For financial planning practices that don't have a clearly laid out business plan, the workload of meeting FASEA's Code of Ethics requirements can be a great push to get it in order, according to a speaker at the FPA Congress.
In a session about being a good corporate citizen, Suzanne Haddan, managing director of BFG Financial Services shared how advisers can approach the workload of FASEA compliance to their benefit.
"At the risk of upsetting some people, FASEA code of ethics should be the guiding light in this process of being a good corporate citizen," Haddan said.
She said when her practice started to think about meeting FASEA Code of Ethics, they looked at what other value the business could get out of it.
"And I started from the point of view of the business plans," she said.
"I hope, most of us have business plan, because it would be ironic not to given our emphasis to the client on the importance of planning or strategy or monitoring or reviewing. Let's practice what we preach and have our business plan."
A show of hands established only a handful of financial planners in the audience had defined a business plan.
Start with a template
Haddan said a simple business plan template is good enough to start with.
"You just have to Google it and many websites have business plans which you can utilise, but it's about starting to get your team involved in this process," she said.
"For example, the strategic direction of your firm, which would have the purpose statement, the mission statement - I get confused with those two by the way - the client value proposition and your core values."
She said standard three should force planners to think which products their business puts on their approved product lists and how they charge clients.
"Also think about what you are going to do about the delivery of the in-house products in delivering those services to your clients," she said.
Standard five should force practices to remap their target market, and the products and people the firm uses to service this target market.
"So in setting something up beyond the competency of your practice, you're heading into dangerous territory. At the very least, it helps you reflect on what that means," Haddan said.
This may mean advisers will have to preen their client books.
"We do have to segment our clients to a certain extent. Standard seven asks that the fees that you're charging be fair and reasonable for your target market.
"It may mean because you have costed your fees and you know what you need to charge to be in practice to be profitable, some clients in the community don't fit your target market
"But you need to sit down and think about it," she said.
Good time for licensed advisers to stand up
Haddan said the code, coupled with new ASIC guidelines, empowers not just independent advisers but those at a licensee.
"They now have a powerful voice, to take it to their licensees and say, 'That doesn't meet the standards of the FASEA code of ethics. That's not going to get us an outcome of being a good corporate citizen.'"
However, she also reminded the audience the code applies to practitioners, not licensees.
"You want to be able to protect yourself by holding them [licensees] accountable to high standards."