An Australian-based compliance software firm is sounding out the NZ market for demand around a new solution designed to objectively measure how financial advice firms meet regulatory ‘client first’ standards.
Ray McHale, founder and chief of MyNextAdvice, said financial advisers in many jurisdictions – including Australia, NZ and the US – now faced tough client ‘best interests’ regulations that introduce a higher, and harder to jump, compliance hurdle.
McHale said rather than leaving it exclusively to regulators to judge the quality of client-first compliance, financial advisers can garner evidence direct from the source.
“All of the new compliance obligations have a single focus. To ensure better consumer outcomes and to help lift trust and confidence in the financial services sector,” he said in a release. “That being the case, it follows that clients deserve to have a say about whether their adviser/broker has complied with the new obligations. They should be asked about their experience of working with their advice provider because the feedback, when combined with other evidence, can authentically validate if compliance obligations have been adhered to and expected outcomes achieved.”
MyNextAdvice enables advisers to survey and analyse client feedback to ensure both regulatory compliance and guide business growth plans, McHale said.
“We’re not a survey platform per se,” he said. “Essentially, we’re about change management – helping adviser businesses see where they are today, whether they are compliant [with client-first duties], how to commercialise the insights and what they can do to improve.”
The cloud-based service, sold as a monthly or annual subscription, provides advisers with a well-tested client survey template. While the underlying advice firms choose who to send the survey to, “we do all the rest”, McHale said.
“But it’s the other tools that add value to the client feedback,” he said. “For example, we can identify the lifetime value of each client to help advisers better understand where to focus their attention. We also have a ‘what if’ tool that shows what any changes may mean for the bottom line.
“And our analysis includes a ‘game plan’ that shows them the next steps on how to improve.”
Currently, MyNextAdvice has subscribers hailing from the financial planning and mortgage-broking industries in Australia but the group sees potential both in NZ and the US, where new best-interest’ duties are being imposed.
While Australian financial planners have faced client-first obligations for some time, the industry fell under a tougher new code of ethics at the start of this year. The Financial Adviser and Standards Ethics Authority (FASEA) code sets higher standards around ethical behaviour, client care, process and professionalism. From next January Australian mortgage brokers will also face a new best interests duty.
And from June 30 this year, US authorities imposed a new regulation best interest (or RBI) obligations on all advisers dealing with retail clients. While similar client-first duties were set to come into play in NZ on the same date, the Financial Services Legislation Amendment Act (FSLAA) regime and associated adviser code standards will now take force on March 15 next year.
McHale said MyNextAdvice had been adapted to meet the NZ standards, although the fundamental structure of the service is the same for all jurisdictions.
“We’ve been in discussion with a few interested parties in NZ,” he said.
The ‘basic’ MyNextAdvice service costs A$48 per user per month, or A$96 per user on the ‘professional’ plan with 20 per cent discounts for annual subscriptions.