Your Guide to preparing your
Adviser Business Statement
This Guide has been prepared using guidance notes from the Securities Commission, our own research, and
other sources. It identifies the key areas, details the key requirements in each, and suggests some possible
responses for you to use in constructing your own ABS.
This Guide is in the form of a Word document that you can use to prepare your own ABS. It consists of:
 Some Introductory Notes based on material from the Securities Commission
 An ABS cover page
 13 Key Areas, grouped into two Sections. In each Area we have provided some guidance notes, and
some possible text.
Everything that is in red is a guidance note that can be deleted as you work your way through the process.
How to prepare your ABS:
1. Review the latest requirements – visit SecCom’s AFA website (www.sec-com.govt.nz/far/afa/) to
review their latest ABS guide, and also ensure you are familiar with the current Code.
2. Save this document as your ABS
3. Read the Introductory Notes in red on the next few pages
4. Prepare your title page
5. Complete Key Area 1 (Role):
- read the Guidance Notes key requirements in red ( minimum requirements and best practice)
-look at some example text you could use, as the basis.
- delete the text you don’t want to use and add to the text you do want
- when you have finished, review the guidance notes again to check that you have provided all the
information required
- review any other “best practice” information you have listed
- delete the guidance notes
6. Repeat for the other 12 Key Areas
7. Delete this page and the Introductory Notes on the next few pages.
8. Review the entire document once more, then save
Page 1
Introductory Notes
(based on Securities Commission guidelines)
What is an ABS?
Behind every successful professional is a well-ordered business with good systems and procedures. As part
of the authorisation application process you must prepare an Adviser Business Statement - or ABS. Your ABS
is a snapshot of how you operate. It explains the systems and procedures you have to ensure you conduct
your business in a professional way.
The ABS is a short, written document that sets out what business you are in and what compliance
arrangements you've put in place. It will be a requirement of the terms and conditions of your authorisation
to have an ABS that is up to date.
The ABS is intended to be a helpful business tool. It's your primary evidence that you've thought about your
professional obligations and how your adviser business operates and that you have systems and procedures
that are relevant to its size and nature. Your ABS is an internal document - you don't need to make it public.
It's a living document that you are obliged to keep up to date so it reflects any changes in your business and
any changes in the requirements in the Act and the Code.
Your ABS will be a key source of information for the Commission. You don't need to attach your ABS to your
application, but it must be available for us to see on request - both before and after authorisation.
The Commission will be doing spot checks as part of our ongoing role of monitoring the financial advice
industry. This could involve a visit to your office so you need to keep your ABS current and have it ready for
inspection.
How do I prepare an ABS?
You need to develop an ABS before you go online to register and apply for authorisation. The ABS consists of
two parts:
Part 1 describes your adviser business. It helps you to think about your business in the context of the
standards in the Code and the Act. It helps the Commission understand your business. It also provides
context for Part 2.
Part 2 explains the systems and procedures you have in place to comply with the Financial Advisers Act and
its regulations; the Code of Professional Conduct for Authorised Financial Advisers; and the terms and
conditions of your authorisation. It should address the things you’ve mentioned in Part 1.
Both sections include:

minimum requirements

suggested information, to help you understand the sort of information which will help to show how
you meet the principle or requirements.
You can structure and write your ABS in a form that suits your own business needs so it will assist you with
operating professionally.
Page 2
The length and complexity of your ABS will depend on the scope and scale of your adviser services. For most
advisers the Commission expects that the ABS will be around 7 to 15 pages. Your ABS is intended to
summarise your approach, but should be comprehensive enough to explain how you oversee your business.
Part 1 may contain similar information to that included in your business planning process. For Part 2 the
Commission expects that you will be operating systems and procedures that already address some of the
new requirements. Any detailed guidance on using these procedures should remain in separate records or
manuals, which the ABS can cross-reference. The ABS can indicate the topics covered in your records or
manuals that are key to your compliance and consolidate topics from a number of sources into one place.
Your employer or QFE can help you write your ABS, or a group of advisers might help each other. An
employer or professional body might provide additional suggestions relevant to a particular business area.
Your employer or QFE cannot require you to adopt a particular ABS, but the systems and procedures
described in your ABS might be those your employer or QFE requires you to follow. The ABS is your
document to help demonstrate your professionalism so you are responsible for it. You are expected to be
able to explain it to the Commission or provide supporting documentation, if requested.
AFAs are responsible for meeting and maintaining the same professional standards, whether or not they
work with a QFE. A QFE sits between its advisers and the Commission and is responsible for their compliance
with the standards specified in the Code. Therefore, an AFA in a QFE can source some of the information
required for their ABS from their QFE, for example, by including QFE-produced material describing the QFE's
systems and procedures as an appendix to a shortened ABS.
Key points to remember:








The focus should be on you as the adviser, not on your business
Don’t just fill in the blanks. Think about your business and personalise your ABS. This will give it
more credibility.
Every word you write has to be deliverable.
Show the controls you have in place to deliver.
You do not need a lawyer to write your ABS. You must personally know the law, the Code and
MED’s disclosure requirements (due out October 2010)
Think about what consumers want to know
Part 1 can be more of a template approach, but Part 2 needs to show how you deliver in a way
that fosters consumer protection. It’s your opportunity to showcase what you do beyond the
minimum.
Your ABS will be a living document. You need to update it to reflect changes. You should keep a
copy of those changes.
Page 3
Table 1: Draft Code Standards
Draft
Code
standard
Overview of standard
ABS section
1
Placing client interests first and acting with integrity
Ethical behaviour
2
Obligation not to bring financial advisory industry into
disrepute
Ethical behaviour
3
Use of term "Independent"
Ethical behaviour
Marketing and branding
4
Borrowing from/lending to client
Ethical behaviour
Client money
5
Restrictions that apply where AFA is related person of
provider
Ethical behaviour
6
Obligation to behave professionally
Advice or service
Competence
7
Ensuring retail clients are able to make informed
decisions
Disclosure
8
Suitability of personalised financial advice
Advice or service
9
Explaining the basis of personalised servicews
Advice or service
10
Providing class services for retail clients
Advice or service
11
Complaints processes
Complaints
12
Recording information about personalised services
Record Keeping
13
Record retention
Record Keeping
14
Overarching competence requirement
Competence
15
Adequate knowledge of Code, Act and laws
Competence
16
National Certificate in Financial Services (Financial
Advice) (Level 5) requirement and alternative
qualifications and designations
Competence
17
Professional development plan
Competence
18
Obligation to undertake continuing professional training
Competence
Page 4
Table 2: Financial Advisers Act conduct and disclosure obligations
Act
section
Overview of Act requirements
ABS section
21 to 25
Disclosure obligations
Disclosure
27 to 29,
31
Disclosure obligations
Disclosure
30
Advertising must refer to disclosure document
Marketing and branding
33
Must exercise care, diligence and skill
Advice or service
34
Must not engage in misleading or deceptive conduct
Ethical behaviour
35
Advertisement must not be misleading, deceptive or
confusing
Marketing and branding
36
Restriction on use of term sharebroker
Marketing and branding
37
Must comply with Code
All sections
38
Must not recommend illegal securities
Advice or service
39 to 44
Conduct obligations in respect of client money
Client money, property and
information
45
Must comply with terms and conditions of authorisation
All sections
Page 5
[START YOUR ABS CREATION HERE]
AFA ADVISER
BUSINESS STATEMENT
XYZ Adviser
Address
Phone
Email
FSP Registration number:
ABS prepared [date]
Page 6
PART 1 - YOUR ADVISER BUSINESS
Part 1 of your ABS must describe your financial adviser business. It must include the requested information.
You may decide on the form and structure of your ABS, but complying with the following suggestions will
minimise Commission queries:

Use the suggested information as a guide to the sort of information which may be helpful. Don't
worry if you don't have all of the suggested information. Add other information if this better explains
your adviser business.

Write your ABS in a way that helps you to think about your business in the context of the standards
in the Code and the Act. It should also help the Commission understand your business and provide
context for Part 2.

Think about the Act's objectives: to promote sound financial advice and to encourage public
confidence in the professionalism and integrity of financial advisers.

Focus on the Code of Professional Conduct and the areas of your business most relevant to the
Code.

Where possible, keep information in the ABS at a high level.

Address all relevant financial adviser services that you provide.

Focus on the business that you personally do rather than the whole of your employer's or principal's
business.

Provide enough information to allow the Commission to assess your business.

Explain any changes to your business that are in progress or planned.

Provide supporting quantitative information to show the relative importance of various business
areas. Give the best information that you can and the latest available (include the date and the
period it covers). You may use forecast information, particularly if changes are expected.
Key question: Do you provide a “financial adviser service” or a “discretionary investment management”
service, as defined?
Page 7
PART 1 - YOUR ADVISER BUSINESS
1.1 Role
What’s
required
Describe your role, including an overview of the type of adviser business
that you undertake. Refer to your Scope of Service
check
Minimum
requirement




Suggested/
best practice




Key message:
whether you provide(a) opinions and recommendations, (b) an” investment
planning service” and/or (c) a “discretionary investment management service”
the method by which you provide services - face to face, internet, phone, postal
or other means
if you work for a QFE, as an employee or nominated representative, state the
name of your QFE and the nature of your relationship
if you are employed, state the organisation that you work for with a brief
overview of its business, including the size of the adviser business, approximate
number of advisers and the number in similar roles to yours.




the proportion of your time spent on your adviser business - outline any other
business you undertake or specific responsibilities you have
a description of the various services you provide, including whether you provide
personalised and non-personalised financial advice. State the relative proportion
of your business that these represent
whether your role involves home or workplace visits or seminars
whether you supervise other advisers or trainees and the proportion of your time
devoted to this.
State not just what you do, but where you are focused
EXAMPLE:
Type of service
I operate as a financial adviser, providing opinion and recommendation in the following financial services
business areas:
[Choose from this list]









Cash management
Debt management & Mortgage Broking
Taxation Planning
Personal Risk (insurance) Management
Fire & General Insurance
Retirement Planning
Investment Planning
Comprehensive Financial Planning
Specialist Business Insurance Planning.
Page 8
[I provide an investment planning service for consumers if required, within the guidelines of the agreed
Scope of Service with a client.
[AND/OR: I provide a discretionary investment management service for my clients if required, within the
guidelines of my Scope of Service.
A Disclosure Statement is provided to every client at the initial interview, and then updated Disclosure
Statements are provided as and when necessary at any time during the engagement or ongoing business
relationship. Additional Disclosure Statements are provided at any time, free of charge, upon request to
clients or prospective clients.
I am personally qualified to provide this type of advice on the basis of my qualifications and education,
supported by my ongoing professional development programme of a minimum 60 hours professional
learning every 2 years (Education Credits log available on request): My relevant designations, qualifications
and education are:






Certified Financial Planner (CFPCM)
Chartered Life Underwriter (CLU)
I have completed a Diploma in Business Studies (Personal Financial Planning) at Massey University,
and undertaken the following XX professional development courses through private education
providers or industry institutions:
XXX
XXX
XXX
How my services are provided
Initial engagement is usually undertaken with personal interview (face to face), although this can be done via
telephone, email or any other method of communication that allows a confidential exchange of information.
During the initial engagement our Terms of Engagement are provided in writing to prospective clients when
establishing the Scope of Service.
I may provide limited advice, or engage in transactional order placing for a client, if that is all the consumer
requires. Client records clearly reflect any express limitations on advice offered or taken.
New clients are generally sourced via referrals from existing satisfied clients, referrals from other business
specialists, [internet/website advertising],[ seminars for members of the public], [newspaper advertising]
[ADD MORE AS REQUIRED]
How my time is spent
In any given year the proportions of work undertaken within the different business lines can vary
significantly, depending on market conditions, product initiatives and choices, consumer demands or new
learning. Typically the breakdown of my work, by time spent advising clients (not by remuneration) is:
 XX% Personal Risk Planning
 XX% Retirement Planning
 XX% Investment Planning Service
 XX% whatever
Overview of my business
Page 9
I am self employed, and am the principal shareholder-employee of XYZ Advisers Ltd. XYZ Advisers Ltd has
been operating since XXXX and currently has:



XX Authorised Financial Advisers (and/or potential AFAs pending authorisation)
XX Registered Financial Advisers
XX support and administration staff
I have XX customers, of whom approximately xx% generally take full financial advice and the balance engage
in limited advice or transactional placements.
Each adviser is a current member of the Institute of Financial Advisers, and adheres to the Code of Ethics of
the IFA, including being bound by the professional development requirements and the complaints
provisions. I have had XX complaints recorded about me by customers with XYZ Advisers Ltd in the last XX
years, and XX complaints to the IFA in the last XX years by clients. XX have been upheld, or are still pending.
I maintain Professional Indemnity insurance through XXX, and have had XXX claims made against my policy.
This Adviser Business Statement relates to my personal position as an Authorised Financial Adviser (AFA)
only, not necessarily to other employees or advisers of XYZ Advisers Ltd. No material changes to the details
provided in this ABS are anticipated at this time.
Where I operate
My business is operated under the brand of XYZ Advisers Ltd from my professional premises at:
[physical location]
All meetings are held onsite at this location
OR
Most meetings with clients are held at those premises. About 5% of the time I may need to visit a client at
his/her residence or place of work.
What other advisers I supervise
I do not currently supervise or train any advisers.
OR
I am currently mentoring XX advisers.
OR
I am not currently supervising any advisers, but I have done so in the past and I may do so in the future.
Page 10
1.2 Remuneration and reward
What’s
required
Minimum
requirement
Explain the way that you are remunerated or rewarded and explain
any potential conflicts of interest arising from this.


Suggested/
best practice





check
a breakdown of how you are remunerated or rewarded, including any base
salary, bonuses, commission and fees. You should include percentages, based
on figures available for the last quarter or year, for example X% salary and Y%
commission
the factors affecting how your remuneration may vary.


the proportion of your overall remuneration and reward received from various
sources, for example, from each product provider
how your fees are calculated, noting any circumstances where these fees can
vary
an overview of any additional rewards that you may receive depending on
performance, and the factors which determine whether you qualify for these
any preferential commission terms that you have in place with various
providers, particularly any variations in commission rates based on volume
the proportion of clients who might be affected by each potential conflict of
interest.
How I am remunerated or rewarded
EXAMPLE/s: (This is an area where it may be more suitable to blend elements of the different types of
remuneration structures used in the examples)
EXAMPLE 1:
I am remunerated entirely by commission from product providers in all business lines. This commission is
potentially payable in a number of forms, primarily:
1. Introductory commission – a gross commission amount payable by a product provider for successful
placement of new business with them. This is generally a fixed proportion of the premium, loan or
investment amount placed with that product provider, and typically accounts for XX% of my annual gross
revenue
2. Renewal (or Service or Trail) commission – a fixed percentage amount payable of the ongoing (or in-force)
premium, loan or investment amount held with a product provider for ongoing management of that
business. This type of gross commission typically accounts for XX% of my annual gross revenue.
3. Production Bonus Commission – a fixed percentage gross commission over-rider payable on volume of
new business (or commission) generated through a particular product provider.
Page 11
4. Persistency Bonus – a fixed percentage gross commission over-rider determined by the overall business
quality, or persistency, held with a particular product provider.
The Gross Commission Remuneration paid by product providers to me annually is approximately:
Provider A
XX%
Provider B
XX%
Provider C
XX%
Provider D
XX%
OR
EXAMPLE 2:
I have an agreement with Provider XX that we will place XX% of the new business generated with them, and
be governed by their branding requirements. They do/do not audit my production to ensure that this
requirement is essentially met.
The gross remuneration generated may vary for many reasons, including overall new business levels & sales
achieved, market/consumer confidence or satisfaction, amendments to commission terms and structures by
product providers or other parties, impact of competition or economic conditions on existing
clients/business levels and so on.
Apart from the gross commission variances, there are the many common business factors potentially
impacting on the operational costs of providing an advisory service, such as unanticipated compliance costs
for example.
My remuneration is Gross Commission less Operating Costs. Generally this means that my personal
remuneration is about XX% of the Gross Commission received, although I may be responsible repayment of
the Gross Commission generated for up to 2 years in event of policy cancellation.
In addition to these types of commissions I will receive some non-cash additional rewards. I may receive
free or heavily discounted travel and/or corporate gifts from product providers I recommend, depending the
total volume of business done with those providers. Most providers over these type of incentives, and the
value can be substantial.
For example, a company may provide a trip for two to Rome if I place $120,000 of annual insurance
premium business with them, or I may receive a trip to Tahiti if I place $60,000 annual insurance
premium with another.
I do not generally do sufficient business with any particular product provider that generates this type of
additional reward. I do often receive benefits in the form of entertainment (e.g. occasional rugby tickets,
concerts, golf days, etc), or subsidised professional development (e.g. below actual cost conference
attendance, subsidised cost training courses, etc), or office supplies (e.g. notepads, pens, etc). The value of
these things are usually unknown to me, nor are they predictable or frequent. Subsidised stationery would
typically be under $XXX in value per annum, subsidised professional development typically under $XXX per
annum and entertainment typically in the $XXX-XXX per annum range though I believe.
OR
Page 12
I am remunerated by way of revenue sharing with the firm XYZ Advisers Ltd. The firm receives all
commissions payable by product providers, together with all fees paid directly by clients. For the clients I
manage the overall (firm) revenue breakdown is approximately:
XX% commissions
XX% client fee income
Apart from the gross commission variances, there are many (common) factors potentially affecting the
operational costs of providing an advisory service.
I receive XX% of the gross revenue/net revenue (??) generated by the clients I manage.
OR
I am remunerated as a shareholder-employee by salary (on a PAYE) basis primarily. In addition to this salary
I may receive a profit share/bonus/company dividend, which is determined as follows:
XXXXXX
XYZ Advisers Ltd receives all commissions and client fees. Fees are calculated on the basis of the time and
expertise required to complete the clients requirements. The current hourly rate is $XXX plus GST. This rate
may change at any time, and from project to project, or client to client. Factors considered in establishing
the fee per client or project include:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
The time and labour expended
The skill, specialized knowledge, and responsibility required to perform the services properly
The importance of the matter to you and the results to be achieved
The urgency and circumstances in which the matter is undertaken and any time limitations imposed,
including any imposed by you
The degree of risk assumed by us in undertaking the services
The complexity of the matter, and degree of difficulty
The experience, reputation and ability of the adviser providing services to you
The possibility that the acceptance of the particular work will preclude engagement of our firm by
other clients
Whether the fee is fixed or conditional
Any quote or estimate of fees given by us
The reasonable costs of running a practice
The fee typically charged for similar services by other professionals
How my remuneration may vary
My remuneration will depend only on the total annual premium income I place OR the total funds invested
OR
My gross remuneration may vary for many reasons, including overall new business levels generated,
market/consumer confidence or satisfaction, amendments to commission terms and structures by product
Page 13
providers or other parties, impact of competition or economic conditions on existing clients/business levels
and so on.
OR
My remuneration levels will vary depending on my achievement of certain production levels for particular
product providers.
Additional rewards or preferential commission terms
I have no preferential terms (other than those readily offered to other market participants) or production
performance agreements with any particular provider.
OR
I am eligible for production bonuses on insurance business place with product providers that is greater than
an agreed minimum. This production bonus will vary from provider to provider. I am also eligible for noncommission incentives such as discounted or free conferences [overseas trips] [etc] with [list providers]
Conflicts of Interest that may arise
Any single client engagement may present a potential conflict of interest.
[NOTE: a brief detail of if and how your remuneration & reward policy could create a conflict of interest]
[ I receive commissions from product providers which vary from provider to provider. I may also be eligible
for additional non-commission benefits]
I mitigate the potential for this to arise by:
1. providing & discussing full Disclosure Statement before client engagement
2. having a formal agenda at the outset of a client engagement, ensuring the client also receives or
understands: Privacy Act consent, engages in a discussion of the obligations of the full advice
process, a personal fee agreement, general Terms of Engagement, and establishing a personal
Scope of Service.
3. disclosing any preferential relationships that might present a conflict of interest to each individual
client engagement when identified, and ensuring engagement does not proceed without client
acknowledgement and consent.
4. [rebating all front-end and trail commissions on investment products and charging clients a fee that
is independent of the product providers used]
[NOTE: Cross-reference this to section2.1 Ethical behaviour]
Page 14
OR
I identify potential conflicts of interest and
- mitigate or eliminate them by changing my remuneration structures
-
Pass on any business that might create such conflicts to another adviser
Page 15
1.3 Business relationships
What’s
required
Explain how your business is structured and your key internal and
external relationships and explain any potential conflicts of interest
arising from this.
check
By a business relationship the Commission means any person or entity that is
key to your business. This might include your employer, employees, product
providers and persons or entities you refer clients to or receive referrals from.
Minimum
requirement


Suggested/
best practice




the nature of any exclusive or preferential terms that you have with any
product or service provider
an overview of persons or entities whose services you employ who are key to
your adviser business.


the proportion of new clients who are introduced and the proportion of your
business that each key source accounts for
the proportion of clients who might be affected by each potential conflict of
interest
an overview of any contractual arrangements you have in place which could
give rise to a conflict of interest. The Commission may request additional
information on contractual arrangements, if necessary
the roles, responsibilities and relevance of persons or entities who are key to
your adviser business.
EXAMPLE:
Structure
XYZ Advisers Ltd is XX% owned by myself (ADVISER), and XX% owned by …………
It is a limited liability company (trading entity) that holds the agency and contractual agreements with
product providers, owns any assets and ongoing rights to contractual income streams, enters into
commercial agreements for the provision/receipt of professional business services, and employs the
administrative and support staff.
The following AFAs (either existing or pending approval) are employed as salaried staff:
XXX
XXX
The following AFAs (either existing or pending approval) are independent contractors to XYZ Advisers Ltd.
XXX
Page 16
XXX
The following RFAs are employed as salaried staff:
XXX
XXX
The following RFAs are independent contractors to XYZ Advisers Ltd:
XXX
XXX
People or organisations that are key to my business
Internal:
In addition to the financial advisers listed, the following key positions exist in XYZ Advisers Ltd:
Managing Director:
Director:
Director:
Auditor:
Compliance manager:
Office Manager:
[NOTE: one or more of these roles could be conducted by the same person]
Key Compliance and Best Practice responsibilities within the firm are managed as follows:
Client Complaints – directed to Office Manager in first instance for recording and initial attempt at
satisfactory resolution. If unsuccessful, referred to Compliance manager, who then attempts to resolve or
refer externally to (DISPUTES RESOLUTION SCHEME of choice)
Internal Audit of Practice Standards – responsibility of Compliance Manager, who reports results of regular
audit to Board of Directors.
Registration/Authorisation of Financial Advisers – responsibility of financial advisers themselves primarily,
but regulatory status of each adviser also checked and recorded internally by Compliance Manager
Statutory and Legal Obligations – operational management vests with Compliance manager, checked and
monitored by Managing Director, but overall responsibility for compliance remains the Board responsibility
External
Page 17
Outside my organisation, there are no people or organisations key to my business.
OR
Outside my organisation, I rely on the XYZ wrap platform to provide a range of services to my clients. These
include portfolio administration, tax calculation and reporting, and quarterly reporting.
Many of my clients also require estate planning work and I am reliant primarily on XYZ Lawyers for that
work.
OR etc
Exclusive or preferential arrangements
Neither I nor XYZ Advisers Ltd have any preferential terms (other than those readily offered to other market
participants) or production performance agreements with any particular product provider. Neither I nor XYZ
Advisers Ltd have any commercial relationships or contractual arrangements that present any particular
conflicts of interest to consumers generally.
OR
I have an agreement with Provider XX that we will place XX% of the new business generated with them, and
be governed by their branding requirements. They do/do not audit my production to ensure that this
requirement is essentially met.
Either myself or XYZ Advisers Ltd have entered into the following commercial or contractual arrangements
that may give rise to conflicts of interest with consumers:


Contractual/Agency Arrangements:
Myself and/or XYZ Advisers Ltd hold representative agencies with the following financial services providers:


Page 18
1.4 Products and services
What’s
required
Minimum
requirement
Outline the products that you provide advice or guidance on and the
services you provide. Focus primarily on retail products or services with
the greatest consumer risk.


Suggested/
best practice





an analysis of your business by high-level product types or classes, noting
category 1 and 2 products separately
in what instances you handle client money or property, if any, the context in
which this occurs and the extent of your involvement.
check


any variation in the service provided by products or product groups, for
example, provision of personalised or non-personalised financial advice
any complex or unusual products or services, terms or arrangements that you
advise on
whether you are tied to a particular provider, choose from a panel, or whether
you are free to select openly from the market place. If you are tied or use a
panel, whether you select the providers
the proportion of business that is given to particular preferred providers
whether you provide an ongoing or one-off transaction service.
EXAMPLE:
Analysis of business by type
I provide advice in both Category 1 & Category 2 products. The proportion varies significantly from client to
client (depending on their individual requirements), but in general terms the breakdown on an annul basis
would be approximately:
Category 1 products – XX% of client engagements
Category 2 products – XX% of client engagements
There are no particularly complex or unusual products or services provided by me.
OR The following particularly complex products and services are provided by me:
*
*
I offer full financial advice in the following areas:
Page 19
Cash Management, Debt Management, Lending/Mortgage Broking, Personal Risk Management, Taxation
Planning, Retirement Planning, Investment Planning, Comprehensive Financial Planning, Fire & General
Insurance, Business Insurance Planning, Estate Planning, Sharebroking, Accountancy services…..
In addition I will engage in limited advice, or providing transactional services, for clients when requested to
do so, with appropriate documentation reflecting the express limitations.
If and when we handle client money or property
Neither myself nor XYZ Advisers Ltd handle any client money directly, with all funds being payable directly to
product providers. The only client funds received are invoiced fees directly payable to myself/XYZ Advisers
Ltd for agreed services.
OR
(If you handle clients funds directly document your trust account processes and internal requirements)
Restrictions on who we can use
Neither I nor XYZ Advisers Ltd have any contractual arrangements restricting the product choices we may
recommend, and every client engagement begins with consideration of all products we are aware of.
OR
Neither I nor XYZ Advisers Ltd have any contractual arrangements restricting the product choices we may
recommend, however XYZ Advisers Ltd have determined that the overwhelming majority of our clients
needs and product solutions can be sourced from the following wrap account/product provider/s:
*
*
OR
I have a contractual arrangement with XYZ Advisers Ltd to recommend only the products approved by XYZ
Advisers Ltd. XYZ Advisers Ltd determine a suitable suite of products to meet clients requirements in key
areas, and I determine which of that suite of products is required at any time by any particular client.
Page 20
1.5 Clients
What’s
required
Outline the types of clients that you deal with, distinguishing between
retail and wholesale clients.
Minimum
requirement


the proportion of your business that each client group represents
how you recruit new clients and the key sources of your clients.
Suggested/
best practice

the business split between retail and wholesale clients giving the total number
of retail clients in each product or service group
any specific client segments which might have a greater need for financial
advice or be more vulnerable to poor advice, for example, older clients
if you are employed, please state the nature of the relationship you have with
your clients, that is, whether their primary relationship is with you or with
your employer or principal
the types of marketing and promotional activities for each client group and
your involvement in these activities.



Key message:
check
“This is how I deal with...”
Showcase where you go beyond the minimum requirement
EXAMPLE:
Client types
I advise retail clients only, and they represent 100% of my business.
OR
I advise predominantly retail clients, who account for approximately XX% of my business. The types of
wholesale clients I advise, and the proportion of business they generally represent are:
Habitual Investors:
XX%
Business Entities (as defined in statute):
XX%
Local Authorities and/or Crown Entities:
XX%
Eligible Investors:
XX%
OR
(if predominantly wholesale clients amend the previous statement in regards to retail investors)
Page 21


How I gain clients
New clients are attained by the following marketing methods, in descending order of importance:
*
*
*
Nature of relationship with my clients
I am an employee of XYZ Planning. All clients are clients of XYZ and the primary relationship is between the
client and XYZ.
OR
My clients’ primary relationship is with me.
Clients with greater needs
There are no particular clients or client segments that I deal with who would have higher vulnerability than
any other.
OR (Example only:) The following regular client types may have higher vulnerability to poor advice than
usual:


New immigrants of XXXXX nationality whom I am frequently referred to, who have a generally poor
understanding of English.
I deal primarily with retirees, and there is a proportion of elderly clients amongst them who sometimes
have difficulty understanding modern investment concepts and choices.
Marketing and promotional activities for each client group
All my marketing activities are targeted at my retail clients. This consists of:
 Referrals from existing clients
 Referrals from my accountant
 Leads from articles I write for my local paper
All marketing activity is carried out by me.
Page 22
PART 2: COMPLIANCE ARRANGEMENTS
Overview of Part 2
Part 2 should explain how you take personal responsibility for complying with the Financial Advisers Act (the
Act), its regulations and the Code of Professional Conduct for Authorised Financial Advisers (the Code).
It must explain your systems and procedures for ensuring that you meet:

the minimum standards set out in the Code

the obligations in the Act and its regulations

the terms and conditions of your authorisation.
Part 2 must include the expected information set out in this section.
You may decide on the form and structure of your ABS, but complying with the following suggestions will
minimise Commission queries:

Provide an overview of your relevant systems and procedures in each section, and describe any
reliance on third parties for these.

Describe the compliance arrangements for your business and the checks that ensure that you are
operating to the required standards. (Advisers will implement processes and controls in different
ways, depending on the nature, scale and complexity of their services.)

Focus on how you ensure that professionalism is embedded in your daily role and activities.

If you employ staff or external parties within your business explain how professionalism is
embedded in their roles and activities.

Explain any changes to your systems and procedures that are in progress or planned. Point out
where these are new.
Use the suggested information as a guide to the sort of information which it may be helpful to provide. Don't
worry if you don't cover all of the things in the suggested information. Add other information if this better
explains your compliance arrangements or is more relevant.
You can provide information on how you exceed the requirements. The Commission can consider this in
determining the level of regulatory monitoring appropriate to you.
Key messages: Focus on you as a person rather than on your business.
How will you deliver what you say you will?
Page 23
PART 2: COMPLIANCE ARRANGEMENTS
2.1 Ethical behaviour
What’s
required
Requirements of the Code and the Act:
Draft Code Standard 1, Section 34 of the Act
Minimum
requirement

the safeguards you have in place to identify, avoid or manage any potential
conflict of interest.
Suggested/
best practice


any relevant mission statement or client charter you publicise
any additional code of ethics or conduct that you abide by, for example, from
your employer or professional body, stating the relevance to the requirements
any systems or procedures, or support, that help you maintain positive
professional behaviour to assist the achievement of suitable client outcomes,
for example, any mentoring arrangements
any ethical training you have undertaken.


check

EXAMPLE:
Managing potential conflicts of interest
Ass noted in section 1.2 Remuneration & Reward, I have a number of potential conflicts of interest.
[DESCRIBE briefly, eg “I am remunerated entirely by commission from product providers”]
I avoid or manage these by:
 Avoiding any production requirements for any one company
 Having access to a range of product providers for each of my insurance and investment advisory
businesses
 Using ratings from independent research houses to guide me in my decisions – using only the top
three rated products regardless of fees or commissions.
 Regularly reviewing my relationship with my key suppliers
 Being transparent in my dealings with suppliers
 Etc etc
Note: Cross-reference this to section 1.2 Remuneration & reward, in describing potential conflicts of interest
and how you avoid them]
Page 24
My mission statement/client charter
(IF you or your company have a Mission Statement or articulated client-care principles or values, then insert
them in this section)
My code of ethics
I am a member of the Institute of Financial Advisers, and as such subscribe to the IFA Code of Ethics,
together with the IFA continuing professional education requirements to ensure ongoing compliance with
these principles. As an IFA member I voluntarily subscribe to the core principles of:
* Placing the clients’ interests first
* being truthful and trustworthy
* Always acting in the clients best interests
* maintaining the necessary skills, knowledge and business expertise
* respecting others
* protecting private information and confidentiality
* maintaining an ethical reputation and professionalism
I am also bound by the IFA’s independent complaints process that is tasked with upholding these values.
Mentoring arrangements
I am undergoing peer-mentoring through the IFA as part of my professional assessment.
OR I have completed 2 years peer-mentoring through the IFA as part of my professional assessment.
OR I have completed 2 years peer-mentoring through the IFA as part of my professional assessment, and am
now an IFA Mentor myself.
Systems and procedures


I have a detailed business process manual that sets out how I manage each aspect of my relationship
with my client
This manual covers XXXXX.
Ethical training
I have completed a minimum of 30 hours continuing education (professional development) each year that I
have been an IFA member, which has included specific requirements in the past for “ethics” training. The
current requirements do not specifically require separate “ethics” training, however most ongoing
professional development contains ethical elements that are sufficient to maintain ongoing knowledge of
standards and expectations.
OR
I completed the Institute’s 2-hour Business ethics education programme in 2011.
OR
Page 25
2.2 Marketing and branding
What’s
required
Requirements of the Code and the Act:
Draft Code Standard 3, Sections 30, 35 and 36 of the Act
Minimum
requirement

any approval process that you have in place for marketing activities and
promotional and client-facing materials to ensure compliance.
Suggested/
best practice

an overview of the records you keep in relation to marketing and promotional
activity and approvals
where you rely on third parties for your marketing, an overview of your
involvement in ensuring that the marketing is compliant
any examples of how you have remedied issues in the past where your
marketing, branding or promotional activities have led to confusion.


Key messages
check

State what your role is and what you do in terms of marketing. Don’t say that you
do not do marketing, or that it is not personal to you. In particular, ensure you
meet the definition of “independence”.
EXAMPLE:
What I do
I do a limited level of marketing to attract new clients and to keep existing clients happy. This is in the form
of:
 A quarterly newsletter.
 A regular email to current clients
 An occasional email to centres of influence including my accountant
 A quarterly advertorial in my local newspaper
I write the material in conjunction with my PA.
I do not use the word “independent” as I receive various incentives from product providers, including
commissions.
OR
As all remuneration is received only from the client, I meet the definition of “independent” and use this in
my marketing literature.
What others do
In my newsletter I use information supplied by product providers. I do not check that their material is
compliant with all legal requirements – I rely on them to do that. To ensure that the material remains
compliant I do not edit their articles in any way.
Page 26
How I do it
I have a checking procedure for all marketing that I do.
 All standard material is cross-checked by a colleague.
 It is then reviewed by the Board of XYZ Advisers Ltd. The Board in turn is responsible for ensuring
legal and ethical compliance requirements are met
 If we believe it appropriate, we will have the material vetted by ABC Lawyers & Solicitors.
 Copies of all marketing initiatives, advertisements and promotional material are retained by myself
and XYZ Advisers Ltd
 Any personalised marketing for individual clients (e.g. seminar invitations, product enhancement
letters, etc) are copied to the individual client file and stored electronically on our CRM database.
Past issues
There have been no issues brought to my/our attention previously regarding advertising and marketing, and
no suggestions of incorrect or misleading information being used by myself or XYZ Advisers Ltd.
Page 27
2.3 Disclosure
What’s
required
Minimum
requirement
Suggested/
best practice
Requirements of the Code and the Act
Draft Code Standard 7
Sections 21 to 25, 27 to 29 and 31 of the Act and the disclosure
regulations



how you design and approve your disclosure statement, and keep it up to date
your approach to providing disclosure to clients on a timely basis
the process that you follow for individual clients to calculate fees and any
commission.

the extent of your input to the design and content of your disclosure
documents or statement. For example, are these based on a template
provided by your principal?
if reliant on a third party for the development of disclosure documents or
statement, the extent of your involvement and the checks that you undertake
whether one standard disclosure statement is used, or whether this is tailored
to each client
whether initial disclosure is provided at the beginning of the relationship or
each time advice is given
if advice is given by telephone, whether no advice is given unless disclosure
has been made or disclosure documents or statement are sent immediately
afterwards
any periodic reviews you undertake
whether and how you test client understanding of the content of the
disclosure documents or statement
any amendments you have made to improve client understanding of your
disclosure documents or statement as a result of feedback.







check



EXAMPLE:
My current disclosure statement
I maintain a current Disclosure Statement that exceeds the requirements of the law and the requirements of
my professional association, the Institute of Financial Advisers. The starting point for the current version of
the Disclosure Statement was the template provided by the IFA, which I then personalised and checked for
initial compliance with legal requirements.
In addition to the Disclosure Statement, which is first provided to every single prospective client at the initial
meeting (if not beforehand), my advice process documentation (including, but not limited to, Letter of
Engagement, Terms & Conditions of Engagement, Scope of Service, Statement of Advice) reinforces the
initial disclosure, by further detailing forms and amounts of remuneration or fees, conflicts of interest,
commercial relationships and so on.
Page 28
I do not provide a tailored disclosure statement but give each client the same disclosure statement,. This is
because a number of my clients use more than one of my services.
Timely provision to clients
At my first meeting with a client I ensure I meet all minimum legal requirements for disclosure. I also provide
additional information within that statement that will assist a consumer in determining my areas of
competency, education, potential conflicts of interest and relevant business relationships. A current
Disclosure Statement is subsequently provided every time further advice is provided to the client.
Whenever a Disclosure Statement is provided to a client they are asked to review it and ask any questions –
whether those questions arise from information provided in the statement or not. On occasions if advice
has been provided over the telephone a disclosure statement is mailed to the client as soon as possible,
usually by the following day at the latest. The document is generic, and equally applicable for every single
client due to it disclosing well above the requirements.
I do not provide regular disclosure statements to clients. I do however tell them if there has been any
material change to the fees for existing services that they are using. I also disclose to them the current fees
and charges for any of my services that they have not used but are considering using.
Process for clients to calculate fees/commissions
In my Terms and Conditions of Engagement, I set out my approach to fees and/or commissions. This details:
 The maximum commissions that I may be eligible to, for placement of risk or investment business
 The actual level that I have chosen to receive, if this is less than the maximum
 The nature and size of any other fees, such as planwriting, investment and estate planning fees
In general terms I charge on the following basis:
Financial planning:
- a planwriting fee (as a dollar amount) payable by the client in advance
- an annual review fee (as a dollar amount)
Investment business:
- an implementation fee, determined as a percentage of funds to be invested
- an annual management and monitoring fee, determined as a percentage of funds to be invested
Insurance business:
- I do not charge clients any fees. I am remunerated by the product provider in the form of commissions.
Ongoing reviews
My Disclosure Statement is reviewed and updated whenever there is any change in commercial
relationships, supplier terms and conditions, qualifications or education and so on. That is, any change in an
area of disclosure triggers a review of the entire Disclosure Statement. It is an ongoing process of revision,
and typically would be amended slightly twice a year. My Disclosure Statement is also subject to random
audit as a member of the IFA.
Page 29
In reviewing my disclosure documents, I take into account feedback from my clients and any suggestions or
comments I am aware of from the wider industry perspective such as from the IFA. I attempt to adopt a
‘best practice’ approach.
In the past year I amended my description of my annual fee for investment monitoring following questions
from two of my clients.
Page 30
2.4 Advice or service
What’s
required
Requirements of the Code and the Act:
Draft Code Standards 5 to 10
Sections 33 and 38 of the Act
Minimum
requirement

any systems and procedures to help you to ensure the quality and suitability
of your advice or service and related client communications.
Suggested/
best practice


the research methods you employ and any reliance on third parties for these
your approach to collecting enough information to understand a client's
requirements (within the scope of the service being provided), for example,
any parameters or guidance you use or any checklists, forms or templates
your approach to setting out your advice for the client, for example, any
templates you use
your approach when no suitable product or service is available
any differences in approach when dealing with different client types, products
or services
any differences in your approach when dealing with non-personalised advice
any "pre-check" of your advice or any periodic review of your work
any improvements you have made as a result of feedback from checks or from
customers.






check


EXAMPLE:
Collecting information
All client advice is tailored to suit the individual client, and as such the fact-finding (data gathering) can vary
substantially from case to case, depending on the Scope of Service and any express limitations. There is
always suitable fact-finding conducted for the scope of the engagement, and that may involve substantial
data gathering via a fact-finding booklet, or it may involve beginning with a blank sheet of paper and asking
gathering just the appropriate information required to complete the clients requirements for advice, or a
combination of both.
On completion of data gathering, consideration of the clients objectives and agreed scope of service, analysis
of data and formulation of a recommendation, the client receives written advice with the recommendation.
That form of written advice will either be in the form of a Statement of Advice (simple, or limited
engagement), or a full report or comprehensive financial plan (more complex or detailed engagement). Both
documents are templated within the business to ensure that the following aims are achieved: full and
necessary ongoing disclosure, restrictions or limitations on advice, statements as to why the advice is
appropriate and suitable, any risks and the rationale for the recommendations, and receiving client
acknowledgement of the advice, together with client authority to proceed to implementation. Client letters
and documentation are provided as swiftly as possible during the engagement process, with letters and
Page 31
Statements of Advice typically being sent within XX days of meeting, and a comprehensive report typically
being prepared and sent within XX days of meeting.
The advice process used by myself is fully documented for each stage of the engagement, with templates
and checklists used extensively within the business to ensure that all steps are met on each client
engagement. The process and standard of documentation is professional, clear, and meets or exceeds the
requirements expected by the Code of Professional Conduct and the Code of Ethics of the IFA. The advice
process and quality is continually improved incrementally from working with clients continually, and
incorporating client feedback into the documentation and templates. In addition there are additions and
improvements that arise from my ongoing professional development programme – new technical education
frequently provides enhancements to the process.
Use of research and external knowledge
I only provide advice on products and areas where I am competent to do so, and conduct my own analysis of
the suitability of product recommendations. In order to ensure my knowledge and understanding of the
products I work with is current and objective, XYZ Advisers Ltd, and myself by extension, subscribe to the
following research methods:
ABC Research house
DEF research
GHI Industry magazines and periodicals
JKL industry websites
MNO supplier accreditation and product training programmes
PQR Group conferences
Institute of Financial Advisers annual conference, and annual professional development roadshow
No-advice situations
On the occasions where I conduct transactional business for a client, with little or no advice sought or
tendered, then the Scope of Service and Letter of Engagement clearly reflect the nature of the nonpersonalised transaction, and a very clear statement to the effect that the transaction does NOT take into
account the clients personal situation and may or may not be appropriate for the client is made. The client
must also provide acknowledgement to that effect in their signed Authority to Proceed.
Inability to offer suitable product or service
In the event that I am unable to offer a suitable product solution, or provide further valuable advice the
client will be informed in writing. Neither I nor XYZ Advisers Ltd are related persons to any providers of
financial products, and as such are not in a position of conflict in that respect.
Differentiation of service
While each client has differing needs, the majority of my clients face similar situations. I have a standard
approach in dealing with clients in terms of the process I follow and the documentation I provide.
Page 32
Depending on the specific client needs, I will then tailor the process and the documentation to match the
particular requirements of the client. I follow this “top down” approach to ensure consistency and to ensure
I have covered off all a client’s particular needs. It also acts as a prompt for both the client and myself.
Process review
As an adviser with XYZ Advisers, we meet at least annually to discuss “best practice” plans. This will take into
account any feedback from clients, my colleagues, staff, and industry commentary. The outcome can include
modifying my process and the documentation that I use for clients.
[EXAMPLE] In the past year we have changed the way we handle clients’ needs for estate planning as a result
of a review, so that their needs for family trusts are identified earlier in the planning process.
Page 33
2.5 Complaints
What’s
required
Minimum
requirement
Requirements of the Code and the Act
Draft Code Standard 11



Suggested/
best practice






how you deal with any complaints, in particular your internal complaints
process
the number of complaints received about your advice or conduct in the last 12
months and the number upheld
the proportion that were referred to any external mediation, complaints body
or dispute resolution scheme or to any court in New Zealand or overseas.
check



your involvement in resolving complaints about your work and whether an
independent person is involved
your approach to the register of complaints, for example, whether your QFE or
employer keeps this record, or you keep your own
your procedures for complying with dispute resolution scheme requirements
for internal complaints handling
your procedures for assisting your dispute resolution scheme
the time taken to resolve complaints
any examples of how you have used complaint information to improve your
advice or service.
EXAMPLE:
How I deal with complaints internally
Within [one week] I
- acknowledge the complaint in writing
- provide the client with information about my internal complaints process
- advise the client how to complain to the Securities Commission
- provide details about the Disputes Resolution Scheme to which I belong
I note the complaint in a “complaints register” and update this with the actions taken to resolve the
complaint.
I call the client within [one week] [whatever] to discuss the complaint with them. I will attempt to resolve
the issue with the client over the phone. If this is successful I will document the outcome and send the client
confirmation by email or post.
If the complaint cannot be resolved by phone, I will meet with the client, if at all possible within one week.
At that meeting I will go through a process to (a) identify the exact issue, (b) identify why the client believes
it is an issue and the impact on the client, (c) identify what outcome(s) the client is seeking and (d) attempt
to find an outcome that is agreeable to both parties. If this is successful I will document the outcome and
send the client confirmation by email or post.
Page 34
If the complaint still cannot be resolved, I will advise the client again of the existence of the Disputes
Resolution Service of which I am a member and details of how to contact them. I will explain that it is free of
charge. I will contact our Disputes Resolution Service provider within three days of reaching deadlock with
my client, and provide my DRS provider with the details for them to commence their complaints handling
process. The process from that point will depend on the DRS’s own internal process.
OR
Within [one week] I
- acknowledge the complaint in writing
- provide the client with information about my internal complaints process
- advise the client how to complain to the securities Commission
- provide details about the Disputes Resolution Scheme to which I belong
All client complaints against any adviser of XYZ Advisers, including myself, are recorded. An officer of XYZ
Advisers Ltd is then tasked with handling the complaint directly, with a view to resolving it as swiftly as
possible with the maximum client satisfaction. The company publicises the complaints process to clients in
occasional newsletters and on the company website, and it is documented within the company’s Procedures
Manual, together with being included in each adviser’s Disclosure Statement including mine.
What I tell my clients
My Disclosure Statement includes the same client notification about complaints, which is printed in full
below:
“DISPUTE RESOLUTION
In the event of a complaint or dispute I recommend that in the first instance you bring it to my
attention. I will provide you with information about my internal complaints process, the Securities
Commission, and m y Disputes Resolution Scheme.
I will try in the first instance to resolve the complaint internally. Should I fail to handle any such
problem to your satisfaction within a reasonably short time frame, then my company has an internal
complaints handling process. In addition, if your complaint concerns one of our supplier companies
(e.g. fund manager, insurance company, etc) they will usually has an internal complaints logging and
handling system to which you should refer.
If I or our firm is unable to resolve your complaint to your satisfaction, then you may make the
complaint to the XYZ Disputes resolution Scheme of which we are a member. This has a three-step
process. We are bound by the outcome of that process. You can choose to be bound by the outcome
but you can also choose to be free to pursue other legal avenues.
In the event that the first two steps prove unsatisfactory then a complaints process exists within the
Institute of Financial Advisers (IFA), of which I am a member and by which I am bound. The IFA can be
contacted at P.O. Box 5513, Wellington, Ph: (04) 499 8062; Fax: (04) 499 8064.
Any complaints referred to the IFA are recorded, then investigated to determine likely degree of
seriousness, then depending on the level of severity handled by IFA National Office staff directly with
Page 35
the client concerned, or referred on to a Professional Complaints Committee consisting of a legally
qualified chair-person and two professionally credentialed advisers to resolve.
This can be a lengthy and sometimes frustrating process for those involved, and is restricted to only
those complaints that breach the IFA’s own rules. It does not allow for civil litigation. I would urge any
dis-satisfied clients to resolve any issues personally and directly with me if at all possible.”
In addition to this internal disputes resolution methodology, I have joined XXXX Disputes Resolution Scheme
The client notice about complaints handling will be updated to reflect my membership of that DRS, and
directing clients to that scheme for resolution if I have been unable to satisfy the client myself.
Details about any complaints received
I have not received any complaints in the past 12 months
OR
I received one complaint in the past 12 months. This was referred to my disputes resolution provider (XXX
Ltd). The complaint was not upheld
OR
Within the last [12 months] I have received XX client complaints. XX of them were not able to be resolved by
myself and were referred to external mediation, which upheld XX of the client complaints. The average time
taken to resolve complaints internally is approximately XXXXX.
Page 36
2.6 Client money, property and information
What’s
required
Requirements of the Code and the Act
Draft Code Standards 4 & 12
Sections 39 to 44 of the Act
Minimum
requirement


how you handle any client money, property or information
any checks that are carried out on your handling of client money and
property, who carries them out and their relationship to you, if any.
Suggested/
best practice

the name of the entity whose client trust account you use and your
relationship to that entity
the name of the bank or entity that holds the trust account (and its location if
not in New Zealand)
the name of any custodian, platform or other third party that you use to hold
client property (and its location if not in New Zealand)
the results of any recent audit of the trust account that you use, the name of
any independent Chartered Accountant who conducted the audit and any
remedial action taken in response to it, where relevant
any other third party arrangements in place in relation to handling client
money and property.




check


EXAMPLE:
How I handle client money
Neither XYZ Advisers Ltd or myself handle or hold clients funds directly, or utilise any custodial accounts for
clients funds or property. All client funds are payable directly by clients to product providers. The only client
money received by myself or my firm is payment for agreed services. Neither XYZ Advisers Ltd nor myself
operate a trust account, and there is no intermingling of client and business funds or property.
(OR document your custodial and/or trust account procedures)
How I maintain client records
All client records are maintained in two forms, the first being primarily a paper-based individual client filing
system, the second being an electronic database. Each individual client paper-file contains copies of all
letters, reports, application forms, interview notes and older contact notes (information that pre-dates
implementation of database). Clients have access to the information contained within the file in accordance
with the requirements of the Privacy Act. The files are stored in the secured offices of XYZ Advisers Ltd, at:
[insert your physical address]
Page 37
All confidential and personal client information that is being disposed of is placed in a secure bin that is
removed from the premises as often as necessary, and all waste paper is shredded and burned. This service
is outsourced to ABC SHREDDING CONTRACTORS LTD.
Client information about my clients is also stored in an electronic client database operated by myself/XYZ
Advisers Ltd. [We are phasing out the use of paper records in favour of electronic storage and the majority of
client reports, policy and personal information and contact notes are recorded within that database.
The data is stored on a server in the secured offices of XYZ Advisers Ltd and is password-protected.
OR [insert your document security/access/backup provisions for electronic data]
Page 38
2.7 Record keeping
What’s
required
Minimum
requirement
Requirements of the Code and the Act
Draft Code Standards 12 and 13




check
the key documents you keep that demonstrate your compliance with the Code
and the conduct and disclosure obligations in the Act
explain your involvement in record keeping
if you rely on a third party for your record keeping, provide an overview of
their systems and procedures stating how these address your requirements
under the Code
the length of time that advice records are kept if in excess of seven years, and
any variations between products.




EXAMPLE:
What documents we keep
To demonstrate my compliance with the Code and the conduct and disclosure obligations of the Act, I keep a
copy of all key client documents on the electronic file of each client. The content and form of the client files
are referred to in detail elsewhere in this statement.
How I am involved in record-keeping
All client records, documentation and correspondence referred to in this Adviser Business Statement are my
responsibility. They are maintained primarily by me, with the assistance of my administrative support staff.
My use of third parties
I do not use any third parties for record-keeping.
OR
I maintain transaction and similar records for my investment clients on the XYZ Wrap Platform. XYZ is
responsible for ensuring the accuracy and security of these records.
How long I keep records for
All client records are retained in full for a period of at least 7 years after we cease to provide advice or
service to clients, continuing to be stored together with all other client files at the secured premises of XYZ
Advisers Ltd.
When we cease to act for a client any longer a notation is made on the electronic client database of the
future date when the file can be physically removed for secure destruction. Seven (7) years after
Page 39
termination of engagement, when the database reminder for disposal is received, the entire client paper file
is removed and disposed of in the secure bin for shredding. The electronic client records are retained and
archived on the server.
Page 40
2.8 Competence, knowledge and skills and continuing professional
training
What’s
required
Requirements of the Code and the Act
Draft Code Standards 6, 14 to 18
Minimum
requirement



Suggested/
best practice




Key message
how you are satisfied that you have the competence, knowledge and skills for
the specific services you provide
how you maintain and test your competence on an ongoing basis
the process you follow when you do not have the competence, knowledge or
skills to provide a professional level of service to a client.
check



any relevant qualifications which exceed the minimum Code requirements
how you develop your professional development plan, for example,
involvement of mentors, supervisors, client feedback or complaints
information. The role of any third party in delivering the plan
arrangements to maintain competence, knowledge and skills in the light of
product developments and changes
arrangements maintain competence, knowledge and skills in the light of
developments in professional practice.
Explain the systems aqnd procedures that you have in place to comply with the
Code, the Act and your terms and conditions. You must demonstrate you
understand and appreciate the Code’s obligations.
EXAMPLE:
My competence, knowledge and skills
(a) Qualifications and training
I have the following relevant qualifications:


Certified Financial Planner (CFP) – achieved in 1999, and maintain ongoing qualification.
Chartered Life Underwriter (CLU) – achieved in 1999, and maintain ongoing qualification
[other, including reliefs under the Code]
In the course of completing these professional designations I have completed the Diploma in Business
Studies (Personal Financial Planning) through Massey University, as well as additional university business
studies papers and a number of specific industry training organisations technical courses.
(b) Specific competence, knowledge and skills
Page 41
In addition to the qualification(s0 listed above, I have relevant competence and experience, and am hence
qualified and competent to provide financial advice, in the following areas:[DELETE the rows not relevant to
you]
Area
Comprehensive Financial
Planning
Cash management
Debt management
Mortgage broking
Taxation planning
Personal Risk (insurance)
Management
Specialist Business Insurance
Planning.
Fire & General Insurance
Estate planning
Retirement Planning
Investment Planning
Discretionary investment
management service
Specific competence, knowledge and skills
Have CFP designation. Prepare comprehensive financial plan for XX%
of clients, approx XX per month. Peer-reviewed by a colleague on
annual basis.
Basic principles covered in financial plan. Any detailed assessment
referred to accountant.
Referred to accountant
CLU designation, backed by regular training in specialist personal risk
areas. Attend regular seminars by main insurance providers.
Experience: prepare 1 – 2 risk assessments per month. Include life,
trauma and income protection.
Completed Level 5 Certificate course in Business Insurance.
Experience since 2005 doing 1 – 2 plans per month
Basic principles only covered. Refer to lawyer for more analysis if
required.
Include in comprehensive plans. Regularly review Sorted and other
sites for generic advice.
Include in comprehensive plans (80% of clients).
Provided for 50% of clients. Peer-reviewed annually to ensure I am
following best practice.
I advise current and prospective clients as to the areas in which I am competent to provide advice. However I
do provide “class service” to clients on [investment] [insurance] though I have not attained [standard set C]
[standard set D]
[ I provide a discretionary management service for clients though I have not attained standard set C]
[ I provide financial adviser services for clients on [insurance products] because I have attained Standard set
E and the products I advise on are within the scope of the financial adviser services I provide and they do
not include any category 1 products.]
Keeping up to date
I keep my qualifications up-to-date through continuing education annually, consisting of seminars, technical
briefings, product accreditation and conference workshops for a minimum of 20 hours per year.
I have been a member of the Institute of Financial Advisers continuously since XXXX, and as a condition of
that membership I continually adhere to the IFA Code of Ethics and IFA Practice Standards in all facets of my
practice. This includes the requirement to act only within areas of competence and knowledge, ensuring
currency of that knowledge base through continued professional development, and continually developing
best practice advice processes. This is, and has been, my standard for years.
Page 42
Under the IFA Rules I am required to complete 60 hours of continuing professional development every two
years, well in excess of the requirement under the Code.
This continuing professional development includes keeping up to date with changes to the Code and
relevant consumer laws such as the Fair Trading Act.
In terms of product developments, I do the following:- I am on a mailing list of each of the product providers that I use, and I ensure I read their updates
- I attend product seminars from the providers
- I attend the annual conference of XXX, my main product provider for YYY products
My professional development plan
I maintain and keep a professional development plan. It is based on feedback from clients and my
colleagues, [feedback from a business mentor, XXX of YYY].
[I do not have any external help in preparing it] OR [I receive help from XXX who is part of my organisation]
It includes:
 The areas I recognise that I need to improve in, so that I have the appropriate competence,
knowledge and skills
 My plans to make improvements, including proposed courses and education and timeframes
 The mentors or external help I am currently using
I maintain a log of professional development to ensure I meet the minimum requirements under the Code
('20 hours of professional development including 10 hours of structured training.)
How I ensure I only provide advice in areas where I have the competence, knowledge and skills
My Scope of Service states the areas I believe I have the competence, knowledge and skills. I only advise in
areas where I have been trained and/or mentored.
When I give advice I follow the internationally recognised six-step process:
1. Establishing the client-adviser relationship,
2. Gathering client data and determining your goals and expectations,
3. Analysing and evaluating the client's financial position in my areas of expertise
4. Developing and presenting written advice,
5. Overseeing the implementation of the plan, and
6. Monitoring and reviewing the plan.
In each step I identify the areas I am providing advice on, and the areas in which I recommend a specialist.
However, on occasions I may be asked or instructed to implement a particular product solution without
providing any advice as to the suitability of that product, or levels of cover. I am willing to do so, but will
document to the client explicitly that I have implemented a transaction following their request to do so
without providing advice.
Clients have the choice then of receiving advice, or providing an instruction to act without advice. I will act
and document accordingly.
Page 43
On the occasions where I do not have the necessary expertise or capacity to advise a client I will refer them
to an appropriate specialist if I am able to do so. Whether I am able to refer a suitable specialist or not
though, I will give the client clear written advice that I am NOT able to advise them in the particular area,
and who they should contact if they wish to receive such advice.
Page 44