securities register is maintained and can be viewed if requested. OR The following benefits or payments relating to your investments will be received by [Corporate auth rep]: OR something similar. Disclosure of commissions & remuneration This depends on the adviser. The main requirement is that the commissions are shown in dollar amounts and if you are using percentages, a worked example is required. Details of personal or beneficial holdings of securities [Name of adviser] holds the following securities which are recommended on this SOA. Description of securities Number of securities Valuable consideration An up-to-date securities register is maintained and can be viewed if requested. OR This section does not apply as the advice does not contain any advice on securities. Page 12 of 39
Membership of EDRS DISPUTE RESOLUTION DFA is a member of the Financial Ombudsman Service ( FOS ). Membership of FOS, or some similar, body will be maintained at all times. This membership will be conveyed to existing and potential clients via our financial services guide as it is updated from time to time. Complaints Procedure The following complaints procedure is to be followed for all complaints (the procedure is extracted from our financial services guide, version 3.0): 1. Contact [Your adviser] on [Adviser s phone number] to explain your situation. 2. If this does not resolve your complaint, please put your complaint in writing to us at our head office at PO Box 68 SANDRINGHAM VIC 3191. 3. If your complaint is not resolved by this stage, you can access our external dispute resolution scheme. Dover Financial Advisers is a member of the Finance Ombudsman Service (FOS). FOS can be contacted on 1300 780 808. This is a free service to complainants. Complaints Register A complaints register will be maintained at all times. Page 13 of 39
Introduction. FACT FINDING Fact finding is the term used to describe all the adviser s attempts to gather information from the client. Before providing personal advice, it is imperative that the adviser take all necessary steps to identify all of the client s relevant financial circumstances. This is a requirement of the Corporations Act, 2001. S. 945A states the following: (1) The providing entity must only provide the advice to the client if: (a) the providing entity: (i) determines the relevant personal circumstances in relation to giving the advice; and (ii) makes reasonable inquiries in relation to those personal circumstances; and (b) having regard to information obtained from the client in relation to those personal circumstances, the providing entity has given such consideration to, and conducted such investigation of, the subject matter of the advice as is reasonable in all of the circumstances; and (c) the advice is appropriate to the client, having regard to that consideration and investigation. S.945A is sometimes referred to as the know your client rule. It is designed to stop the practice, previously common in financial planning, of all clients receiving the same advice, seemingly regardless of their personal circumstances. The accusation often made about financial plans was that the advice given was more likely to meet the adviser s financial objectives than those of the client. Under s.945a, you must be able to show that the advice that you have given to your client is designed to address their specific circumstances. To do this, you must obviously be able to demonstrate that you took the time to ascertain the client s circumstances before you began to develop your advice. Fact Finders The usual method for demonstrating that you did ascertain the client s circumstances is to use a pro forma questionnaire, commonly known as a fact finder. Using a pro forma fact finder is the best way to demonstrate that you took reasonable steps to procure information. By putting all clients through the same data collection process, you can demonstrate that your client work follows a logical methodology designed to identify all relevant information. And of course, using a pro forma written questionnaire provides documentary evidence of this fact. DFA s Financial Services Guide includes a fact finder. You should use this document for all clients. How Much Information Is Enough? The general rule here is that there can never be too much information. Specifically, ASIC require that the following three questions be considered when deciding how much information to collect: 3 1. The potential impact of inappropriate advice for the client; 2. The complexity of the advice; and 3. The financial literacy of the client. Just in case you were wondering, the more important your advice will be (as indicated by the impact of inappropriate advice for the client), the more information you need to collect. The more complex the advice, the more information you need to collect. The less financially literate your client, the more information you need to collect. 3 ASIC Regulatory Guide RG 175. Page 14 of 39
Completing the Fact Finder Some advisers like to complete the fact finder themselves, using answers obtained in client interviews. Other advisers like to ask their clients to complete the fact finder in preparation for commencing the advisory service. In the latter case, fact finders are often sent to clients, or downloadable from a website. Either way, it is the adviser s task to ensure that the fact finder is completed. What Information Should the Fact Finder Aim to Identify? The fact finder should record all information that is required for you to provide advice. We have included an example fact finder as Appendix A to this document. Please note that this is only an example. There may well be further information that you would like to gather from your clients. Feel free to add areas to the example, and let us know if you think they would be useful. If you wish to delete areas from the fact finder, make sure there is a legitimate reason for doing so. For example, you may wish to remove the section on insurance if you are not authorised to provide advice in insurance. Leaving Areas Blank Sometimes there will be an area of the fact finder that is not relevant to the client. Do not leave this area of the fact finder blank. Instead, write not applicable, or draw a line through the section. If a client is completing the fact finder, and they leave an area blank, you need to follow up with the client whether this was intentional. If it was, then write not applicable or draw a line through the section. Leaving an area blank is too ambiguous. If your file is scrutinised later, and there are blank areas on the fact finder, then the document will be open to the interpretation that you did not try to gather that piece of information. If you write not applicable, or otherwise indicate that you did consider the question, then you have provided evidence that the topic was considered. Attaching Documentation At times the best source of information will be some sort of third party document, such as a bank statement. If clients give you copies of these, refer to them in the body of the fact finder, and attach them at the back of the fact finder document. Page 15 of 39
Introduction FINANCIAL SERVICES GUIDE As a licenced provider of financial services, you must maintain a Financial Services Guide. The requirements for a Financial Services Guide are laid out in ASIC Regulatory Guide 168, a copy of which can be downloaded free of charge from: http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/ps168.pdf/$file/ps168.pdf All advisers should download and familiarize themselves with this document. Dover Financial Advisers will supply you with a copy of a Financial Services Guide to be used in your practice. If there is any aspect of the supplied FSG that you would like to discuss, please don t hesitate to contact us. What Function is the FSG Designed to Perform? The FSG is intended to allow the client to answer the question: What Service Am I Getting? Therefore, the FSG must be written such that the client can clearly and easily answer this question. To Whom Must the FSG be Given? A financial services guide must be given to all potential clients of the financial service. The DFA FSG includes a section known as a fact finder. The last page of this includes a section where the client signs that they have received the FSG. This should be copied and placed on your client file. When Must the Financial Services Guide be Given? Generally, the FSG must be given to clients as early as possible in the advisory process. The FSG must be given before any personal advice is provided. S.941D of the Corporations Act states the following: General rule (1) Subject to this section, the Financial Services Guide must be given to the client as soon as practicable after it becomes apparent to the providing entity that the financial service will be, or is likely to be, provided to the client, and must in any event be given to the client before the financial service is provided. Page 16 of 39
PROFESSIONAL INDEMNITY INSURANCES ASIC have decreed that all AFSL holders must maintain adequate PI cover at all times. This decree and the specific details of how the PI must be arranged is contained in ASIC Regulatory Guide (RG) 126. DFA will comply with RG 126 at all times. As individual arrangements will vary, advisers will be individually informed as to the way in which PI cover affects their practice. Page 17 of 39
Introduction STATEMENT OF ADVICE All personal advice to clients must be provided in writing. This written advice is referred to as a Statement of Advice. This is required by s.946a of the Corporations Act 2001. ASIC have provided further information regarding Statements of Advice in Regulatory Guide 175. A full version of RG 175 can be viewed at the following url: http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/rg175.pdf/$file/rg175.pdf Advisers should download a copy of RG 175 and familiarise themselves with its contents. What is Personal Advice? S.766B of the Corporations Act 2001 defines financial product advice as follows: financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence. RG 175 distinguishes between two types of financial advice: 1. Personal advice. This is advice developed in response to the recipient s personal circumstances; and 2. General advice. This is advice that is not personal. General advice is discussed in a separate information sheet. The basic rule for personal advice is that any advice that is in any way individualized is probably personal advice. It can only be provided via a written statement of advice. What Must the Statement of Advice Contain? RG 175 gives the following list of things that must be addressed within a Statement of Advice: 1. The title. The document must be titled Statement of Advice. These words must be written in full on the front page of the document; 2. Your contact details. This includes name, telephone, street address, postal address and email address. Include your ABN and website if you have one. 3. DFA s contact details. This includes name, telephone, street address, postal address, email address and website (www.dover.com.au). It should also include the licence number (AFSL 307248); 4. A summary of the client s personal circumstances; 5. The advice; 6. A list of all amounts payable by the client if they follow the advice; 7. Details about your remuneration. This disclosure should be made in dollar amounts whenever possible. It should also include non-dollar payments that you may receive; 8. Disclosure of any and all relationships, personal and financial, that you may have that may have influenced your advice; 9. Any warning required; and Page 18 of 39
10. In the event that you are recommending an existing asset be disposed of, information as to why you are making this recommendation. This information should include an acknowledgement of all the benefits that are lost through the disposal of the asset, and a description of how the new recommendations will better meet the client s needs. As you can see, this is a long list. However, the format for the statement and much of its text will not vary from client to client. Therefore, we recommend that you develop a set format that covers these 10 areas. DFA will provide you with electronic copies of standard statements of advice for use with clients. DFA will also provide you with a blank template Statement of Advice. Approval of Statements of Advice For commencing authorised representatives, all SOAs must be submitted to the compliance officer prior to being issued to the client. The compliance officer will review the SOA for both content and format and advise the adviser as to whether the SOA is suitable for issue to the client. Once an adviser has demonstrated a consistent ability to prepare SOAs that do not require alteration, they will be informed that they are, from that point forward, able to issue SOAs directly to clients. From this point forward, an electronic copy of the SOA must be provided to DFA as soon as practicable after it has been presented to the client. The compliance officer will periodically review these SOAs to ensure the reasonableness of advice being given and the appropriateness of the format of the SOA. If for any reason we find that there are compliances issues or breaches relating to this, it will be looked into more closely. Please note that your monthly fee to DFA does not include time spent in amending compliance issues or breaches. Any time required to make corrections to SOAs will be charged accordingly. Page 19 of 39
STATIONERY Your business will obviously use stationery. This section details the principles that you must follow when developing your stationery. 1. Main Principle The main principle to follow when developing your stationery is that any document which identifies you or your business as a provider of financial services must also make it clear that you are an authorised representative of Dover Financial Advisers. The Financial Services Reform Act (FSRA) requires that advisers do not act in a manner that may deceive or mislead their audience. Not all documents will state that you are a financial adviser. For example, you may have a letterhead for an accounting practice. If the document does not state or imply that you are a financial adviser, then the AFSL does not need to be shown. In disclosing the relationship with DFA, DFA s AFSL Number 307248 must also be disclosed. This will allow any user of the stationery to easily identify that you are a legitimate provider of financial services. An example of how to identify yourself appropriately is given below: Bloggs Investments Pty Ltd is an authorised representative of Dover Financial Advisers Pty Ltd (AFSL 307248). This sentence would appear on all business documents that hold you or your company out as a financial adviser. 2. Whose Name is More Prominent yours or DFAs? DFA does not require that you place the DFA name and logo with greater prominence than your own. Nor do we require that our logo be used on your stationery. After all, it is your practice that you are advertising, not ours. All we do require is that a sentence such as the example above be included, in legible text (no fine print, please!) on all your business stationery. 3. Which Name Must I Use: My Company Name or My Own Name? Full representatives must conduct their business through a separate company (which may be the trustee of a trust). This means that the company is the representative, not the natural person involved with the company. The name of the company must be disclosed. For example: Bloggs Investments Pty Ltd is an authorised representative of Dover Financial Advisers Pty Ltd, AFSL number 307248. 4. What is Business Stationery? Anything with your name or your business name written on it. This name may be pre-printed or typed in. For example, if you write a letter on paper other than letterhead, and the letter has something to do with your business, you need to disclose the relationship with DFA. A common list of stationery includes (but is not limited to): business cards, letterheads, with compliments slips, invoices, FSGs, fact finders, cover sheets, etc. Websites should also disclose the licencee relationship. 5. ACNs and ABNs Page 20 of 39
It is an ASIC requirement that all incorporated entities disclose their ACN or ABN on printed material. The public are able to check the details of the company on the ASIC company register, using the ACN or the ABN as the identifier. You should disclose your own ABN near your own company name. 6. Specific Questions If you have any specific questions regarding your business stationery, please contact Florence Tee, our compliance and training officer, on (03) 9583 6533. Page 21 of 39
Introduction: TRAINING PLANS ASIC Regulatory Guide RG146 requires all authorised representatives to conduct an annual training needs review and devise a training plan as part of their ongoing education obligations. DFA will issue you a training plan early in each calendar year. At a minimum, this training plan will require that you maintain membership of any professional bodies with whom you are affiliated. DFA s current policy is 30 hours of on-going education and training per annum. All authorised representatives should keep a register of their training or complete a training plan for each year. A template training plan can be found on Appendix C. All authorised representatives are required to keep a record of all training undertaken in any particular year on file and forward the details of all training courses attended. This should include the hours involved and a copy of the agenda. Adviser should keep records of all reading materials on a register. An example of this is found on Appendix C. Please note that your monthly fee to DFA does not include a payment for training. Any training that you undertake will be at your own expense. Page 22 of 39
Appendix A: Sample Fact Finder (Extract: Financial Services Guide ver 3.0) Dover Financial Advisers CLIENT QUESTIONNAIRE Please take the time to complete this document as thoroughly as possible. We use this information to develop our advice to you. If any part of the questionnaire is not relevant, please write N/R in the space provided. Please also feel free to attach any extra documents that you feel are relevant. Completed forms can be sent to us via the following media: Fax: (03) XXXX XXXX; Email: adviser@company.com.au; Post: Mailing address Alternatively, you can bring the questionnaire to your first meeting with Adviser. Section A: Personal Details Name (1): DOB: / / Name (2): DOB: / / Home Address: P/C: Work Address: P/C: Postal Address: P/C: Telephone/Fax: (a/h) (b/h) (mob) (fax) Email: Children: DOB: / / DOB: / / DOB: / / DOB: / / Marital Status: (please circle) Single/Married/Co-Habiting/Separated Page 23 of 39
Section B: Your Reasons for Seeing Us In the following sections, we ask you to give us specific information about your financial circumstances. In this section, we ask you to tell us in your own words what you would like us to help you with. Please let us know of any and all other information that is relevant to your financial situation. Please feel free to attach other documents to this questionnaire. General Information Short Term Goals Please list your financial goals for the next 12 months Medium Term Goals Please list your financial goals for the next five years Long Term Goals Please list your financial goals for the period after the next five years Page 24 of 39
Section C: Assets and Liabilities C1: Your Home Value of your home: Debt Secured Against the home: Deductible (business/investment): Non-Deductible (private): Home is owned in whose name: C2: Investment Properties Address Owner (ie whose name is the property held in) Cost Date of Acquisition Current Value Debt Net Value Eg 1 Smith St Blacktown Husband $400,000 Oct 2003 $650,000 $150,000 $500,000 C3 Share or Managed Investments Company/Fund Manager Owner (ie whose name is the asset held in) Cost Date of Acquisition Current Value Debt Net Value Eg AMP Managed Fund Husband $100,000 Oct 2003 $150,000 Nil $150,000 C4: Other Assets Cash: Superannuation: (see also section D) Other Assets Client 1 member balance: Client 2 member balance: C5: Debts: Credit card: Leases: Other: C6: Comments is there anything else we should know about these assets and liabilities: Page 25 of 39
Section D: Superannuation Please complete the following tables: D1: Client 1 Name: Fund Eg HESTA Annual Contribution Current Value Comments 9% of salary: $4,500 $52,000 Invested in high growth Are you happy with your current superannuation fund/s? D2: Client 2 Name: Fund Annual Contribution Current Value Comments Eg HESTA 9% of salary: $4,500 $52,000 Invested in high growth Are you happy with your current superannuation fund/s? Page 26 of 39
Section E: Life Insurances (term life, income protection, etc please do not show general insurances such as home and contents and health cover) Please complete the following tables: E1: Client 1 Name: Type of Insurance Annual Premium Amount of Cover Insurer e.g Death Cover $1,000 $1,000,000 AIG Are you happy with your current life insurances? Are there any medical reasons why you might not be able to increase or change your cover? E2: Client 2 Name: Type of Insurance Annual Premium Amount of Cover Insurer e.g Death Cover $1,000 $1,000,000 AIG Are you happy with your current life insurances? Are there any medical reasons why you might not be able to increase or change your cover? Page 27 of 39
Section F Estate Planning and Financial Management F1: Client 1: Do you have a will? Y/N. Last reviewed: / / Do you have powers of attorney? Y/N. Last reviewed: / / Do you have a solicitor? Name of solicitor: Address: Telephone: Y/N Have you previously used an accountant? Y/N Name of accountants: Address: Telephone: F2: Client 2: Do you have a will? Y/N. Last reviewed: / / Do you have powers of attorney? Y/N. Last reviewed: / / Do you have a solicitor? Y/N Name of solicitor: Address: Telephone: Have you previously used an accountant? Y/N Name of accountants: Address: Telephone: F3: Other Details Do you expect to inherit any major amounts in the next five years? Do any of your beneficiaries need particular protection in your will? Page 28 of 39
Section G: Income and expenses G1. Please provide details of your current income. Client 1 Client 2 Name: Occupation: Employer: Name: Occupation: Employer: SOURCE GROSS $ PA SOURCE GROSS $ PA Salary Salary Business Business Trust Income Trust Income Centrelink Centrelink Superannuation Superannuation Rental Rental Dividends Dividends Other (please specify) Other (please specify) TOTAL TOTAL G2. Do you expect to inherit any major amounts in the next five years? G3. Is there any other further information about your income that may be relevant to the development of your financial plan? G4. How reliant are you on investment income to meet your day to day living expense? G5. How reliant will you be on investment income in the future to meet your daily living expense? G6. What is your annual combined living expenses including interest on loans? (refer to budget template on Section I for assistance) G7. Do you anticipate any major expenses in the next five years? Page 29 of 39
Section H: Investment Profile H1: Please rate how comfortable you would feel investing in the following types of assets: 1 = very uncomfortable; 3 = reasonably comfortable; 5 = very comfortable Residential Property Commercial Property Direct Australian Shares Direct International Shares Managed Equity Funds Managed Property Funds Other Managed Funds Fixed Rate Investments Speculative Investments 1 2 3 4 5 H2: Investment Time Frame Time Frame < 10% 10-20% 20-60% 60-80% 80-100% < 1 Year 1-5 Years > 5 Years H3: Retirement Plans Client 1 Client 2 Retired < 5 Years 5-10 Years 10-20 Years > 20 Years H4. Using the descriptions on the last page of this document, how would you describe yourself as an investor? H5. How comfortable are you with debt? H6. How comfortable are you in borrowing to finance investments? H7. What is/would be the main purpose of your investments? Page 30 of 39
Section I Your Budget (Optional) The following planner can be used to list out the major areas of expenditure in your lifestyle. The planner is a very useful tool to help you learn about your spending habits. If you are a couple, please complete this as a couple. Mortgage Item Per Month Per Annum Rent Item Per Month Per Annum Council Rates Body Corporate/Maintenance Household Help Home Phone Cable TV Other Mortgage Loans Personal Loans Life Insurance Trauma Insurance Income Protection Car Registration Lease/Loan Repayments Other Children/Dependants Clothing School/University Fees Allowance Groceries Entertainment/Restaurants Club Membership/Hobbies Clothes/Shoes-Personal Furniture/Appliances Medical/Dental Consultations Private Health Insurance Pet Costs Books Cigarettes Transport Costs Taxi Train Water Electricity Gas Mobile Phone Internet Investment Loans Credit Cards Financial Planning Accountant Solicitor Insurance Petrol/Repairs/Maintenance Childcare Other Activities Alcohol Sports & Fitness Holidays Clothes/Shoes-Work Related Pharmacy/Prescription Subscriptions/Newspapers Fifths/Donations Lunch/Coffee Other Page 31 of 39
Section J: Client Signatures Please complete this page before sending the questionnaire to us. The contents of this fact finder represent a true and accurate reflection of my financial circumstances. I understand that this information will be used for the purposes of providing financial and investment advice to me. My information will not be used for any other purpose unless directed by me. I confirm that I have received a Financial Services Guide from Dover Financial Advisers. Client 1: (please sign) Client 2: (please sign) / / / / Page 32 of 39
Section K: Fees for Preparation and Implementation of Advice This section is to be completed by your adviser following your initial meeting. Adviser will be paid the following amounts for providing financial advice: Fees Paid By You Fee for preparing Statement of Advice $ (plus GST). Please note that the fee for preparing the Statement of Advice is payable upon delivery of the advice. This fee will be payable regardless of whether the advice is implemented. Fees for subsequently implementing the advice will be disclosed in the Statement of Advice. Fees Paid by a Third Party (Commissions) These fees will be communicated to you in your Statement of Advice. These fees will not be payable if you do not accept the advice. Acceptances of Fee Arrangements Adviser: / / Name of Adviser We accept the fees outlined above and authorize our adviser to proceed with preparing a written statement of advice. We undertake to pay the fee for the preparation of advice. We understand that fees for implementing the advice will not be charged until we accept the written statement of advice and agree to its implementation. Client 1: / / (please sign) Client 2: / / (please sign) Page 33 of 39
Common Risk Profiles The following is a list and description of the main risk profiles for investors. These descriptions are general in nature. You can use these descriptions to answer question H4. A. Conservative The conservative investor needs to maintain their capital (initial investment amount) and will find it very difficult to cope with losses in any given period. Increasing wealth is not as important as maintaining what they already have. They prefer to know exactly what level of return they will experience on their investment. They may need to cash out their investment at short notice, to finance unexpected but necessary purchases. The conservative investor might be quite nervous about investing, and prefers to proceed only when a good understanding of the investments being considered has been established. They may well be older and thus less able to make back lost ground if an investment goes bad. Conservative investors typically have shorter timelines for investing (0 3 years). Conservative investors usually need to use investment returns to pay for necessary expenses. B. Cautious The cautious investor tolerates low levels of variability in returns, and is not too worried by the occasional experience of unsatisfactory returns. They like to have a good idea of the likely outcome of their investment, but do not need to know precisely. They may have some nervousness about investing, but are prepared to put up with this nervousness. Increasing wealth is still not paramount in their thinking, but they are prepared to accept some risk to their capital for the chance of moderate growth. The cautious investor may still need to have the ability to cash out their investment at relatively short notice. Cautious investors also think in terms of shorter timelines. Cautious investors may need to use investment returns to pay for essential expenses. C. Balanced The balanced investor looks to achieve modest growth in their capital while still understanding that investment income is only going to be a small (for example single digit) percentage of their investment. They aim to strike a balance between protecting the wealth they already have and using it to generate further wealth. They understand that periods of low or negative returns are likely for investments with the potential to create higher returns. They are less likely to need to cash out their investments in times of financial stress. Their timelines are more mid term (5 10 years). Balanced investors use investment returns either to generate further wealth or to pay for non-essential expenses. D. Assertive The assertive investor seeks higher returns and thus is prepared to experience short term and periodic losses. They can cope with reasonably high levels of volatility in their portfolio. They are looking to use investments as a way of creating a substantial proportion of their extra wealth in the medium to long term. Thus their timelines are medium to longer term (5 years plus). The assertive investor will typically have a portfolio of more than one type of investment, which includes some high growth assets such as shares or property. The assertive investor is less likely to have to cash out all of their investments to meet unexpected cash needs. Assertive investors do not rely on investment returns to fund their day to day living. E. Aggressive Aggressive investors are looking to their investments to provide the bulk of their wealth creation over the medium to long term. Aggressive investors may still have a portfolio of more than one investment asset, but the portfolio includes a substantial proportion of high growth- high risk assets such as speculative shares and property. Periodic losses do not impact on everyday standards of living. Investment returns are ploughed back in to the investment portfolio to fund further wealth generating investments. Aggressive investors should have longer term timelines. Page 34 of 39
Appendix B: Sample Invoice AUTH REP FIN PLANNING PTY LTD LOGO Dover Financial Advisers Pty Ltd ABN 87 112 139 321 PO Box 68 Sandringham VIC 3191 To: Client name and address Date: XX XXXX 20XX On behalf of its authrised representative: Corporate Auth Rep Pty Ltd ABN XX XX XXX XXX Adviser address Adviser contact number Adviser email Invoice number: AR001 (Note: Adviser initials followed by invoice number) Description Details of fee charges Charge $XXXX Goods & Services Tax TOTAL $XXXX $XXXX Terms of payment : X days from invoice date PLEASE DETACH THE PORTION BELOW AND FORWARD WITH YOUR PAYMENT If you have any queries in relation to this invoice, please contact: Adviser name Adviser email Adviser contact number Payment option 1 By bank transfer to: Dover Financial Advisers Pty Ltd BSB: 013 355 Account number: 4909 88196 ANZ Bank Description or Reference: AR001 Client name Payment option 2 By cheque to: Dover Financial Advisers Pty Ltd PO Box 68 Sandringham VIC 3191 Write AR001 Client name on rear of cheque Page 35 of 39
Appendix C: Sample Training Plan Page 36 of 39
Dover Financial Advisers Pty Ltd ( DFA ) AUTHORISED REPRESENTATIVE TRAINING, REVIEW AND PLAN Introduction: ASIC Regulatory Guide RG146 requires all authorised representatives to conduct an annual training needs review and devise a training plan as part of their ongoing education obligations. This form should be used for that purpose. This form contains a space for selfreview and a training plan which must be completed by you and returned to us on (FAX) 03 9583 6733. Please Note: You may participate in training that is not listed on your training plan. Similarly, there is no penalty for not participating in nominated additional training. This plan is for guidance purposes only and is not intended to be a restrictive document. Deviations from the plan can be accommodated at the annual review next December. Questions If you have any questions regarding this document, please contact Brett Rose on (03) 9583 6533. Page 37 of 39
DOVER FINANCIAL ADVISERS PTY LTD TRAINING PLAN Please complete this form and fax it to DFA on (03) 9583 6733 Representative: Date: / / Review: Please nominate any areas in which you feel you need additional training: Training Plan: As an authorised representative of Dover Financial Advisers Pty Ltd, I will satisfy the requirement for ongoing training by maintaining my status as a member of the following professional body: (eg CPA, NIA, ICAA, FPA). In addition, I intend to undertake the following training in [insert year]: Please note that DFA is not responsible for this additional training. It is your responsibility as an authorized representative to organize all aspects of your additional training. Signed: / / (Authorised Representative) (Training Officer) / / Page 38 of 39
List in chronological order: Title of reading material (book, journal, magazine); Author of material; Page reference(s) REGISTER OF TRAINING Document how the reading was applied and resulted in enhanced technical knowledge Date Reading Completed Hours spent on reading CPD points allocated (1 point per hour) Declaration: The information contained on this register is true at time of print. Signed Date Page 39 of 39