Strategy Formulation

Strategy Formulation
To formulate strategy you must collect information, agree on what is to be discussed and provided
advice upon. Using this information you can formulate an appropriate recommendation for the
client that will enable them to meet their needs and objectives.
1. From the fact find and the collection of goals and personal information
2. Determine strategies
3. Analyse situation now and where they want to be
4. Calculate how you can recommend a strategy in getting them there
5. Model Portfolio using there income expenses liabilities and assets
6. If necessary look at products to complete the task
7. Look at and if necessary prepare possible alternatives
8. Generate Statement of advice with review and disclosures
Personal Advice - Corporations Act & ASIC Regulatory Guide 175
ASIC defines “appropriate” advice in Policy Statement 175.115 as advice that is “fit for its purpose”
and “satisfies the client’s personal circumstances”.
Appropriate advice can only occur where there has been adequate investigation into the client’s
financial circumstances, needs and objectives.
The Corporations Act section 945A requires that personal advice is only provided to a retail client:
after making reasonable inquiries of the client’s personal circumstances;
giving due consideration and, where necessary, carrying out further investigation in relation
to those circumstances;
Ensuring that the advice is appropriate in light of that consideration and investigation.
InterpretationFor practical purposes, the ability to determine whether advice is ‘appropriate’ can achieved where
there is documented client questionnaire and a statement of advice that clearly summarises the
client’s position. The statement of advice will explain clearly concisely and effectively, how the
strategy and if any product(s) recommended matches the established needs and objectives of the
ASIC are very clear and understand that advice does not have to be best, "does not need to be ideal,
perfect or best”, but "appropriate" to their situation.
In this instance it should understood that planners will not be able to provide "the best advice that
will provide the best result". Appropriate advice is delivered to the client’s situation. This in turn
may turn in to a good result, however no guarantees are provided and no certainties are known.
This is based on the premise - You cannot provide an understanding of the future and future
outcomes cannot b guaranteed.
Making a Recommendation - Reasonable Basis of advice
Corporations Act s.945A(1) requires that when providing personal advice there must be a
‘reasonable basis’ for that advice.
This involves:
Understand your scope of advice which is determined from client’s requests and uncovering
any further scope that may be determined during your interview with the client.
Determining what the client’s relevant personal circumstances are both socially and
Making reasonable enquiries about those personal circumstances, historically and what they
expect to occur in the future, based on today’s understanding of their situation;
Take into consideration the above when looking at the scope of advice
Providing appropriate advice taking into consideration all of the above.
Clearly and concisely it is about matching your advice (that may be (1 strategy) and (2 product) to
the client’s current needs and future objectives.