THE IMPORTANCE OF USING THE RIGHT CLIENT ADVICE DOCUMENTS

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1 THE IMPORTANCE OF USING THE RIGHT CLIENT ADVICE DOCUMENTS Unison Advice Team Copyright Unison Financial Group 04 July 05 Message: This presentation is the property of Unison Accounting Group and must not be provided to third parties external to the receivers practice

2 Unison SMSF Advice Documents Unison will provide each participant a comprehensive range of advice documents and material to ensure that any advice requirements are thoroughly catered for. Para planning Services: on the rare occasion where there is a requirement to provide for either simple or complex strategy work other than what is available within the standard SMSF SoA framework, our para-planning team will provide the finished document. In certain instances where we are requested to create a tailored SoA there will be an additional fee for this service. Advice Documents To ensure all participants have the right tools and advice documents, Unison provides the following to each authority holder: Fact Find (SMSF Establishment) Statement of Advice Fact Find* - Member and Trustee FSG*: Financial Services Guide Adviser Profile* Risk Profiling Process* Statement of Advice (SOA*) Template: (one template to cater for the majority of your requirements) Authorised Representative - Communication Guidelines and Templates Documented - Advice, Implementation and Review Process Online Portal Storage Facility for all Advice Documents Financial Service Guide A guide to our relationship with you & others

3 The Practical Implications to your Business of the SMSF Advice Process - Your New SMSF Environment...Welcome to our World! Advice Process - Documentation Step : Initial Appointment with the Client Step : Plan Preperation Step 3: Presentation Appointment with the Client Step 4: Establishment of SMSF Fact Find - Member & Trustee FSG*: Financial Services Guide Adviser Profile Risk Profiling Process Statement of Advice (SOA) Templates x Record of Advice (ROA) Implementation Process Client Review Process and Documentation Para Planning Services AR Licensee Communication Guidelines and Templates Qualifying the client eg: - Client to have more then $50K to invest; - Discuss compliance requirements and costs involved; - Risk profile Provide and explain the Financial Services Guide (FSG) Complete Fact Find (Member and Trustee) Complete Risk Profiling Questionnaire Discuss (potentially) Investment and Insurances - refer to AFSL Advisor Completion of - SoA - RoA Investment Strategy-Draft Other information where required Present and explain the Statement of Advice (SOA) Client to sign-off on implementation (ie. Authority to Proceed form) Complete relevant bank account/cma application forms (if applicable) Assess file checklist to ensure compliance - Obtain copies of identification and certify - Complete AML/CTF documentation - Obtain Tax File Number (TFN) authority SMSF Implementation Checklist Establish SMSF structure and related entities (if applicable) Submit bank account CMA application forms (if applicable) If not actioned, engage AFSL Advisor for Investment and Insurance advice Provide AFSL Advisor with all relevant information relating to SMSF Note: ensure all documentation, meeting notes and signed SOA documents are stored and available for ASFL review Important: When do you have your accountant hat on vs. advisor hat? 3

4 MEETING Financial Services Guide (FSG) & Adviser Profile A Financial Services Guide (FSG) contains information about the entity providing the financial advice. It explains the financial services offered, the fees charged and how the person or company providing the service will deal with complaints. The Adviser Profile forms part of the FSG and is given to the client at the same time. It informs the client in relation to the particular adviser they are engaging with, the financial services they can offer, fees they charge and who they are licenced with. In the first meeting or just before the first meeting with the client (via mail or ). It is considered optimal if it is provided before the first faceto-face appointment as it provides an opportunity for client to understand the range of services an adviser can offer and the associated fee. Financial Adviser/ (Client Services Team may assist) Financial Service Guide A guide to our relationship with you & others 4

5 MEETING Fact Find & Risk Profile A Fact Find is a data collection tool. It helps the adviser gather personal financial details of a client which further helps clarify their end financial goals and objectives. A Risk Profile helps measure and identifies a client s attitude to risk, particularly the concept of downside risk. In the first meeting or just before the first meeting with the client (via mail or ). It is considered optimal if it is provided before the first face-to-face appointment hence providing adequate time to client to think about the questions and complete with appropriate responses. It is expected of the adviser to go through the completed documents with client in the meeting to vet through their answers and hence obtain a clear understanding of their financial goals and objectives. Financial Adviser/ (Client Services Team may assist) Insert your logo here Client Fact Find Important Notice To Clients The Corporations Act 00 requires that an adviser making financial recommendations must have reasonable grounds for making those recommendations. This means that an adviser must conduct an appropriate investigation as to the financial objectives, situation and particular needs of the client. The information requested in this form will allow the adviser to provide recommendations to the client and will be used solely for that purpose. We accept no liability for any advice given on the basis of inaccurate or incomplete information. The content and intellectual property contained in this document remains the property of Unison Accounting Group. All branding remains the property of Unison Accounting Group. Client () Name: Client () Name: Adviser Name: First Interview Date: Completed: In Person By Phone Investment Risk Profile (Please complete with your Advisor if required) Next Interview Date: Risk Management Most growth investments (e.g. property & shares) have an inherent risk of Date either FSG & temporary Adviser Profile Provided: fluctuations in value & price, or the risk of permanent loss of some capital. Unison s Investment Management service aims to minimise these risks through a number of core strategies: FSG Distributed by: Mail By hand Investing only in well researched investments, that meet a strict valuation criteria, and have a margin of safety between purchase price and estimated value; Referred by: Diversification of investments; for example by spreading a portfolio equally across 0 investments, a 50% price drop in one investment (assuming all others are the same price) Unison Accounting Group Pty Ltd ABN Corporate Authorised Representative of represents a 5% drop in the portfolio. Unison Wealth Management Pty Ltd ABN Australian Financial Services Licensee 896 Only investing in growth assets where you are prepared to invest for the Client long Fact term Find (i.e. Version at least February 7 05 Page of 3 + years), so that you give time for investments to reflect their true value, and to reap the benefits of a growing cash flow stream. Despite these strategies there is no way to reduce risk entirely. The key is to ensure that risks are calculated, understood, and the potential reward is sufficient for the level of risk undertaken. When it comes to investing, usually when you make an informed decision to take on greater risk, you create the opportunity for greater returns. At the same time, the potential loss may also be higher. For example, historically shares and property have provided a higher return over a longer period but their value is more likely to fluctuate. Investments that pay interest only generally have greater security, and lower volatility, but generally provide a lower return. Of course by investing too conservatively, you may incur the risk of not achieving your goals. We will ask you questions below that help to define your attitudes toward investing. We use this in combination with our understanding of your goals and objectives to ascertain an overall risk profile. Your risk profile helps to guide us on the selection of appropriate investments to meet your needs, goals, objectives, and the level of investment risk you are prepared to accept. Please tick the boxes below, for each question:. How long do you expect to invest the majority of your funds for? Client Client More than 7 years 5 to 7 years 3 to 5 years Less than 3 years 5

6 Para planning Request Form (PPRF) A Para Planning Request Form (PPRF) is a strategy form that advisers complete for the Para Planners to complete the necessary compliance documents (such as SOA/ROA). Advisers are expected to enlist the strategies (including any alternative strategies) in detail (based on client s financial goals and objectives) in the PPRF. After the first appointment with client and further to client s confirmation that they would like to seek advice from you for an agreed fee. Financial Adviser/ INVESTMENT STRATEGY Test Super Fund Financial Year Client Name(s) Date of Request Date Required (please allow 7 business days from the date of request) Paraplanning Request Form Type of SOA/ROA/Strategy only please tick the appropriate boxes ROA Required Limited Scope Comprehensive SOA Required Limited Scope Comprehensive Entities the SOA is required for Individual SMSF Trust Company Scope of Advice Details: (Please detail the Scope of the Advice to be provided) Background: relevant strategy section below) Broad overview of any alternative strategies Individual and Entities (please include details under the relevant strategy section below) Strategies to be included in the advice document (please provide details) Strategy Establish Self-Managed Super Fund (please specify) Establish a SMSF and rollover the existing super accounts Entity Name: Corporate Trustee/Individual Trustee: Wind up the SMSF as of / / ; Reason Buy Property Deposit amount: Deposit Source: Loan Amount or LVR: Year in which property is to be purchased: Is loan LRBA or Related Party Loan: Rate of interest: Repayments (P & I/Interest only): Macquarie Cash Management Business Income Capital Requirements Life TPD Trauma Expenses Protection pa pa Liabilities to clear Future Expenditure Required (PV) Future Education Expenses (PV) Medical costs/recovery Income Provision for tax Other Provisions Other Total Capital Required $ - $ - $ - $ - $ - Business Income Capital Provisions Life TPD Trauma Expenses Protection pa pa Disposable Assets Continuing Income (PV) Total Capital Available $ - $ - $ - $ - $ - Business Income Insurance Needs Life TPD Trauma Expenses Protection pa pa Total Cover Required $ - $ - $ - $ - $ - Other Notes (from initial consultation): Risk Profile Risk Profile Conservative Balanced Growth High Growth Financial goals and objectives Goals When Amount $ Tick Type of Fees Amount (incl. GST) Tick Plan Fee $ Implementation Fee $ Ongoing Adviser Service Fee $ New SMSF Deed Set Up $ Corporate Trustee Set Up $ New SMSF Deed Set Up & Company (combined) $ Establish Pension Account $ Actuarial Certificate $ Add/Remove Trustee (Individual) $ Change to Trustee $ Upgrade Trust Deed $ Holding Trust Set Up (when bank lending only, Includes Corp Trustee) $ Holding Trust Set Up & Related Party Loan, Includes Corp Trustee (combined) $ Amount to be invested in the first year: Future/Regular investments: Shares/Direct Investing (no product advice) Amount to be invested in the first year: Future/Regular investments: Salary sacrifice/non concessional contributions Amount per annum or per month: How it is to be invested (into assets or pay down the debt): Account Based Pension/Transition to Retirement Pension Which year it is to commence from: Amount (minimum, maximum, specific) Existing Cover Surplus/Shortfall $ - $ - $ - $ - $ - Option Specific levels of cover Life: TPD: Trauma: Income Protection: Option 3: Specific expenses to be covered (please specify) Expense : Expense : Expense 3: Scope of Advice Scope Statements In Scope Out of Scope Establish SMSF with Cash Management Account Wind up SMSF Limited Recourse Borrowing Arrangement Contributions into the SMSF Salary Sacrifice contributions Shares/Direct investment (no product advice) Transition from accumulation to pension phase Types of personal insurance and level of cover (no product advice) Any other (please specify) Broad overview of the recommended strategies Individual and Entities (please include details under the Death Benefit Nominations Client name: Beneficiary Type (Reversionary/Binding Death Nomination) Beneficiary name(s) with % allocation: Strategy Personal Insurance Option Standard Needs Analysis (through Xplan); please provide the following details An extra charge of $50 + GST applies for this 3 Any other strategy/for future consideration (please provide details below) The strategy direction provided in this document is complete and correct and I authorise the Paraplanner to complete projections and the SOA based on the information provided. / / (Adviser Name) Signature Date 4 6

7 Types of SOA 3 MEETING Statement of Advice (SOA) x A Statement of Advice (SOA) is a comprehensive strategic document that sets out the advice (such as establishing/ winding up the SMSF and various other strategies) given to a retail client by their licensed financial planner or adviser. The SOA must be given to the client at the time, or as soon as practicable after, the advice is provided. In time critical cases (where implementation is upfront), the SOA can instead be given within 5 business days of implementing the advice. Financial Adviser/ SOA - Establishment/Wind up Only (Basic Authority) Strategies that may be included in the SOA:. Establish/Wind up the SMSF. Contributions into the SMSF 3. Salary sacrifice contributions 4. Benefits of concessional vs non concessional contributions 5. Benefits of personal insurance Unison KPO SOA - Establishment/Wind up and Strategies (Limited Authority) Strategies that may be included in the SOA:. Establish/Wind up the SMSF. Limited Recourse Borrowing Arrangement. Contributions into the SMSF 3. Salary sacrifice contributions 4. Share investing (no product advice)* 5. Move from accumulation to pension phase 6. Types of personal insurance and level of cover (no product advice) * for product advice, you must refer the clients to a qualified Unison Financial Adviser. Outsource plan writing for a fee Copyright Unison Financial Group 04 It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive. 7

8 3 MEETING Record Of Advice (RoA) A Records of Advice (ROA) is much less detailed and less comprehensive document, which can be as little as or 3 pages in length. They are therefore a simple and effective way of providing ongoing personal advice to your existing clients. A ROA can be provided at the time of annual review considering client s relevant personal circumstances are not significantly different from when the original SOA was provided. Additionally, the advice provided in the ROA references back to advice provided in the original SOA. Hence, a ROA can t provide new advice (unrelated) to the original SOA. A ROA can be in an format. Note: The best practice is to use ROAs for years from the date when original SOA was provided (for related advice) and thereafter a new SOA should be completed. Financial Adviser/ RECORD OF ADVICE CLIENT NAME <Individual/Trustee ATF SMSF Name> MEETING/TELEPHONE CONVERSATION DATE <dd/mm/yyyy> BACKGROUND / SCOPE Insert your logo here Please list the details of your meeting/conversation with the client and why you are required to provide a Record of Advice. 8

9 4 SMSF Implementation Checklist including Investment Strategy SMSF Implementation Checklist will help ensure that all steps in the compliance process have been followed through including preparing the paperwork (such as for Trust Deed, Trustee Structure, Investment Strategy etc.) that needs to be implemented as part of the advice recommended. At the time of presenting the SOA/ ROA to the client. Financial Adviser/ SMSF Implementation Checklist Action! Download FSG, Fact Find, and SOA Template from the Unison Partner Portal.! Provide client with the FSG, complete the Fact Find, and prepare the Statement of Advice.! Establish whether the client will use an individual or corporate trustee Whom Responsible Insert your logo here Completed! Prepare Statement of Advice and have the client authorise.! Submit corporate trustee application if required. Set up Trust Deed. SMSF investment strategy to be completed in conjunction with Unison. / Unison Apply for ABN, TFN, ROCS allow up to 30 days to receive the ABN. Register the SMSF for GST if required. Prepare SMSF Cash Account (if applicable). Obtain Statement of Compliance for client to provide to their employer for SG contributions. Obtain ATO Trustee Declaration for the trustees to authorise. Obtain binding nominations for the clients to complete and sign. Note these must be updated bi-annually. Make duplicate copies of any documents (or the execution pages only) to be retained for scanning and uploading to the Unison Partner Portal. 9