FAQs - Financial Planning Advocate

Professionals are a curious bunch so they ask a lot of questions. Needless to say we love answering these questions because they help us make our process better. The following is a list of the most frequently asked questions.

Are there risks involved in becoming my client’s advocate?
No. The ultimate responsibility for the advice given to your client lies with us as the AFSL holder. That is the whole point of the exercise: it allows you to restrict your involvement to the thing that you know best (accounting), while effectively outsourcing the provision of financial advice to us.
Provided that what you tell us is accurate, there will be nothing for you to worry about.
How much work am I expected to do to get my client insured?
Very little. We provide an online fact finder, which most accountants can complete in 10 minutes or so, using information that you already hold about your clients. If you would prefer not to do this yourself, you are welcome to ask your client to complete the fact finder on their own behalf.
Once we have gathered the client information, all work involved in preparing a compliant statement of advice and then implementing that advice is conducted by us. Most accountants like to review our advice prior to it being presented to their client. Our statements of advice are only five pages or so long, and so this review does not take long.
Who does the medical check follow up?
Who prepares the statement of advice?
We do. Prior to presentation to you and your client, the statement of advice is then reviewed by our licensee and then again by an independent legal practice engaged by our licensee. These reviews ensure that the advice given to your client complies with all relevant laws, most conspicuously the requirement that financial advice always be in the best interests of the client to whom it is provided.
The statement of advice clearly states that the advice has been provided by us under the auspices of our licensee. The document will make clear that you have not provided financial advice or any other service for which you are not licensed.
If an insured event occurs and my client is not covered, who is liable?
We are obliged to have an effective compensation scheme in place in the event that something goes wrong with a service that is provided to a client. This compensation scheme involves a combination of external professional indemnity insurance and internal reserves that are maintained specifically to ensure any legitimate compensation claims can be paid.
We are also obliged to be a member of an external dispute resolution service.
We enjoy a very good record in terms of client satisfaction. All advice that we provide is reviewed internally to ensure the advice is in your client’s best interest.
For the above reasons, we can confidently state that, provided that the information you provide to us is accurate, you will not be liable in the highly unlikely event that something goes wrong for your client.
When do I get paid?
Do you communicate directly with my clients?
We only contact your clients to the extent necessary to provide risk insurance advice and then implement the advice that has been given. We always prefer to liaise through you, as this serves the dual purpose of reducing the time that we spend on things like introducing ourselves to clients as well as ensuring that nothing happens without your knowledge and that the client relationship remains under your control at all times.
While we take full responsibility for the service that we are providing, we always consider the client to be yours and act accordingly.
Why would this be better than my current referral arrangement where I get paid 20% of the commissions for doing zero work?
Well, for a start, when you are an advocate you receive a cut of all commissions paid on behalf of your clients. In addition, because we only liaise with your client through you, you control the client experience at all times and there is absolutely no risk that you will lose a client to us or to somebody else to whom we want to refer your client.
Lastly, the quality of advice that we give to your client will be at least as good as, if not better, than the advice they could get elsewhere. This is due to a combination of our own skills and experience, as well as our preference to have your professional judgement informing our opinion.
In summary, you still do virtually no extra work, your client gets a better service and you get paid more.
Who owns the client?
Financial services licensing laws require that financial product advice can only be provided by somebody operating under an Australian Financial Services Licence. Therefore, it is important that the financial product advice is demonstrably provided by us and not you.
That said, our only interest is in ensuring that your client receives competent and helpful financial product advice. Therefore, once our advice has been implemented, we have no further interest in providing additional services to that client. Our engagement with your client is therefore a short-term one and you remain your client’s primary advisor before, during and after our involvement with them.
Who owns the goodwill attached to the income generated from my clients risk insurances?
You do. Your goodwill calculation improves in at least two ways. Firstly, you simply generate more revenue, which makes your practice more profitable and thereby improves its capital value. Secondly, you establish an income stream that is ongoing and it is separate to any investment of your time or effort. This income stream is typically valued at a higher multiple that is paid for the purchase of accounting fees.
If you decide that you would like to sell your share of the ongoing trail commission, we agree to also sell our share of this revenue stream to the same purchaser. In this way, you are not limited in any way from accessing the goodwill that has been created from your clients.
What about transferring servicing rights?
Risk insurances typically give rise to ongoing trail commissions. You will receive a cut of ongoing trail commissions that are received in relation to your client. The right to receive these trail commissions from the insurer can only belong to a licensed financial advisor such as ourselves. These rights can be transferred from one licensee to another.
If you decide that you would like to sell your share of the ongoing trail commission, we agree to also sell our share of this revenue stream to the same purchaser. In this way, you are not limited in any way from accessing the goodwill that has been created from your clients.