FASEA – Code of Ethics: · Web view2021. 7. 27. · Nextplan Financial Pty Ltd. ABN: 24 167 151...

Nextplan Financial Pty Ltd ABN: 24 167 151 420

Australian Financial Services Licence No. 452996Level 8, 179 Queen Street, Melbourne VIC 3000

www.nextplan.com.au

Compliance Manual- Policies and ProceduresFor Corporate and Sub Authorised Representatives of

Nextplan Financial Pty Ltd (Nextplan)

Version: January 2021

Important note: These policies and procedures are designed to meet legal, regulatory and industry requirements, so it is important that you follow Nextplan Financial Pty Ltd (Nextplan) guidance. By not following the steps outlined in this compliance manual, you risk failing to meet your obligations as a Corporate and Sub Authorised Representative of Nextplan. You must at all times comply with the requirements of these policies, unless you have written confirmation from the Nextplan Compliance team confirming otherwise.

Nextplan Financial Pty Ltd Compliance Manual Version: January 2021 1

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ContentsFASEA – Code of Ethics …………………………………………………………………………………………………………………………….2

FASEA – Code of Ethics:..............................................................................................................................6Standard One................................................................................................................................................6Standard Two................................................................................................................................................6Standard Three.............................................................................................................................................6Standard Four...............................................................................................................................................6Standard Five................................................................................................................................................6Standard Six..................................................................................................................................................6Standard Seven.............................................................................................................................................7Standard Eight..............................................................................................................................................7Standard Nine...............................................................................................................................................7Standard Ten................................................................................................................................................7Standard Eleven............................................................................................................................................7Standard Twelve...........................................................................................................................................7The 6 Steps of Financial Planning and Safe Harbour (Fofa) Requirements:..................................................7Professional Obligations...............................................................................................................................8

Minimum Training Requirements.............................................................................................................8Continuing Professional Development.......................................................................................................10Business Documents and Promotional Material.........................................................................................12Access to Clients’ Funds..............................................................................................................................12Client File structure and maintenance........................................................................................................12

Electronic Files........................................................................................................................................13Shared Office..........................................................................................................................................13

General conduct.........................................................................................................................................13Client services.........................................................................................................................................14Communication......................................................................................................................................14Market Representation...........................................................................................................................14Document Administration and Confidentiality.......................................................................................14Receiving Mail for Clients.......................................................................................................................15Client Terminations and Transfers..........................................................................................................15Client Assets............................................................................................................................................15

Tax File Numbers........................................................................................................................................15Future of Financial Advice Reforms (Fofa)..............................................................................................16Best Interest duty...................................................................................................................................16

Fee Disclosure Statement...........................................................................................................................18Disclosure Day........................................................................................................................................19Record Keeping.......................................................................................................................................19Client fees...............................................................................................................................................20Conflicted Remuneration........................................................................................................................20Grandfathering.......................................................................................................................................22

Engagement................................................................................................................................................23Issuing the Financial Services Guide.......................................................................................................23Setting the Terms of Engagement...........................................................................................................24Ongoing disclosure.................................................................................................................................25Client Engagement..................................................................................................................................25Terms of Engagement document............................................................................................................26





www.nextplan.com.auCollect Client Information...........................................................................................................................26

Client Personal and Financial Information Workbook / Data Collection.................................................26Risk Profile Questionnaire.......................................................................................................................28Anti-Money Laundering / Counter Terrorism Financing.........................................................................28Identification...........................................................................................................................................29Suspicious Matters..................................................................................................................................30

Vulnerable and Special Circumstances Clients............................................................................................30Who is a Vulnerable Client?....................................................................................................................31Requirements for all Vulnerable Clients.................................................................................................31

Products and Fees.......................................................................................................................................32Products..................................................................................................................................................32Fees and Services....................................................................................................................................32Practice Management Considerations....................................................................................................33Specific Vulnerable Clients......................................................................................................................33Record Keeping.......................................................................................................................................36

Analyse and Assess Client Financial Status.................................................................................................36Analysing a Client’s Financial Situation – Identifying and Evaluating Financial Planning Strategies........36

Conflicts of Interest....................................................................................................................................37Conflicts of Interest – continuous disclosure..........................................................................................37

Develop Suitable Strategies and Recommendations..................................................................................37Statement of Advice (SoA)......................................................................................................................38Record of Advice (RoA)...........................................................................................................................40When can I use a RoA?...........................................................................................................................40Maintain / Hold ROA...............................................................................................................................41Deposit products and certain other products ROA.................................................................................41When RoA use is prohibited?..................................................................................................................42Advice and disclosures............................................................................................................................42Appropriate advice.................................................................................................................................42Fees, commissions, benefits and associations........................................................................................42Financial Services Guide and Product Disclosure Statement requirements............................................44

Appendix 1..................................................................................................................................................45Recommending Products............................................................................................................................46

Strategy Text...........................................................................................................................................46Approved Product List................................................................................................................................47

Background and Philosophy....................................................................................................................47Investment Committee...........................................................................................................................47Establishment of the APL........................................................................................................................48Removal of financial products from the APL...........................................................................................48Research Houses.....................................................................................................................................48Additional Approval Requests.................................................................................................................49Changes in research ratings....................................................................................................................49Accreditation of Advisers........................................................................................................................49Replacement Recommendations for Existing Financial Product.............................................................50Inappropriate superannuation switching advice - An example...............................................................51Commentary...........................................................................................................................................52

Gearing.......................................................................................................................................................52LVR..........................................................................................................................................................52Cash flow analysis...................................................................................................................................52Risk discussion........................................................................................................................................52Structured products................................................................................................................................53





www.nextplan.com.auSelf-Managed Super Funds (SMSF).........................................................................................................53

Presenting financial planning recommendations........................................................................................54Implement Recommendations...................................................................................................................54

Authority to Proceed..............................................................................................................................54Execution Only Standard.........................................................................................................................54Securities Trading...................................................................................................................................58

Advice Implementation..............................................................................................................................59Time Critical Advice (TCA).......................................................................................................................59

Reviewing Advice........................................................................................................................................60Nextplan Advice Vetting Process................................................................................................................60

1) Purpose...............................................................................................................................................602) When is Vetting required?..................................................................................................................613) What advice must be submitted to attain vetting clearance?.............................................................624) How to Submit a file for Vetting?........................................................................................................625) Incomplete Submissions.....................................................................................................................636) What is the Vetting turnaround?........................................................................................................637) How many submissions are required to receive Vetting clearance?...................................................638) Time Critical Advice Situation.............................................................................................................639) Execution Only/ Nil advice documents...............................................................................................6410) Priority Service..................................................................................................................................6411) Multiple File Submissions.................................................................................................................6412) Vetting Outcome...............................................................................................................................6413) Multiple Authorisations and Accreditations.....................................................................................6514) How do I cancel/ terminate a vetting request I have submitted?.....................................................6515) What if I have some queries relating to issues not covered via compliance standards/policies?.....6516) Adviser required to return to pre-vetting requirements...................................................................6517) Clearance from pre-vet.....................................................................................................................6518) Vetting Feedback..............................................................................................................................6619) Vetting Period...................................................................................................................................6620) Non-adherence to vetting.................................................................................................................66

Advice Document Review Program (ADR) aka Adviser Audit......................................................................671. Introduction........................................................................................................................................672) How often am I subject to a ADR?......................................................................................................673) What does a ADR consist of?..............................................................................................................674) How many files will be looked at in a ADR?........................................................................................675) What files may be requested for a ADR?............................................................................................676) What is the scorecard used in a QAR & how does it work?................................................................677) Will I be provided with a scorecard/rating & how is it calculated?.....................................................688) What happens after the Adviser Support and Compliance Manager has reviewed the files?............689) Will I be required to complete any actions post the interim ADR Report?.........................................6810) Non-adherence to ADR?...................................................................................................................68

Breaches.....................................................................................................................................................69Recording and Reporting Incidents.........................................................................................................69Notifiable Data Breaches Scheme (NDB Scheme)...................................................................................70Why the need to notify?.........................................................................................................................70What is a Data Breach?...........................................................................................................................71

Actions to take in the event of a data breach:............................................................................................71Identifying notifiable data breaches:..........................................................................................................71

Example 1 — email sent to the wrong recipient contained before serious harm can occur:..................72Example 2 — loss of unencrypted storage media containing personal information...............................72





www.nextplan.com.auComplaints Handling...................................................................................................................................73

Unresolved Complaints...........................................................................................................................74Tips for Complaints Handling..................................................................................................................74

Software.....................................................................................................................................................74Paraplanning...............................................................................................................................................75Communication..........................................................................................................................................76It is stating the obvious, but one of the main reasons most people get upset in any relationship is due to a lack of communication................................................................................................................................76





www.nextplan.com.auFASEA – Code of Ethics:

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 established the Financial Adviser Standards and Ethics Authority (FASEA) in April 2017, to set the education, training and ethical standards of licensed financial advisers in Australia.

The Code of Ethics commenced on 1 January 2020, with all Financial Advisers required to adhere to the Code from that day onwards.

At Nextplan we take these standards very seriously and ensure that all our Advisers (also known as “relevant providers”), adhere to all standards within the Code.

Our Values:All Nextplan Advisers must always act to realise and promote the values of:Trustworthiness CompetenceHonesty FairnessDiligence

All Nextplan Advisers also act within a framework of twelve standards that underpin all aspects of our behaviour and are demonstrated in our advice to all clients:

Ethical Behaviour Client CareQuality Process Professional Commitments

Standard OneYou must act in accordance with all applicable laws including this code and not try to avoid or circumvent their intent.

Standard TwoYou must act with integrity and in the best interests of each of your clients.

Standard ThreeYou must not advise refer or act in any other manner where you have a conflict of interest or duty.

Standard FourYou may act for a client only with the clients free prime and informed consent. If required in the case of an existing client, the consent should be obtained as soon as practicable after this code commences.

Standard FiveAll advice and financial product recommendations that you give to a client must be in the best interests of the client and appropriate to the clients individual circumstances.

You must be satisfied that the client understands your advice and the benefits, costs and risks of the financial products that you recommend, and you must have reasonable grounds to be satisfied.

Standard SixYou must take into account the broad effects arising from the client acting on your advice and actively consider the clients broader, long term interests and likely circumstances.





www.nextplan.com.auStandard SevenThe client must give free, prior and informed consent to all benefits you and your principal will receive in connexion with acting for the client, including any fees for services that may be charged. If required in the case of an existing client, the consent should be obtained as soon as practicable after this code commences.

Except where expressly permitted by the Corporations Act 2001, you may not receive any benefits in connection with acting for a client that derives from a third party other than your principal. You must satisfy yourself that any fees and charges that the client must pay to you or your principal, and any benefits that you or your principal received in connection with acting for the client are fair and reasonable and represent value for money for the client.

Standard EightYou must ensure that your records of clients including former clients are kept in a form that is complete and accurate.

Standard NineAll advice you give and all products you recommend to a client must be offered in good faith and with confidence and be neither misleading nor deceptive.

Standard TenYou must develop maintain and apply a high level of relevant knowledge and skills.

Standard ElevenYou must cooperate with ASIC and monitoring bodies in any investigation of a breach or potential breach of this code.

Standard TwelveIndividually and in cooperation with peers you must uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public interest.

The 6 Steps of Financial Planning and Safe Harbour (Fofa) Requirements:

Step 1: EngagementProcess: Inform the client about the financial planning process, the services on offer and your competencies and experience. Determine if you can meet the client’s needs and define the scope of engagement.

Key Documents: FSG and Terms of Engagement / Annual Service Agreement documents

Step 2: Collect Client Information Process: Identify the client’s personal financial objectives, needs and priorities. You must conduct reasonable inquiries to obtain complete and accurate information.

Key documents: Data collection workbook and Risk Profile Questionnaire workbook

Step 3: Analyse and assess client’s financial objectivesProcess: Analyse the client’s information and current financial situation. Assess objectives, needs and priorities.





www.nextplan.com.auKey documents: Personal Client Information workbook and Client insurance / superannuation / investment statements, and any other relevant documentation provided by the client.

Step 4: Develop suitable strategies and recommendationsProcess: Analyse the client’s information and current financial situation. Assess objectives, needs and priorities. You must identify all issues and ensure that they are consistent to the client’s circumstances and the advice they have asked for and have the expertise to provide the client with the advice they have asked for. You will have conducted a reasonable investigation into the financial products to meet the client’s objectives and needs prior to implementation.

Key documents: Personal Client Information workbook and Client insurance / superannuation / investment statements, and any other relevant documentation provided by the client.

Step 5: Implement recommendationsProcess: Agree on implementation responsibilities and obtain signed authority to implement strategies, having based all judgements in advising the client on the client’s relevant circumstances, and having taken any other step that would be reasonably regarded as being in the best interest of the client.

Key documents: Statement of Advice, Authority to Proceed (in SoA), Application forms, AML / CTF client ID forms; Terms of Engagement / Annual Service Agreement documents. Step 6: Review and Re-evaluateProcess: Review and re-evaluate strategy as per Terms of Engagement / Annual Service Agreement documents

Key documents: Further Advice SoA and RoA

Professional Obligations

Minimum Training Requirements

To become an authorised representative with Nextplan, we require advisers to meet the minimum training requirements as set out by FASEA.

You can only offer advice in areas in which you are authorised and by virtue, professionally qualified. In areas where you are not professionally competent you should seek the counsel of other qualified professionals or refer your clients to them. You must also ensure that you meet the continuing professional development requirements outlined by Nextplan (see the Continuing Professional Development section).

For some advice areas and product types, Nextplan requires advisers to reach a higher standard as directed by ASIC.

For specialised products and areas of advice, advisers must complete product-specific training as required by the product provider. E.g., Australian Super require completion of a Kaplan module of study to be successfully completed, as part of a registration process before an adviser can use their product, as do a number of others. The product provider will require that the adviser has completed the training prior to the adviser recommending the product to clients, as the adviser will not be “registered“ otherwise to do so. For further details regarding this, please discuss with your Adviser Support and Compliance Manager.





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Self-Managed Super Funds: Advisers must complete one of the following accreditation options before recommending the establishment of an SMSF or providing advice on the investments within an SMSF:

- Kaplan’s SMSF program / The FPA’s SMSF Adviser Education Program / SPAA Advisereducation program or similar.

Securities: Options for advice on securities, for example direct shares advice as opposed to managed funds are:

- Broker SoA. Under this option, advisers may provide broad asset allocation advice on shares, for example, “You would like to purchase a portfolio in Australian shares, and I will refer you to a stockbroker for advice on the specific shares”. The broker must provide a Statement of Advice under their licensee’s AFS licence. This makes it clear that the Nextplan adviser is not recommending the shares and they may be given to the client either by the adviser or stockbroker.

- Adviser SoA with broker guidance. Under this option, the Nextplan adviser provides the advice but seeks advice from a broker on the specific securities. The SoA should be provided under Nextplan’s AFS licence and the Nextplan adviser is responsible for the advice. You must complete the ASX Accredited Listed Product Adviser Program or similar prior to providing this service to clients.

- Adviser SoA without broker guidance. Under this option, the Nextplan adviser provides direct shares advice based on their own analysis and expertise. The SoA should be provided under Nextplan’s AFS licence and the Nextplan adviser is responsible for the advice. You must complete an ASX Accredited Listed Product Adviser Program or similar prior to providing this service to clients.

Under the FASEA Standards, if you do not have the expertise to advise the client on a product / matter sought by the client you have to decline to provide the advice and refer the client to an adviser with the relevant expertise.

Before they can be appointed to Nextplan, any adviser who has not held an authorisation to act as a Financial Adviser between 1st January 2016 and 1st January 2019, must hold a Bachelor’s degree in Financial Planning and complete the Professional Year as monitored by FASEA. They must also successfully complete the FASEA Professional Advisers exam.

All Nextplan advisers, regardless of their appointment date, must successfully complete the FASEA Professional Advisers exam before 31st December 2021.They must also successfully complete the equivalent of the AQF 8 or the Graduate Diploma in Financial Planning by 31st December 2025.

The following situations are prohibited and must be avoided:

Margin lending products/facilities: Nextplan’s AFS Licence does not allow our Authorised Representatives to advise on Margin lending products or facilities for clients.

Managed Discretionary Accounts (MDAs): Nextplan’s AFS Licence does not allow our Authorised Representatives to advise on Managed Discretionary Accounts for clients.

Derivatives: Nextplan’s AFS Licence does not allow our Authorised Representatives to advise on Derivatives for clients.





www.nextplan.com.au Agri-Business: Nextplan’s AFS Licence does not allow our Authorised Representatives to advise on

Agri-Business products or facilities for clients. Power of Attorney: Acting as a Power of Attorney (excepting immediate family members) Limited powers of attorney/authorities to operate within investment platforms. Permission to

execute transactions on behalf of clients is acceptable. Withdrawals and access to funds is prohibited.

Client Accounts: Being a signatory on client accounts or holding account passwords to client accounts, or any other situations where it is possible for you to access client money.

Property: As a Nextplan Adviser you can discuss property as an asset class, but are never to discuss a particular address, street or even suburb! There have been court cases where clients have argued the only reason they bought a property was due to their Adviser.If it can be proven that you advised on a property and you cannot defend yourself – you may well be in serious trouble.Issues like valuations and rental returns are never guaranteed and cannot be mentioned.You would never guarantee a Managed fund return – likewise you cannot provide this sort of advice when discussing property.

Continuing Professional Development

Snapshot! Nextplan’s continuing professional development (CPD) program runs from 1 July to 30 June each year. The minimum training requirement is 40 hours for non-CFP advisers and 50 hours for CFP advisers.

Nextplan provides all advisers access to the FS Aspire custom CPD program as the training provider of structured education via online articles and videos. Training plans are allocated each year and explain the various knowledge areas that need to be covered. Training can be made up of online articles and external training events such as conferences, fund manager seminars, workshops, product accreditation and PD days.

Unstructured education needs to be accredited by an authorised assessor, usually the FPA. In most cases, the sponsor of the training will arrange for the course to be accredited and you will be sent a certificate of attendance. In order for your unstructured education courses to be counted towards your training plans, you are required to either upload your certificate of attendance into your Training Record in the FS Aspire custom CPD program, or forward to [email protected], who will undertake this on your behalf.

It is your responsibility to keep up to date with your training requirements.

Of course, Nextplan will be able to support you through this process to ensure you meet your training obligations each year and will advise you on your progress to ongoing training each quarter.

The CPD Process:

Once appointed to Nextplan you will receive an email containing your Username and Password for the FS Aspire Custom CPD program.

Log on to www.aspirecpd.com.au to access your training plans, articles, videos and reports.

Once you have entered your username and password you will come to the Dashboard page.Here you will find 3 headings: ASIC, FASEA and FPA. Click on the FASEA button.



mailto:[email protected]



www.nextplan.com.auThis will bring up the following categories:Professionalism and Ethics - minimum 9 CPD Hours requiredTechnical Competence - minimum 5 CPD Hours requiredRegulatory Compliance and Customer Protection - minimum 5 CPD Hours required Client care and Practise - minimum 5 CPD Hours requiredGeneral – minimum 16 CPD Hours required

If you click on any of these headings, they are hyperlinked to content for that area of knowledge. If you click on “Tile View” you will see content in one layout, and “List View” will provide you

another layout so you access content. If you click on the “format” dropdown button, you will see various formats of content i.e., PDF,

Audio, Video etc.

You can choose how you want to use this tool, and what works best for you.

To check your CPD progress against knowledge areas click on the ASIC tab, which break down knowledge areas and work completed.

Another very helpful area of Aspire is the Tech Zone tab which contains a library of information which you can use to increase knowledge but can also be used to cut and paste into your advice documents. Just click on Tech Zone tab when you enter Aspire.

Nextplan also holds a number of Face-to-Face Professional Development Days. There comprise three half days and two full days per year. These are held at various training / conference rooms across Melbourne CBD. A Calendar of Events is issued at the start of each year advising the dates and times of these sessions. CPD points are allocated to these sessions and are uploaded to the training records of those who attend by Nextplan administration.

Product Providers and others also provide external training / Professional Day opportunities, both face to face and online.

These will also allow you to attain extra CPD points. To add external training into Rainmaker:

1. Log into the FS Aspire system 2. You will be taken to the Dashboard screen.3. Click on the Claim CPD Tab 4. Click on New CPD Activity Claim5. Enter the name of the new activity. 6. Enter the date the activity was completed. 7. Enter the name of who has provided accreditation.8. Enter in the accreditation number. 9. Click on the “Include in target” - include the hours for this activity button.10. Click on Attachment – attach file button and upload the certificate that you received from the

training. 11. Click on the Save button.





www.nextplan.com.auOnce you have completed the above steps this activity will now appear in your training record.

If you have any queries on any of the above, please discuss with your Adviser Support and Compliance Manager.

Business Documents and Promotional Material

Snapshot! Advisers must fully disclose their capacity as authorised representatives and also the identity of their licensee in all key business documents used in the financial planning process, as well as any written or electronic promotional materials.

Business documents and promotional material include letterheads, business cards, websites, email signatures, fax cover sheets, office signage, Financial Services Guides and Statements of Advice.

Requirements: Name of authorised representative providing advice. Name of corporate authorised representative providing advice and ABN.

Status - “Corporate Representative or Authorised Representative of Nextplan Financial Pty Ltd. ABN 24 167 151 420 and AFSL 452 996”

It is also important that your business documents don’t include the following: Product references or endorsements Links with other businesses (unless a disclaimer is also included) Unearned professional designations (e.g., CFP when you are not a CFP)

Any implications that you or your business is endorsed by ASIC, the FPA or AFA (or any other entity) or that your business is the licensee/holder of its own AFSL.

Access to Clients’ Funds

Snapshot! Nextplan’s AFS licence prohibits the licensee and its authorised representatives from having access to client’s funds.

The following situations must be avoided: Acting as a Power of Attorney (excepting limited powers of attorney/authorities to operate within

investment platforms) Being a signatory on client accounts Holding account passwords to client accounts Any other situations where it is possible for you to access client money.

It is also strongly recommended that advisers should avoid getting involved in the estate planning issues of their clients, for example by acting as an executor. It is possible that claims that a conflict of interest has influenced the adviser’s actions, and it is also very difficult to be removed as an executor once it’s implemented.





www.nextplan.com.auClient File structure and maintenance

Snapshot! Client files can be maintained either in electronic or hardcopy form. In cases where a Nextplan authorised representative shares open office space with non-Nextplan people or entities, it is imperative that there is a clear physical distinction drawn between offices and location of client files.

Information in files should be easy to locate and secured in the file.

Segments: Segmenting your client files is a good way of organising the information effectively, so that you are able to quickly find required information.

The following segments are strongly recommended: Correspondence: File notes, emails, letters, including records of meetings or discussions with clients. Data collection: Personal Information workbooks, and risk profiling workbooks, statements or

spreadsheets used to understand the client’s personal and financial circumstances, copies of tax returns and inquiries made to obtain complete and accurate information.

Advice documents: Exact copies of SoAs and RoAs, as well as signed Authorities to Proceed. Applications: Completed and signed application forms. Working documents: Projections, spreadsheets, research of insurers/products/product providers,

draft strategies used for formulating the advice. AML/CTF documents: Copies of client’s identification and verification forms.

Electronic Files For electronic storage, you should ensure that there is a regular “back-up” storage process in place. It is also important to have clear procedures in your office so that everyone knows what gets stored electronically and when it is safe to destroy paper copies.

Similarly, for electronic storage, we recommend you create folders corresponding with the recommended sections in a paper file as outlined above.

Tip: Ensure documents are easily identifiable by their file name and location. Documents must also be kept in a non-writable format. For example, Word documents can be changed, and their accuracy can be questioned; PDF or other lockable file formats are better.

Statute of Limitation: You should retain all client files for a minimum of six years. There is generally a statute of limitation of six years on financial negligence claims. This means that a client has a six-year time limit beginning from 1) when they first engaged a financial adviser, or 2) when they first suffered their financial loss to bring forward a claim. Once the six-year period has elapsed, claims can usually no longer be lodged. If we take the later definition into consideration, it is best to keep all files for the life of your business.

Shared Office Security of client information is paramount. In order to ensure data is not accessible to anyone other than Nextplan and its associates (authorised representatives and their staff etc.), filing cabinets should be locked, and computer files and applications should always be password protected.

General conduct

Snapshot! You must provide professional services in accordance with the law and Nextplan’s policies.





www.nextplan.com.auAs an authorised representative of Nextplan, you must treat others with courtesy and respect, which includes clients, other authorised representatives and Nextplan staff. You must not engage in any misleading, deceptive or fraudulent behaviour, or any conduct which will reflect adversely on your integrity as a financial planner, your business and/or Nextplan.

Client services You must ensure that all professional services are provided in an efficient, honest and fair manner with proper legal authorisation. It is important that all recommendations are suitable for the client and that you do not let your own personal biases or interests adversely affect your service provision. The “Best interest” requirement is a foundation of the law and must be evident in all client dealings.

Communication You must inform Nextplan of any changes in your address or contact details, as ASIC’s online register must be updated within a short timeframe. You must also advise Nextplan of any notifiable event within 7 days. You must also comply with Nextplan’s requirements in complaints handling, dispute resolution, disciplinary procedures and compliance review.

Notifiable events include: Expulsion or refusal of membership to a professional/other body in respect of your professional

capacity. You are subject to disciplinary proceedings by any professional or regulatory body. You are under consideration for an investigation from any professional or regulatory body. You are under consideration to be banned from practicing. You are subject to a client complaint. You have had a business-related licence, registration or membership revoked, varied, restricted,

denied or suspended. You have become the subject of a legal or regulatory investigation. You, as a natural person, have become insolvent or placed under administration. You, as a body corporate, have become an externally administered body corporate. You been found guilty of any breach of the law punishable by imprisonment. You have become a defendant or respondent in any criminal, civil or regulatory proceeding or

investigation.

Market Representation In communicating your professional services, you must not misrepresent any services offered, any of your skills, competencies, experiences, expertise or capacity. In addition, you must not misrepresent any associations, any remuneration or benefits received or receivable or any charging model provided by yourself or any other party.

You must not make any unsupported comparisons of your services against another or advertise in a way that is misleading or deceptive. For example, you should not promote the ability to achieve specific returns on investments which are not factual and cannot be guaranteed, nor hold yourself out as something that you are not. i.e., An SMSF expert if you have not had specialised training.

Document Administration and ConfidentialityAll personal information/documents obtained as part of the financial planning process must be kept confidential and must not be used for personal benefit (direct or indirect) regardless of whether it impacts on your client. You must keep separate and independent files and records for each of your clients for a





www.nextplan.com.auminimum period from the date a matter is finalised. (See Statute of Limitation above). You cannot charge clients for the costs of retaining information/documents.

Receiving Mail for Clients As large amounts of documentation are sent by the various financial services providers, the volume can become overwhelming for clients. As a result, many clients prefer to have their adviser receive communications on their behalf.

One possible impact of this practice is that clients lose visibility of the status of their insurance cover, investments, or superannuation, which they can consider to be to their detriment. There have been numerous reported instances where clients believed their investments were in safe hands and performing well, when their statements would have shown otherwise. Historically, a lack of access to information about a superannuation fund or investments status has allowed for fraud or other serious misconduct to occur.

To strike a commercial balance between risk management, client protection and providing a valued service, Nextplan will allow advisers to be the nominated mailing address for their clients provided that an authority has been completed by the client allowing them to do so.

Client Terminations and TransfersIf a written request is made by a previous client or another person authorised by the client to transfer the client’s business to another professional, you must take all reasonable steps to facilitate the transfer. The transfer must be made as soon as possible upon receiving the written receipt. This requirement applies to documents that the client has paid for, such as Statements of Advice and investment reports. You do not need to transfer internal notes, memoranda or other working documents. For more guidance, please contact your Adviser Support and Compliance Manager.

Client Assets Client assets must be kept separate from other clients’ assets and your own. Lending between advisers and clients is also prohibited.

Tax File Numbers

Snapshot! There are strict laws governing the use of TFNs. TFN information must be kept private and not misused.

Below is a summary of the guidelines issued under the Privacy Act. They are intended to protect the privacy of individuals.

TFNs are not to be used/disclosed to identify an individual or to confirm the identity of an individual for any purpose other than taxation, assistance agency* or superannuation law.**

TFNs are not to be used to obtain or match information about an individual for any purpose other than taxation, assistance agency or superannuation law.

Tax file information shall only be requested by those authorised by taxation, assistance agency or superannuation law.

- It is a criminal offence to request a tax file number without authorisation. When collecting tax file numbers, individuals should be informed of:

- The legal basis for collection. - The right to decline to provide a TFN.





www.nextplan.com.au- The consequences of not providing a TFN.

TFN information must be adequately protected to prevent unauthorised access, use, editing, disclosure and any other misuse.

Access to TFN information should be restricted to those authorised to carry out responsibilities under taxation, assistance agency or superannuation law.

Those authorised to collect TFNs will ensure staff maintain an adequate understanding of the need to protect individual’s privacy in relation to TFNs.

Individuals have the right to remove their TFN and in this situation no record will be maintained of the TFN.

*Assistance Agency law – Those sections of the act that deal with the handling of tax file numbers for the purposes of data-matching:

The Child Care Act The Student and Youth Assistance Act The Social Security Act The Veterans Entitlements Act

**Superannuation law – the Act for which the insurance and Superannuation Commissioner has the general administration; including the superannuation Industry.

Please note that while there are exceptions to these rules for taxation/superannuation purposes, these are unlikely to apply to Nextplan advisers, but should not be discounted.

Future of Financial Advice Reforms (Fofa)

In 2013 the Australian Government introduced the below Fofa reforms: - Best interest duty: An obligation on you to act in the best interest of your client. - Fee Disclosure Statements (FDSs): The requirement for FDSs to be sent to clients.- Conflicted Remuneration: Ban on accepting conflicted remuneration. - Scaled advice: Facilitating access for retail clients to scaled advice.

Best Interest duty There are four standards that you must meet when providing advice to a retail client. These are:

1. Act in the best interests of the client; 2. Put the client’s interest before your and our own interests; 3. Provide appropriate advice; and 4. Warn the client if the advice is based on incomplete or inaccurate information.

Advisers are considered to have satisfied the best interest duty where they can demonstrate that they have complied with a series of steps prescribed by ASIC. The below steps explain the safe harbour provision:

(a) Identify the objectives, financial situation and needs of the client that were disclosed to you by the client through instructions;

(b) Identify: the subject matter of the advice that has been sought by the client (whether explicitly or implicitly);

and the objectives, financial situation and needs of the client that would reasonably be considered as





www.nextplan.com.aurelevant to advice sought on that subject matter (i.e. the client's relevant circumstances)

(c) Where it was reasonably apparent that information relating to the client's relevant circumstances was incomplete or inaccurate, make reasonable inquiries to obtain complete and accurate information;

(d) Assess whether you have the expertise required to provide the client advice on the subject matter sought and, if not, decline to provide the advice;

(e) If, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product:

i. conduct a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter and;

ii. assess the information gathered in the investigation

(f) Base all judgments in advising the client on the client's relevant circumstances;

(g) Take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client's relevant circumstances.

Handy tips!

1. Many clients do not know or fully understand what their objectives, financial situation or needs are. Clients may also provide instructions that are unclear or seem inconsistent with their circumstances. In these situations, you may need to make further inquiries of the client to identify their objectives, financial situation and needs from the information disclosed through the client’s instructions.

2. As a matter of good practice, if a client is not willing to obtain personal advice because of the cost involved, you may consider providing the client with other solutions, such as:

a) Giving the client factual information; b) Giving the client general advice; c) Offering to provide personal advice on another subject matter; or d) Recommending that the client see a financial counsellor or contact the Department of Human

Services’ Financial Information Service.

3. If it is reasonably apparent, after reasonable inquiries have been made, that information about the client’s objectives, financial situation and needs on which the advice is based is incomplete or inaccurate, an adviser must warn the client that:

a) The advice is, or may be, based on incomplete or inaccurate information relating to the client’s relevant circumstances; and

b) Because of this, the client should, before acting on the advice, consider the appropriateness of the advice, taking into account their objectives, financial situation and needs.

4. To ensure that your advice is appropriate, it must be reasonable to conclude, at the time of the advice is provided that:

the advice is fit for its purpose – that is, following the advice is likely to satisfy the client’s relevant circumstances; and

the client is likely to be in better position if they follow the advice.

5. The conflicts priority rule means that:





www.nextplan.com.aua) an adviser must not recommend a product or service of a related party to create extra revenue for

themselves, their AFS licensee or the related party, where additional benefits for the client cannot be demonstrated;

b) where an adviser uses an approved product list that only has products issued by a related party on it, the adviser must not recommend a product on the approved product list, unless a reasonable adviser would be satisfied that it is in the client’s interests to recommend a related party product rather than another product with similar features and costs;

Note: One way that an adviser may be able to do this is by benchmarking the product against the market for similar products to establish its competitiveness on key criteria such as performance history, features, fees and risk. The benchmarking must be reasonably representative of the market for similar products that are offered by a variety of different issuers.

If you cannot act in the client’s best interests in providing them with advice, you must not provide the advice. You should refer the client to another adviser who would be better placed to act in the client’s best interests.

Fee Disclosure Statement

Australian financial services (AFS) licensees and representatives of AFS licensees who enter into or have an ongoing fee arrangement with retail clients must provide their retail clients with a fee disclosure statement (FDS) on an annual basis where the fee arrangement is a % based fee.For clients who pay a fixed fee. i.e. A specific dollar amount, then this fee should be contained in an Annual Service Agreement, which is agreed to each year, and signed off and authorised by the client each year. Even if you issue a client with an Annual Service Agreement, there must be a page in the Agreement with a heading “Fee Disclosure Statement” outlining what was agreed to and what was delivered, and what the client paid.

The FDS obligations must be met for both new and existing retail clients who enter into or have entered into an ongoing fee arrangement. ‘New clients’ and ‘Existing Clients’ are defined, for the purpose of the obligation to issue a Fee Disclosure Statement as:

New client A person who enters into an ongoing fee arrangement with an AFS licensee or their representative who has not been provided with personal advice as a retail client before that time by that AFS

licensee or representative.

Existing client A person who has received personal advice as a retail client from an AFS licensee or their

representative: An existing client can enter into a new ongoing fee arrangement but will still retain the classification

as an existing client.

An ongoing fee arrangement is one where a client has received personal financial advice from you and agreed to pay for an ongoing service for a period of more than 12 months. An arrangement under which a





www.nextplan.com.auclient receives unrelated separate pieces of advice does not necessarily constitute an ongoing fee arrangement, even if the client used the same adviser over a period of longer than 12 months.

The below are not considered ongoing fee arrangements: a) a payment plan meeting prescribed requirements—for example, an upfront advice fee paid in

instalments; b) an arrangement under which the only fee payable is an insurance premium; c) an arrangement to the extent that the fee payable is a product fee.

A Fee Disclosure Statement is a regulated document. The regulations do not state the format or structure of the document but does set out what it must contain. It must include information from the previous 12 months:

about the services that were agreed; those actually delivered; and the fees paid in $AUD.

Note: Set out the amount of each ongoing fee paid by the client.

It must be issued by the fee recipient to existing clients within 30 days of the anniversary of the disclosure day to the client.

It must be issued by the fee recipient to new clients before the end of a period of 30 days beginning on the disclosure day. The delivery can be by mail, email, fax, online or by hand. ASIC indicated that numerous ongoing fee arrangements can be included in one fee disclosure statement but inferred that it should include only one client.

Disclosure Day

You need to work out the disclosure day for any existing clients that have paid an ongoing fee for services (and received personal advice) for more than 12 months.

Existing client’s disclosure day anniversary date1. The actual anniversary of the day you entered into an ongoing fee arrangement or

New Clients disclosure day anniversary 1. The date will be the anniversary of the date the ongoing fee arrangement was commenced. 2. The day can be reset if more convenient, but you need to inform the client.

Nextplan provide access to a standard template for the preparation of the FDS. It covers the legislative requirements. We have also included provision for free text so that you can explain if, and why some services had not been delivered.

The obligation for delivery of the FDS is on the fee recipient but it can be outsourced; however, the obligation for compliance remains with the fee recipient. For new clients, if you have not provided this type of report or document to a client previously, we suggest that you do so face to face at a client review as long as it can be achieved within the required timeframes.





www.nextplan.com.auYou will need to establish a diary system to assist you to comply with the delivery time requirements.

Record Keeping

Keep records of delivery of the FDS to clients. If electronic method, you need to be able to reproduce the FDS in the same format and with the same information as was provided to the client at the time. Protected document format is always a prudent format.

Keep records of the approach you have taken to identify the date that ongoing fee arrangements were entered into with existing clients. Apply that approach consistently across all existing clients. Nextplan accepts that you might take different approaches for different categories of client.

If in doubt about any issue regarding Fee Disclosure Statements, please discuss with you Nextplan Adviser Support and Compliance Manager.

Client fees

From July 1, 2013, any advice to a new client for investment products can no longer involve the payment of commissions from the product provider. You will need to charge a fee for service. If you are offering an ongoing service, then you will need to have an ongoing fee arrangement in place.

Your fees must be reasonable for the services you provide. Any fees that are excessive may be viewed by ASIC as conflicted remuneration. Additionally, ASIC has indicated that over servicing to generate additional revenue can be viewed as conflicted remuneration.

Nextplan require that all fees are to be paid to us and we will deduct your agreed fee payable to us before passing on the balance to you.

We provide all advisers with Terms of Engagement and Annual Services Agreement documents. If you wish to vary this, then you must present your ongoing fee agreement to us for approval. The document can cover the initial service and ongoing services, or you can have two separate documents. We believe that two separate documents make sense, as a client should not sign up to ongoing service until the recommendations have been accepted.

Your ongoing fee agreement is mandatory and should include information about the renewal notice and the consequences of not renewing, as well as include the provision for you to assign rights to another party.

Conflicted Remuneration

Conflicted remuneration is defined in the Corporations Act. The definition is quite broad and includes anything that could be expected to influence the advice that you provide to a client. They include the below:

Commissions whether upfront or trailing, fixed or variable, paid by a product issuer to a licensed dealer group, whether the payment is made directly or through some other arrangement;

Volume-based payments from a licensed dealer group to an authorised representative or other representative;

Volume-based bonuses and other payments, such as a commission or one-off payment, to a financial adviser, which is calculated by reference to the number or value of financial products acquired by clients following the advice of the financial adviser;

A discount on the fees paid by an authorised representative to its AFS licensee based on client funds





www.nextplan.com.auheld in a particular financial product;

Shelf space fees is a fee for making the product available through the platform. It also includes a discount on an amount payable, or a rebate of an amount paid, by a fund’s manager for its products being available through the platform. A benefit is generally presumed to be a volume-based shelf-space fee if the benefit, or the value of the benefit, is wholly or partly dependent on the total number or value of the funds manager’s financial products to which the custodial arrangement relates;

Asset based fees on borrowed amounts that are to be used to acquire financial products by or on behalf of a client. There is no restriction on how an amount is borrowed for this ban to apply e.g. charging an advice fee regarding a margin loan;

Employee performance benefits are only conflicted remuneration if they could reasonably be expected to influence the advice given by an employee that is an AFS licensee or representative; and

Soft dollar or non-monetary benefits – these can include: - free or subsidised business equipment or services; - hospitality-related benefits (e.g. tickets to sporting events or concerts and subsidised travel); - shares or other interests in a product issuer or licensed dealer group; - marketing assistance; and - promotion or other ways of recognising an employee based on product recommendations or

sales.

There are some exceptions to the general rule. These are: a) Life insurance risk products that are not group life insurance for members of a superannuation entity

or insurance in a default fund b) General insurance c) No advice was provided to the client in the previous 12-month period and the client purchased a

product (i.e. execution or no advice transaction with the addition of the time frame limitation) d) A fee paid by the client for a service received (either advice or a purchase of a product) e) The benefit is provided for education or training and is relevant to the financial product advice f) The benefit is IT support or software in relation to the financial product advice given and specifically

relates to the financial products issued or sold by the benefit provider. g) Soft dollar benefits less than $300.00

While the requirements of the changes resulting from FoFA are distinctly separate they cannot be looked at in isolation. The requirements for ‘best interest’, client interest to receive priority and appropriate advice CANNOT be IGNORED for grandfathered clients to be retained in a conflicted remuneration arrangement.

The ban on conflicted remuneration means that you and Nextplan cannot receive anything that falls within the definition and a platform provider or product issuer cannot pay a benefit that falls within the definition.

Conflicted remuneration was banned from 1 July 2013 for the establishment of new arrangements and from 1 July 2014 for new clients into existing arrangements.

Our position is that on review you should investigate the options for the existing client, retain the working papers, make a recommendation that meet the interests of the client, put the client’s interest before your and our interests, and ensure that the product if there is any involved, is appropriate for the client.

Please record any soft dollar benefits from $100-$300 in your alternative remuneration register.

Handy tips!





www.nextplan.com.au Review existing clients when due. Investigate the alternatives to remaining in the existing arrangement and product(s). Recommendations must put the interests of the client first, leave the client in a better position and

provide appropriate advice.

If you leave the client in the existing arrangement you must disclose any commissions that you will receive as a result of your advice.

If you agree to a new fee arrangement, then you will need to set up a diary entry for the provision of the Fee Disclosure Statement at the anniversary of the disclosure day.

New Clients New products without commissions should be used for new clients. If a commission product is to be used it will need to be clearly demonstrated that it is more

beneficial for the client.

Even though commissions on life insurance risk products are acceptable we recommend you rebate commissions for premium discounts and charge the client a fee for the service.

Grandfathering

Broadly, any existing arrangement for commissions or benefits entered into prior to 1 July 2013 were banned at 1st January 2021. This means that any remuneration that you may have received as an adviser is no longer. We encourage you to commence an orderly conversion of your clients from the grandfathered commission products to new products with no commission built into them, and to charge a fee for the service that you provide. Care does need to be exercised because you still need to meet the best interest obligation and it may be in the best interest of the client to remain in a product that is now no longer paying commissions and other benefits to you.

Remember that advice to move must meet the interests of the client’s and the product must be appropriate.

Efficiency You must have a good diary system to track the dates for issuing your FDS and offering renewal of your ongoing arrangements with clients. The system must also alert you when a client does not respond to the invitation to renew the arrangement.

Diary system

You must put in place an efficient diary system to remind you that the FDS is to be issued and that renewal notices are required and if they are outstanding, so approach actions can be taken.

The most efficient method for achieving compliance with the requirements for FDS and opt in are contained within the software program Worksorted. (See entry later in this manual).Alternatively, an electronic diary system whether that be in Xplan, COIN or Midwinter, or by using Outlook or a Contact Management Database can be used. Your Adviser Support and Compliance Manager can help you review these processes.





www.nextplan.com.auCollection and payment

As you AFSL, Nextplan will collect and pass commissions and fees to you in accordance with the agreement between you and us.

Worksorted software will allow you to prepare invoices for fees that you charge clients. The fee arrangement as disclosed in the Statement of Advice must disclose the split between us and you.

The collection of any outstanding fees remains your responsibility. We will only pass on fees when they are cleared funds from the client.

Debtors

Collection of arrears is your responsibility, so ensure your accounting procedures are in place.

Scaled Advice

Clients can engage you for a number of reasons. Many clients will most probably want advice on a specific objective or need only; some may have a couple of objectives, while others may require advice on their complete financial situation; however, in reality all advice is scaled to some extent. You will need to discuss this with the client prior to the personal information collection / fact-finding process as this will define what level and type of information you need to collect and record.

Once you start the collection of information you may find that the scope originally agreed is not appropriate for the client’s circumstances or the fee to provide the scope is beyond the client’s affordability. You may need to renegotiate the scope at this time, obtain the client agreement and record this process before proceeding further. You cannot just amend the scope of the advice without the client’s prior agreement.

As an adviser you will: Use your judgement and training to decide whether, by limiting the scope of the advice, you can

provide scaled advice that meets your legal obligations. Adjust your level of inquiries to reflect the nature of the advice being provided. Implement systems that will help you decide whether scaled advice can be provided to a client in a

way that meets your legal obligations. Communicate clearly to the client the type of advice service you are offering.

Engagement

Issuing the Financial Services Guide

Snapshot! Provide your FSG to a client as soon as practicable and record the date and version provided, either using the FSG acknowledgement form or file notes, or email system.

The Financial Services Guide (FSG) contains important information a client should read and understand before deciding whether to obtain financial services from an adviser, such as what financial services are offered, the costs of financial services, any conflicts of interest that exist and dispute resolution arrangements.





www.nextplan.com.au

As soon as you are appointed as an Authorised Representative of Nextplan, you will be issued with an FSG specifically designed for you and your clients.

The FSG must be provided to clients as soon as practicable once it becomes clear that a financial service will be provided to the client. In any event the FSG must be given before the financial service is provided. This applies to personal or general advice as well as execution only services. It is also good practice to provide an FSG to a client on request.

You should ensure that your FSG is up to date with the latest Nextplan version and that a copy of each previous version is maintained. To show that an FSG was provided to clients, each file should show when the FSG was provided and what version the client received. This could be done via a hard copy or electronic file note or a client-signed acknowledgement.

When you provide your up-to-date FSG to a client, you need to record the date and version provided, using either the FSG acknowledgement form or file notes, or email system. You should also record in the File Note that you have explained the FSG to the client and provided the client the opportunity to ask questions. If the client did not have any questions, record as such. If the client did indeed have questions, record what the question/s were and your response.

Tip: It is best practice to provide the FSG to the client in the first face-to-face interview to ensure that you have covered your initial compliance requirements and you can focus on getting to know your client and understanding their goals and objectives. It is even better to provide the FSG to a client via email, so that you always have a record of when it was sent and received by the client.

Important: When you join Nextplan as a new adviser, or there is a material change to Nextplan’s FSG, you should ensure that all clients receive the FSG before any further financial services are provided.

Setting the Terms of Engagement

Snapshot! Outline what services you provide and discuss the client’s needs and objectives. Determine whether your services are a good match for the client’s goals. If you are going to move forward you must outline the terms of your engagement both verbally and in writing.

Recent industry debate and legislative and regulatory changes have focused on the need for clients to be better informed about financial products and services. This can be achieved by clearly setting out the terms of the professional relationship between the adviser and the client in a Terms of Engagement document. The purpose of having a formal Terms of Engagement is to establish a professional relationship between the adviser and their clients, and improve client confidence by setting clear and realistic client expectations.

The aim of the Terms of Engagement is to build client trust by acting as a contract between the adviser and client, covering:

the parties’ understanding of the services the adviser will provide the expectations of both parties the liability of the adviser to the client the context against which to measure the adviser’s performance.

The scope of your engagement must be explained to the client in a way that they are likely to understand and in addition must be written up in a formal document. A template of this document, known as the Terms





www.nextplan.com.auof Engagement (TOE) is available via Nextplan’s website – under Engagement Tab. Alternatively you can design your own. The TOE must be signed by both parties and kept on file. A copy should also be provided to the client.

Prior to signing an agreement with a client, you must disclose your relevant: Qualifications Authorisations Experience Areas of expertise

The FSG contains this information, so using it to explain these areas is obviously helpful.

You must determine the client’s objectives, financial circumstances and needs, and together with the client decide whether the services you offer will meet these needs.

In addition, you need to explain: The financial planning process Confidentiality of client information Any conflicts of interest you have in relation to the client/client’s requests Fees likely to be incurred by the client.

Having discussed the above and determined that it’s in the best interests of your client that you move forward, you must outline the scope of your engagement. Scoping your advice carefully helps show you understand your clients’ needs. You must not agree to do business with a client if doing so is likely to breach industry requirements or result in illegal or deceptive activities. You may also decide that your services/expertise will not meet the client’s needs or expectations, so it may be that you decide not to begin a business relationship with that client at this point.

Ongoing disclosure

In the event that there are changes to the financial planning engagement which could negatively impact on your client’s interests you must notify your client in writing as soon as appropriate. Examples include changes to the services you provide, changes in your authority to offer certain services and changes in remuneration agreements.

Client Engagement

If you become aware that your client has a previous financial planning services engagement with another financial planning business or financial planner, you should obtain authority from your client to transfer documentation from the previous business/planner. If your client declines to give authority, you should consider whether or not to accept an engagement with them and document your reasons for accepting/declining engagement.

Authorisation (Servicing Adviser) Form:You need to be careful when you request to take over the Servicing rights of a new client.

Firstly, the fees charged by the previous adviser should be requested to be ‘turned off’ at product provider level at the time of transfer.





www.nextplan.com.auYou, as the acquiring Adviser, can then initiate a fee once the ATP of the new SOA has been signed, and the OSA has been signed by the client. This avoids any “Fee for No Service” issue.

If work is to be undertaken immediately and an OSA has been signed, then fees do not need to be turned off.

Also be very careful about any Insurance that the client has.

If there is a responsibility period in place – you will be held accountable if there is a clawback if the client cancels or modifies their Insurance.

Terms of Engagement document

The Terms of Engagement must contain: The name, contact details and license number of the adviser, adviser’s employer (where applicable)

and the licensee. The agreed nature and type of service to be provided

Service deliverables and timeframes Expected frequency of contact Duration of the engagement and how to terminate the engagement Client’s responsibilities Any other information necessary to ensure the client is fully informed

A Terms of Engagement document is available via Nextplan’s website.

You need to decide with a client if you are going to provide ongoing service to that client. If you are providing a ‘one off’ service such as the initial advice, then your terms of engagement should reflect this situation. If there is agreement to provide ongoing service for a fee being charged for a period of more than 12 months, then you will need to enter into an agreement describing those services and setting out the fees that will be payable. It would seem a reasonable process to have two different terms of engagement - one for the initial engagement, and a second for ongoing service as a client may not want to enter into an ongoing arrangement until after they are satisfied with the initial advice.

Collect Client Information

Client Personal and Financial Information Workbook / Data Collection

Snapshot! You need to collect sufficient client information to demonstrate that you are acting in the interests of the client for any personal advice provided and that the resulting advice is appropriate. This information should be both quantitative and qualitative, and steps should be taken to ensure that it is complete and accurate.

This is best demonstrated through using the Nextplan Client Personal and Financial workbook.

Work with your client to build an accurate picture of their overall financial situation. Ensure that they understand that the development of financial strategies and advice is based upon the information that they provide, and that inaccurate or incomplete information could lead to inappropriate recommendations. The





www.nextplan.com.aucollected information should be both quantitative, such as the values of assets and liabilities, and qualitative, such as goals, attitudes towards particular types of investments and preferred methods of communication.

Nextplan’s Client Personal and Financial workbook is available under the Collecting Information tab of Nextplan’s website.

All sections of the workbook should be fully completed to show that all areas of the client’s relevant personal circumstances were investigated.

The Client Personal and Financial workbook should be signed and dated by both the adviser and the client.

Nextplan take the view that a client’s Personal and Financial information does not vary that greatly over a two year. As a result, we are happy for an adviser to use the Personal and Financial workbook over a two year, and make amendments to the current version in the second year, using a different coloured pen, or using word review functionality to cross out and an underline changes.

It is for this reason that we have a separate document in the Collecting Information section of the Nextplan website called Client Declaration and Consent. This document comprises of the last two pages of the complete Personal and Financial workbook and is to be used as sign off by the client showing that they have amended and agreed to the changes within the current Personal and Financial workbook.

Tip: Blank, crossed out or parts marked "NA" should be avoided in the Client Personal and Financial workbook as they don’t show whether the information was checked with the client. Also, a client may state that superannuation is not applicable to them at the time of your meeting, however superannuation is applicable to all clients, as they will at some point in their life want to retire. If your advice is ever challenged at AFCA or in a court of law, then “NA” / not applicable in a superannuation section of the client personal information workbook will not be deemed appropriate information gathering and will not suffice. Please ensure that sections are marked such as “client declined to provide information”, “outside of agreed scope of advice” or that the client had no information relevant to that section, for example no liabilities or no trauma insurance.

Tip: Clients may provide you with bank, superannuation or other statements that contain information that the Client Personal and Financial workbook requires. To save time, you can attach these to the workbook and write “see attached” in the relevant section, rather than duplicate the information. If you are unable to collect the information required to develop and support recommendations, you must explain to the client how this lack of information will affect your terms of engagement and the overall financial advice and plan. It may even mean that you are unable to provide the client with advice. You must still fulfil the obligations in respect of the ‘best interest of the client’. It is not sufficient to just warn the client of the implications of not providing the information or ensuring that it is accurate; you must make reasonable attempts to elicit the information. Your file must reflect these attempts.

It is essential that you take reasonable steps to ensure that information is complete and accurate. For example, request and keep on file current copies of bank statements, investment reports and superannuation statements.

If you still cannot obtain complete information, then you need to decide if you can proceed with a recommendation based on the information you have collected. If you decide to proceed, then you must provide a warning to the client. We require that you provide this warning at the time of the discussion about the incomplete information or its inaccuracy. The provision of this warning should be recorded in the Client





www.nextplan.com.auPersonal and Financial workbook and preferably a separate file note. The warning must also be included in the SoA given to the client.

You must; Warn the advice is, or may be, based on incomplete or inaccurate information relating to the client’s

personal circumstances; Tell the client what information you believe is incorrect or incomplete; and Warn the client that, before acting on the advice, they should consider the appropriateness of the

advice, having regard to the client’s relevant circumstances. Therefore, your warnings must be clear, so the client can make an informed decision. You must warn the client at the time information is withheld or believed to be inaccurate and this

warning MUST be included in the SoA along with a general indication of what you believe is inaccurate or incomplete.

Risk Profile Questionnaire

Snapshot! To fulfil the “know your client” rule, the “reasonable basis for advice” requirement, and “best interest duty” of each client, you must understand the clients’ level of risk tolerance. Using a structured and documented process is crucial to showing that this requirement has been met.

Each client will have an individual view of how much risk they are comfortable with. To achieve an understanding of the client’s risk profile, a risk tolerance assessment should be completed. Advisers are encouraged to use Nextplan’s Risk Profile Questionnaire, available on our website. Discuss the risk profile outcome thoroughly with the client to ensure they are in agreement with the risk profile selected. Take file notes if necessary.

The keys to showing a reasonable basis for asset allocation advice are: 1. Educate the client about the different investment options and asset classes. 2. Ask the client questions to determine their tolerance for investment risk. A structured questionnaire

will achieve this requirement best. 3. Choose an appropriate asset allocation. As well as considering the client’s level of financial planning

experience and knowledge and their risk tolerance, this step should also consider the client’s goals. If the goals are not in line with the risk tolerance, there might need to be a trade-off. For example, the client might need to scale back their objectives to match their appetite for risk or increase their volatility risk to achieve their investment goals. This discussion must be well documented in the Risk Profile Questionnaire and file notes – and certainly signed off by the client.

Tip: If there is any difference between the asset allocation that the questionnaire recommends, and the final asset allocation chosen, file notes and the Statement of Advice must explain the reason for the difference and show that the client understands the characteristics of the new risk profile and has signed off to these changes. For example, the client’s answers might indicate overall that a “growth” asset allocation is appropriate, but one answer might say that the client requires a high level of liquidity which is not consistent with a “growth” asset allocation.

File notes must show discussion about any increased risks, decreased returns, longer minimum investment timeframe or different investment classes in the new allocation. You should also include in your SOA in the risk profile section, a discussion in regard to the reasoning behind the different risk profile.

Anti-Money Laundering / Counter Terrorism Financing





www.nextplan.com.au

Snapshot! A client’s identity must be verified before you arrange a designated service. Suspicious matters must be reported to the compliance team immediately.

The AML/CTF Act has been active since 12 December 2007.

The aim of this legislation is to detect money laundering and/or terrorism financing by meeting the needs of law enforcement agencies for information about possible criminal activity and terrorism.

Nextplan is required to establish and maintain an AML/CTF compliance program. As financial planners are defined as “item 54 only” entities, the requirements under the AML/CTF Act are triggered when you arrange a “designated service” for a client.

Designated services include: Obtaining new or additional interests/units in managed investments Opening or making a deposit into a cash management trust Buying or selling shares/options in a listed company or trust Paying a premium or being issued with an investment life insurance policy (where it is a regular

premium policy with annual premiums greater than $1,500 or where it is a single premium policy with a single premium greater than $3,000)

Obtaining an annuity or pension Obtaining an interest in or have the ability to transact through a WRAP/Platform/IDPS Cashing out all

or part of a superannuation interest.

Advisers’ obligations are known as the “Know Your Client” requirements, which are to identify clients, verify their identity and to report any suspicious matters.

Identification

Product provider forms should be used to identify the client, using appropriate types of identification, and a copy of the form and identification should be kept on the client file.

Generally, an individual authorised to operate a customer’s account is considered an agent under the AML/CTF Rules and AUSTRAC’s guidance explains that all agents acting on behalf of the client must be identified. The usual method of identification required by product providers is using the FSC/FPA identification form for individuals and sole traders. For any situations where you provide placement or advice services to clients that are companies, trusts or other non-individual customers, including further services to existing clients, you should complete an individual identification form for all signatories on the account. A signatory is every individual authorised to give instructions in relation to the account, including directors, the secretary and other authorised individuals.

Product providers may request copies of the identification form at the time of application. It is not necessary to conduct the customer ID procedure every time the customer interacts with the product issuer.





www.nextplan.com.auNextplan is also required to have a risk-based approach to the “Know Your Client” requirements. After considering the likelihood and consequences of different types of clients, the following clients are considered to be higher risk:

A client who the adviser does not meet in person A client who wants to carry out a large transaction not consistent with their financial plan or

personal circumstances A client who is suspiciously vague about their objectives A client who is vague about the source of their funds A client who has a business which involves large amounts of cash A client whose identification is difficult to establish A client who changes address frequently A client who wants to deal in cash.

Designated services should not be provided for clients who meet the examples above without contacting you Nextplan Adviser Support and Compliance Manager to discuss. Similar to the suspicious matter reporting process, the prospective client should not be made aware that they are under review.

Suspicious Matters

Suspicious matter reporting (SMR) requirements of the AML/CTF Act became effective as of Friday 12th December 2008.

Along with the client identification requirements, these obligations may require that a suspicious matter report (SMR) be submitted to AUSTRAC, the government regulator, if:

You think that a client, or potential client, is not who they say they are; Information you have about a client, or potential client, indicates that they have committed or plan

to commit a crime related to money laundering, financing terrorism, tax evasion or any other crime; or

Information you have about a client, or potential client, might be relevant to the prosecution of a crime.

Reporting obligations are only triggered if the suspicious matter is in the context of providing or proposing to provide a financial service or an enquiry about the provision of a financial service.

It is important to note that any suspicious matter should be kept confidential and only reported to the CEO or your Nextplan Adviser Support and Compliance manager. Any tipping off of the client or potential client is prohibited by the AML/CTF Act and must be avoided.

If you identify a suspicious matter, please call your Nextplan Adviser Support and Compliance Manager immediately as an SMR form must be submitted to AUSTRAC within three business days, or within 24 hours if the matter relates to the financing of terrorism. Your Nextplan Adviser Support and Compliance manager will then investigate the matter and decide if a report should be sent to AUSTRAC.

Vulnerable and Special Circumstances Clients

Extra care is required when providing advice to vulnerable clients and those with extra needs. You are responsible for ensuring that the advice provided is fully understood and does not take advantage of clients in any way and has contemplated their extra needs. Any circumstance where it could reasonably be thought





www.nextplan.com.authat a client may not understand the advice provided or the client’s vulnerability or extra needs were not appropriately taken into account, may be considered as unconscionable conduct.

You should take steps to help avoid the charge of engaging in unconscionable conduct or treating a client unfairly. Always ensure the file demonstrates that the:

Clients understand the product recommended; Client is able to assess the suitability of your advice; and The recommendations are in the client’s best interests given their vulnerability.

You are always responsible for demonstrating that the advice provided is in the client’s best interest. It is always important to clearly document dealings with clients however extra care should be taken when providing advice to a client with special needs or circumstances. You need to ensure that there is documentation relating to the steps taken to ensure that the client has understood the advice.

Who is a Vulnerable Client?

A Vulnerable Client is anyone who appears to have difficulties understanding matters related to money management, financial products or is in a position to be taken advantage of with regards to the financial advice or service an adviser gives to them.

Below is a list of the categories of clients who may be classed as a Vulnerable Client: Aged 85 years and over; Does not understand English (or any other language spoken fluently by the planner) sufficiently to be

able to understand the advice or recommendations; Exhibits a physical disability (e.g. blindness and / or hearing impairment) that could suggest impaired

ability to understand; Exhibits a mental impairment (e.g. dementia) that could suggest impaired ability to understand; Has someone acting as a Power of Attorney, Trustee or Guardian on their behalf in the above

categories (eg potential for Elderly/Adult Dependent abuse).

The above is not an exhaustive list. Advisers must use their professional judgement when assessing if a client should be considered vulnerable. If a client falls into the above categories and is deemed not to be vulnerable, the adviser must document their reasons in a file note.

Requirements for all Vulnerable Clients

At, or prior to, the meeting you must assess whether you consider the client to be vulnerable. The major considerations for vulnerable clients are that they may not be able to clearly express their needs/objectives and personal situation, understand the implications of the advice or recommended product(s) or whose judgment may be impaired or poor.

If assessed as vulnerable, the client must be recommended to seek independent advice (either from a professional eg lawyer or a support person) or have a nominated representative attend the interview to assist them to interpret what is being said. This nominated representative does not have to be a professional. A family member or friend may be adequate, if, you are satisfied that they can explain the situation to the client. If you have any concerns in this regard you are to insist that an independent professional (accountant or legal adviser) is required.

Where a client has been assessed as vulnerable and the client chooses not to have a nominated representative present, you must either include in your file note that the client was encouraged to have a





www.nextplan.com.aunominated person at the meetings, however they have chosen not, or you can decline the offer of advice. Where possible you could consider having another person from the practice involved in the meeting.

Examples where you should consider declining the advice is where the client clearly does not understand or comprehend the advice you are giving.

The following matters are required to be documented via a file note: The client’s particular special need or circumstance. Recommendation that the client seeks independent advice on specific issues - for example legal

advice or contract issues. If applicable, the presence of other nominated individuals involved in the advising process, as well as

the date they attended, their capacity and their role. If applicable, signature of the nominated representatives. Required actions, if a client has been assessed as vulnerable and must be recorded in a file note: Take extra care that your advice does not and would not be perceived to be taking advantage of the

customer’s vulnerability (eg higher pricing or charging for services that are not necessary given the clients situation).

Take extra care to ensure that your client understands your recommendations, the associated fees and charges and their cooling off rights - make provision for a longer appointment than usual to allow time for additional explanation.

You must encourage the client to take the SOA away with them, to read it carefully and consult with support persons such as family and friends.

You must carefully take the client through the terms and conditions of the ATP and confirm they understand the advice before signing.

Consider carefully whether, even with the above steps the clients will actually understand the recommendations and whether alternatives should be recommended (eg appropriateness of complex products or high feature products).

Ultimately, if you do not think a client is able to understand the financial advice given, then you must not implement the recommendations.

Products and Fees

Products Advisers should take into account the customers circumstances and vulnerability when considering what products and services to recommended. Some customer vulnerabilities mean that certain products are not suitable to be recommended to them. The onus is on the adviser to ensure that any product that they recommend is in the best interests of the customer based on their circumstances, which includes considering any vulnerabilities.

For example, recommending complex products or high feature/ expensive products to customers with low levels of financial literacy and simple needs should be avoided.

Advisers should give consideration as to the features of the product given the specific customer vulnerability in determining its suitability. For example, products that can only be accessed online are likely to be unsuitable to those who due to their vulnerability cannot access the internet.

Fees and Services





www.nextplan.com.auAdviser’s fees, including ongoing fees should be appropriate and consistent with your normal fee arrangement. Charging higher fees for vulnerable customers compared to non-vulnerable customers, need to be justifiable with an increase in the level of service they receive, or the fees could be perceived as acting unconscionably. Your justification, including the additional level of service needs to be included in your file note.

Services package sold to customers should also be appropriate to their needs. Service propositions to customers which contain services that are clearly unnecessary for those customers may also been perceived to be taking advantage of a customer vulnerability.

Ongoing services need to take into account the specific vulnerability of the customer to ensure that services are delivered appropriately.

Practice Management Considerations Whilst the adviser will have a special relationship with the customer and be familiar with the customers area of vulnerability or extra needs, the adviser should give considerations as to how to ensure that the customer receives the right service or assistance from practice staff where required. This may require a note on a file or other electronic system that ensures that the customer receives appropriate treatment from others within the office in the absence advisers. Care should be taken to ensure that this is done in an appropriate manner in light of the customer’s vulnerability with care taken to ensure vulnerability is kept sufficiently private within the office. A balance between protect the customers privacy and the need to ensure appropriate service in light of the vulnerability may be required.

Specific Vulnerable Clients

Non-English-Speaking PersonsIn addition to the minimum requirements above, you also need to ensure:

any documents received from a client in a foreign language are translated into English by a certified translator, with both documents maintained together on the client’s file, and;

any documentation presented to the client is in English. Where the client does not, or you are aware that the client will not be able to, understand any document presented in English, you should obtain confirmation from the client that they have appropriate arrangements in place to translate the document into their preferred language and where they do not have appropriate arrangements in place provide a referral to a certified translation service.

Where the client agrees to utilise the services of an external interpreter, you can contact the "Translating and Interpreting Service” (TIS). TIS is a government organisation which maintains a register of qualified interpreters and is available nationally 24 hours a day, seven days a week. Booking external interpreters Bookings with external interpreters must preferably be made one week before the meeting with the client. Details relating to the use of TIS can be found on the Department of Immigration and Foreign Affairs website at www.tisnational.gov.au. This site contains a detailed schedule of fees, procedures for arranging an interpreter and booking forms for onsite interpretation or pre-booked telephone interpretation. TIS can be contacted on 131 450. For onsite interpreting enquiries call 1300 655 082.

For onsite bookings email [email protected]. Deed of Confidentiality





www.nextplan.com.auThe interpreter should be requested to sign a Deed of Confidentiality.

Meeting Ideally, the interpreter should be present at the meeting/s with you and the client (i.e. onsite interpreter), however, if this is not possible, a telephone interpretation service can be arranged.

Telephone interpretationIf using telephone interpretation, the interpreter will need to complete the Deed of Confidentiality prior to the meeting. It is advisable to forward any material to be tabled at the meeting, e.g. FSG, SOA, and PDS to the interpreter to give them the opportunity to examine the material in preparation for the meeting.

Visually challenged persons Clients are encouraged, not required, to seek independent confirmation of the written document(s). The minimum requirement for visually challenged clients is receipt of a signed (by either the client, if possible, or the support person) statement declaring:

all the written documentation has been offered to be read to the client verbatim, the client information is correct and the recommendation provided is suitable, and Any alterations and/or any additional information are acknowledged as correct.

Hearing impaired personsHearing impaired persons are encouraged, not required, to seek independent counsel who is skilled in sign language. This will assist the client to clearly understand the discussion.

Additionally, you are required to ensure that: file notes are comprehensive and cover all issues including how the hearing impairment was dealt

with. Clear documentation will provide the client with a visual record of the discussion(s), a written summary over your conversation is provided to the client (SOA, ROA etc) (eg via email).

Mentally impaired or judgement impaired Special care must be taken where the client’s powers of comprehension and understanding could be considered to be below the level required to understand any advice provided. There are a number of reasons why a client’s powers of comprehension may be impaired. Some key indicators of evidence of cognitive impairment include:

Difficulty recalling personal details (e.g. date of birth, phone number); Forgetting recent discussions; Inappropriate behaviour or responses (i.e. frustrated, agitated, confused); or Not understanding what you are saying to them. Some examples where the client may be suffering from mental impaired include: Dementia; Anxiety/Stress; Drug/Alcohol affected A serious adverse life event (death of a close family member, serious medical condition, divorce, loss

of employment). When a client is identified to fall into this category: Special care must be taken to present advice and services without the use of technical language or

financial jargon; Additional time should be spent explaining in plain language the advice presented and its

consequences; If they are alcohol or drug affected rescheduling the meeting;





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Comprehensive file notes should be maintained to document discussions held.

Aged over 85 While age on its own is not a determinant of a client’s vulnerability, it is important to be aware that this can be a contributing factor in the client’s ability to understand financial matters.

When meeting a new client or an existing reaches age 85, this must be a trigger point to consider whether they are vulnerable or not. The client being or reaching age 85 does not automatically make them vulnerable, however your reasoning for whether they are vulnerable or not needs to be included in your file note. There is no requirement to inform the client that they have been classified as vulnerable. Existing Clients Consideration must also be given to existing clients who could also become vulnerable. The same categories apply to your existing clients. As your clients age, you should give consideration as to whether they are vulnerable when they reach age 85.

You should observe your clients for deterioration in their mental health (eg repeated forgetfulness) or experience an event that could impair their physical health (losing sight in their eyes).

If you have any concerns that your existing clients could also be a victim of abuse by a third party (eg a relative, carer or unrelated party) then contact Nextplan Director.

Your decision on whether a new or existing client aged 85 or over is vulnerable or not needs to be included in a file note.

Dealing with a Power of AttorneyIn the event that a Power of Attorney (“POA”) has been exercised and is relied on by the client/attorney, you must:

View the original POA, or a certified signed copy. Take all reasonable steps to check that the POA has not been revoked. Reasonable steps would

include searching for the lawyer who drafted the document and contacting via phone or email. Obtain and keep a certified copy of the POA on the client file. To ensure you are acting in the best

interest of the client, it is essential to view and verify the POA prior to the interview commencing and/or presenting any recommendations.

Establish whether the POA is General or Enduring. Whilst both are revoked in the event of the death of the Principal, a General POA is also revoked where the Principal has lost the capacity to make decisions through unsoundness of mind. Therefore, if the Principal is of unsound mind, you cannot rely on a General POA. NOTE: POA laws vary from state to state.

Only allow the attorney to exercise the powers granted under the instrument. Where Financial Advice and / or Financial Services are authorised under the instrument, ensure that

the attorney fully understands the products and its characteristics and is in a position to assess the suitability of your advice for the client.

Keep file notes clearly identifying who has participated in the discussions. In accordance with the AML / CTF provisions, ensure that both the client and the Attorney are

identified and verified and that the FPA/IFSA customer identification form is completed for both the client in whose name the funds are being invested as well as the Attorney.

Financial Abuse





www.nextplan.com.auFinancial abuse of clients can take many forms and usually consists of a number of actions over a period of time, rather than a single event.

A financial abuser is anyone who manipulates, threatens, pressures or otherwise influences a client to gain access to their money. Abusers often take advantage of the trust or power they are given (e.g. friend, family member, care giver or those granted Power of Attorney). Some key indicators or evidence of financial abuse include;

Increase in withdrawals from investments or transfers of funds to third parties of high value; Suspicious signatures on withdrawal requests or other documents; Family members or third parties (i.e. carers, church members) attending meetings with the client

and coercing / influencing them to withdraw large amounts of funds.

If it is identified that a client may being taken advantage of, file note your assessment and escalate immediately to either:

1. Nextplan Director2. Public Trustees

If you have a client who you believe is being taken advantage of by their Power of Attorney.

In Victoria, the State’s Public Trustees that offer guidance on reporting Powers of Attorney. http://www.publicadvocate.vic.gov.au/power-of-attorney

Record Keeping Copies of the customer ID procedure should be kept on the client file at all times, and for a period of seven years. The documentation should always be able to clearly show the sources from which the customer identity was verified, and the type of procedure conducted.

Analyse and Assess Client Financial Status

Analysing a Client’s Financial Situation – Identifying and Evaluating Financial Planning Strategies

Snapshot! Evaluate possible strategies using reasonable assumptions to determine which will best enable your client to reach their goals.

Considering the opportunities and limitations of a client’s financial situation using reasonable assumptions (predicted interest rates, life expectancy, investment returns etc) allows you to determine the likelihood of your client reaching their goals.

At this point you may need to obtain additional information, or your client may need to reassess some of their objectives. You must inform your client if any of their needs or objectives are in conflict with each other or whether or not it would be in their best interests to consider an alternative strategy.

Having identified alternate strategies for achieving your clients’ confirmed objectives, you must evaluate the ability of each strategy to adequately meet your client’s personal circumstances, needs, priorities and any reasonable previously identified assumptions. The evaluation of strategies may involve discussions with the client, consideration of multiple assumptions and/or consulting with other professionals.



http://www.publicadvocate.vic.gov.au/power-of-attorney



www.nextplan.com.auFollowing the selection of strategies, you can then develop financial planning recommendations. A financial product will not always be necessary to satisfy the recommended strategy, however if financial products are necessary, begin investigating products and services relevant to the recommendations. In order to recommend a strategy, product or service, you must fully understand its characteristics, risks and key features. To have a reasonable basis for advice, you should read and understand a product’s PDS and research reports before recommending them to clients. It is also essential that you comply with Nextplan’s Approved Product List.

You must retain records of all your workings in the consideration of strategies, classes of products and specific products to support your advice and demonstrate that you are complying with the requirements to meet the best interests of the client.

Conflicts of Interest

Snapshot! Any actual, potential or perceived conflicts of interest must be brought to your client’s attention. Nextplan has covered all known conflicts in the FSG and SoA templates but contact your Adviser Support and Compliance Manager if you identify another conflict.

Conflicts of interest are circumstances where some or all of the interests of people (clients) to whom a licensee or its representative provides financial services are inconsistent with, or diverge from, some or all of the interests of the licensee or its representatives. This includes actual, apparent and potential conflicts of interest.

While most of the above circumstances apply at the licensee level, these could occur when an adviser recommends to a client a strategy or product that could benefit them (the adviser) through an associated entity.

Examples of conflicts of interest include:1. Incentives to recommend one product over another via higher commissions 2. Ownership of a licensee by a financial product issuer 3. Volume-based payments for recommending investments in a particular financial product.

Most conflicts of interest are managed through disclosure in the FSG and SoA. If a conflict arises that is not dealt with in these documents, you should contact a compliance team member for guidance on how to address the issue.

Conflicts of Interest – continuous disclosure

Any actual, potential or perceived conflicts of interest that arise after the commencement of the engagement must be brought to your client’s attention (in writing) as soon as appropriate and before any further recommendations (relating to the conflict) are made.

You must not recommend a product/service in which you have a personal interest (ownership of over 10% of the products holdings or a stakeholder relationship) (direct or indirect) without disclosing this interest to the client (in writing) at the time of the recommendation. In order to implement a product/service in which you have a personal interest you must obtain written authority from your client to undertake the transaction/service acknowledging that the client has received disclosure of your interest and that the client





www.nextplan.com.auhas either received independent advice recommending the product/service or has declined to receive independent advice.

Develop Suitable Strategies and Recommendations

Selecting the appropriate advice documents and when to use them.

Statement of Advice:This is used for:

Initial Advice Super Switching Cancelling a product and replacing with another

Statement of Advice:This is used for when you are providing advice to an existing client where:

Significant Changes to existing client New Strategy Significant Lifestyle Changes Significant Monetary Changes Reaching Preservation / Pension Age

Record of AdviceThis is used for:

Non-Significant Changes to existing client Investment switch with no significant product replacement Withdrawals or deposits of less than 25% of portfolio Reweight to original position of advice Investment switches – similar asset allocation Changes to asset allocation of less than 25% Withdrawals or deposits of less than $10,000 Recommending hold advice

Execution Only Statement of AdviceThis is used for:

No advice Time critical Client driven – explicit instruction.

Time Critical Statement of Advice This is used for:

5 days after Time Critical SoA has been provided – new Complete SoA must be provided

Statement of Advice (SoA)





www.nextplan.com.auSnapshot! Whenever personal advice is provided to a client, it must be documented either via a Statement of Advice or Record of Advice.

Personal advice is defined as “financial product advice given or directed to a person in circumstances where: The provider of the advice considered one or more of the client’s objectives, financial situation and

needs; or A reasonable person might expect the provider of the advice to have considered one or more of

those matters.”

A Statement of Advice (SoA) is the main method of documenting initial personal advice for clients and can be used in all advice situations.

The SoA must contain the following information: 1. The title “Statement of Advice” 2. The details of the licensee and authorised representative 3. The scope of the advice 4. The basis for the advice 5. The advice 6. The reasoning or explanation for your advice must include an explanation of how the client is better

off for having received or implementing your advice. 7. Details of any charges incurred, benefits lost or other details relevant where the replacement of a

financial product is recommended. 8. The remuneration received by the authorised representative, the employer of the authorized

representative, the employee of the authorized representative, licensee and any relevant associate – including referral partners.

Limited Advice

You can, of course, limit advice to what the client came to see you about.

But you always need to state that there may be other areas to cover off, and then let the client decide.

As we all know, it comes down to priorities, and what is important to the client.

But you also have a fiduciary duty to the client.

If you find out / know something about a client that may affect their future – you need to raise it with the client and make them aware – even if they don’t want to address it.

Remember, clients don’t know what they don’t know – that’s your role.

What our advice doesn’t cover

Following our discussions, you do not wish to receive advice in the following areas: Insurance – Kevin: You declined insurance advice due to medical reasons and have advised you will

retain your existing Westpac Life insurance policy as this will cover the mortgage in the event of claim.

Cashflow/Budgeting Personal Investments Estate Planning Retirement Planning





www.nextplan.com.au Reasons required as to why clients did not wish included in scope.

For advice to existing clients who have already received an SoA, further advice can be provided using either another SoA or a Record of Advice (RoA).

Nextplan has examples of Statements of Advice which can be used as templates for advice to your clients. These are available via the Nextplan website, under the “Suitable Strategies” tab.

Nextplan also provides a range of strategy texts relating to many common strategies. Some examples of available strategy text include regular savings plan, trauma insurance and superannuation switching text.The “Tech Zone” section within the Aspire CPD program (see earlier in this document) also provides suitable text that can be suitable for use in SoA and RoA documents.

Please visit Nextplan’s website to view our full range of strategy text – again under the “Suitable Strategies” tab.

Record of Advice (RoA)

A ROA is the record of further personal advice provided to existing clients.

The ROA must include: A record of the financial advice given, or brief particulars of the recommendations made – for

example, to increase income protection cover by $X in light of a recent salary increase; Brief particulars of the basis on which the recommendations are made – a reference to the client’s

circumstances as set out in the SOA is acceptable here. Remuneration and association disclosures usually required by an SOA; If the financial advice is to replace one product with another, brief particulars of the product

replacement information usually required in an SOA. The remuneration and association disclosures are relevant remuneration including commissions paid

to the financial adviser, corporate authorised representative, licensee or related parties and information about interests, associations or relationships with product providers.

When can I use a RoA?

RoAs are permitted if: 1. Further advice is being provided to the client, which relates directly to the advice in an SoA; 2. The client previously received an SoA outlining their relevant personal circumstances and advice and

you were the adviser on the SoA;3. If has been confirmed there have been no significant changes to the client’s relevant circumstances;

and 4. There are no significant changes to the basis of the advice in the SoA being referred.

Meaning of ‘significant’

To use a RoA there must have been no significant changes to the client’s relevant circumstances or the basis of the original advice.

To determine whether there is a relevant significant change, advisers must consider: 1. The scope of advice, 2. Potential consequence of the recommendation





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Factors to consider when deciding whether a ROA can be used are: Changes to the client’s risk tolerance; Changes to the client’s family situation; Significant changes to the client’s income; Significant client illness or incapacity; Changes occurring to a product; Tax considerations; Risk (attached to the product); Economic environment; Regulatory environment; Significant local or world events.

If unsure if the change is significant, do not use a RoA. A new SoA must be provided to the client

All RoAs must reference the previous SoA.

PLEASE INSERT FLOW CHART FROM P.45 Here

Maintain / Hold ROAMaking a recommendation to maintain current investment, super or insurance is Personal Advice. You should use the Hold ROA to document this. This document is available on the Nextplan website – under Suitable Strategies.

A Hold ROA is one which may be used where the adviser recommends that the client take no action in relation to their portfolio. Making a recommendation to maintain a current investment, super or insurance is considered Personal Advice, and as such an Advice document MUST be provided to the client.The determination is whether this document is a SoA or a RoA.

Deposit products and certain other products ROAIf you provide personal advice on any of the following financial products you do not have to provide an SOA and can instead rely on an ROA:

A basic deposit product; An investment less than AUD $15,000. A non-cash payment facility for making non-cash payments that is related to a basic deposit product; Cash management trust interest;

Where an Adviser moves to Nextplan and has provided a client with a SoA while at the previous AFSL, and the client now seeks further advice, which is an extension of the previous SOA, a RoA may be used in certain circumstances.This will only be allowed where the advice is very simplistic, and there have been no significant changes to the client’s relevant circumstances or the basis of the original advice.

Please discuss this with your Adviser Support and Compliance Manager.

Examples where approval may be granted:

1. Client requests a withdrawal for a set amount and an adviser has to perform a trade to provide cash for





www.nextplan.com.authe requested withdrawal.

2. Client has term deposit maturing and seeks advice on reinvestment.3. Client has holdings of direct shares and a corporate action recommendation is required.

Where approval has been granted, the ROA must contain additional disclosure regarding Nextplan licensee and associations information, as well as new disclaimers and advice warnings as they differ at Nextplan from the previous AFSL SoA. It must be confirmed and not assumed, that there have been no significant changes to the client’s relevant circumstances. This must be done via written confirmation with the client or sending (post or email) a copy of the Client Personal and Financial Workbook to review and confirm.

When RoA use is prohibited? The above RoA guidance has not be met; The original SoA has been deemed non-compliant (i.e. did not adequately outline advice or include

relevant disclosures); There have been multiple RoAs issued which reference the same SoA making it likely that the clients

could find it difficult to follow the advice trail; or Nextplan has imposed restrictions on the use of RoAs for specific scenarios.

Advice and disclosures If you determine a RoA can be used, advice can be provided prior to preparing a RoA. The advice and disclosures may also be provided verbally. Alternatively, the RoA can be provided in writing including disclosures.

The level of detail provided to the client and recorded within a RoA must be sufficient to enable a client to decide whether or not to act on the advice. At a minimum the following must be disclosed to the client:

What the recommendations are (the strategy and product); How the recommendations meet the client’s needs and objectives; If there is a replacement of one financial product with another, information on the fees, charges and

consequences arising from the replacement; Fees, commissions and other benefits directly arising from the further advice; and Any new associations, relationships and any conflicts of interests associated with the further advice.

You may disclose this to the client verbally or in writing e.g. email.

If at the time of advice you are unable to verbally disclose the information above (e.g. you are unable to ascertain the commission), delay giving the further advice or prepare and provide the RoA at the same time as the advice.

Appropriate advice All personal advice, including RoAs, must clearly set out the recommendations and why they are appropriate for the client’s needs and objectives. Regardless of how you document the advice it must be in the best interests of the client.

Fees, commissions, benefits and associations All remuneration and benefits relating to advice must be disclosed. This includes:

The fee payable for the further advice e.g. fee for service Initial and ongoing commissions relating to the further advice





www.nextplan.com.au Referral benefits relating to the further advice Any new Associations, relationships, interests or conflicts of interest relating to the further advice. Any licensee/adviser splits must also be disclosed.

When disclosing ongoing commissions and benefits, if it is not possible to nominate an exact amount received, provide an explanation of how it will be calculated. Also provide a mathematical example of amounts received based on the client’s funds being invested.

For example: “From the fund manager we will receive ongoing commission of 0.45%pa based on your balance at the end of each month. Of this, our practice will receive 95% and licensee will keep 5%. Your balance will fluctuate monthly but based on the $10,000 we’ve recommended this may be approximately $45 every year. Our practice will then receive $42.75 and our licensee $2.25.”

Replacement of product disclosure The replacement of product information requirements are as follows:

If the advice is or includes a recommendation that:

the client disposes of, or reduces their interest in all or part of a particular financial product and instead acquire all or part of, or increase their interest in another financial product.

The following additional information must be included in the Statement of Advice:

any charges the client will or may incur in respect of the disposal or reduction; any charges the client will or may incur in respect of the acquisition or increase; any pecuniary or other benefits that the client will or may lose (temporarily or otherwise) as a result of

taking the recommended action;

information about any other significant consequences for the client of taking the recommended action that the adviser knows, or ought reasonably to know, are likely;

the client will or may lose benefits there will or may be consequences for the client

The Statement of Advice must include a statement to the effect that there will or may be such charges, losses or consequences if the product is replaced.

If the advice includes a replacement of a financial product, you must fully disclose the associated costs and consequences. The disclosure will be based on the amount being replaced or switched to another product, as recommended by the further advice.

This is a key part of showing full consideration of recommendations made, and that your advice is not just about product placement.What should be remembered is that a recommendation doesn’t have to be cheaper to be appropriate. Where a more expensive option is recommended, provided that it can demonstrate it provides superior benefits in meeting objectives, it will be seen as being appropriate.Most importantly – ask yourself – Why are we doing this?What would the ‘common man” expect?



http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#charge

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601raa.html#will

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#statement

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761a.html#statement_of_advice

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601raa.html#client


http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#benefit




http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#information

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http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761a.html#statement_of_advice

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#included

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#information

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1023b.html#financial_product

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601waa.html#interest

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#acquire

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1023b.html#financial_product

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601waa.html#interest

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#dispose




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Nextplan expect that “like for like” scenarios are captured in the Replacement of Financial Product.

eg: A client has $200,000 of life cover and now requires $500,000, and your advice is offer the client a different product to the current one. Let’s use TAL as the existing and AIA as the new. You must compare the TAL in current form - $200,000 listing costs, benefits etc. - then TAL at $500,000, and AIA at $500,000. The client then knows what they were paying, what they will now be paying, and why they are doing what they are doing.

Preparing a RoAFurther advice and disclosures must be clearly recorded within 5 business days of the advice being provided and retained on file.

The RoA must contain sufficient detail for the client, the licensee and anyone who reviews it to understand the particulars relating to the further advice given. When disclosing fees and commissions, it is insufficient for the RoA to state “All product fees and commissions were explained to the client”. The level of detail for all disclosures is the same as would be for an SoA, with the exception that it is specific to the further advice only. This must already have been explained to the client if the advice was provided before preparing the RoA.

The licensee approved RoA templates can help meet obligations.

Other relevant client discussions and correspondence relating to the further advice must also be file noted. Must the RoA be issued to clients?It is not compulsory to provide the client with a RoA however it must be retained on file and provided free of charge upon request. Best practice would suggest that you do , as this communicates your advice to the client. In circumstances where the client may find it difficult to recall what has been recommended (e.g. a lot of information) providing the RoA is suggested.

ImplementationBefore implementing RoA recommendations one of the following forms of acceptance are required:

1. A signed RoA authority to proceed,2. An email response from the client confirming they wish to proceed with the recommendations,3. A written file note confirming verbal acceptance.

If the client declines to proceed with the advice, please ensure a file note with the reason(s) provided by the client is recorded.

If the client chooses to proceed with variations a further RoA is required to reflect the new advice.

Financial Services Guide and Product Disclosure Statement requirements

The standard FSG obligations apply; all clients must be provided with the latest version of the FSG at the earliest available opportunity. If an existing client has previously received the current version of the FSG you do not need to reissue the FSG unless requested by the client. Reissue the FSG if the version of the FSG previously provided has now been replaced.

Product Disclosure Statements (PDS) The standard PDS obligations apply when giving further advice; you must provide the client with the PDS, unless you confirm they already have a copy of the current PDS.





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The client file must show if an FSG or PDS was supplied to the client including the version and/or date of the document.





www.nextplan.com.auAppendix 1

Flow Chart

No

Yes

No

Yes

Yes

No

Yes

No

Start

Are you providing further advice to the

advice in the previous SOA?

Are there any significant changes to the client’s relevant

personal and financial circumstances?

Is the basis for the further advice

significantly different to that of the SoA?

SOA

ROA

Provide further advice and disclosures:

1) Your advice and why it is appropriate for the client

2) Fees, commissions and other benefits

3) Associations, relationships and any conflicts of interest

4) Replacement of product disclosures (if applicable)

Document the advice and disclosures in an RoA. Retain on file.

Has the client previously received a compliant SOA from

you?

End





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Recommending Products

Snapshot! Know your client. Know your product. Act in your clients’ best interests.

To satisfy the reasonable basis for advice requirements, it is crucial to ensure that any financial products recommended are suitable for your clients. There are two steps in determining this. Know your client. This means to ensure that the product’s behaviour and characteristics should suit the client’s investment strategy, personal circumstances and risk tolerance. For example, it would not be appropriate to recommend a capital protected investment product with a minimum investment period of five years when the client was retiring in two years and needed access to the money. Similarly, a margin loan would not be appropriate for someone with a low risk tolerance. It is also important here to make sure that the client understands and is comfortable with the product.

Know your product. This will involve conducting a reasonable investigation into financial products that might achieve the client’s goals and objectives. This should be achieved by reading the PDS or other disclosure documents; obtaining and reading external research about the product can also be useful.

The next step is to assess the information gathered in the investigation. Note: A reasonable investigation does not require an investigation into every product available.

The client may request that you consider a specific financial product. If this is the case, you must investigate that Financial Product. There may be an issue that the requested product is not on the Nextplan Approved Product List (APL); further it may not have been researched by the provider that Nextplan has contracted.

You then must conduct due diligence on the Research Provider that you select to ensure that they have the required skills and no conflict of interest. You must retain a record of the due diligence as well as the research you conduct to arrive at your decision.

If you decide that a product is appropriate to the strategy and is in the interests of the client but is not on the Nextplan APL, you can apply to the Nextplan Investment Committee, by completing the “Application for use of product” form under the Research tab on the Nextplan website, and you must refer all the material collected to the Nextplan Investment Committee for approval, before making any recommendation to the client. If in doubt, please refer directly to Nextplan management team for support.

Strategy TextNextplan has developed a library of strategy text. This text covers a variety of strategies including:

Cash Reserve for unexpected expenses Living Expenses and expenditure Planned capital expenditure Term Deposits Future purchase of a new home Save for a house deposit First Home Owners Grant First Home Saver Account Wealth Accumulation Establish a managed fund portfolio





www.nextplan.com.auEach piece of strategy text explains the relevant goal, the recommendation and any risks or consequences of the advice. The Nextplan Strategy Text can be found on the Nextplan website – “Suitable Strategies” text tab.

Approved Product List

Background and Philosophy

The Corporations Act requires that providers of personal financial product advice act in the best interests of the client. This includes the requirement to conduct a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to the advice on that subject matter and assess the information gathered in the investigation.

Nextplan holds professional indemnity insurance pursuant to its legal obligation to have adequate compensation arrangements. In order for Nextplan to seek indemnity through the professional indemnity insurance policy, Nextplan advisers must only provide advice on those products and services which are on the Approved Product List (APL). If an adviser provides advice in relation to a financial product that is not on the APL, they will not be covered for professional indemnity insurance and may be liable to Nextplan for any loss resulting from a client investing in the product.

Nextplan also has a very close relationship with Mercer Investments – one of the largest asset managers and consultants in our Industry. Mercer consultants also sit on the Nextplan Investment Committee and advise us on our asset allocation across a range SMAs, as well as our APL and Risk Profiles. As a result we also provide you with MercerIS Research at no cost to you.

To ensure Nextplan meets its legal and professional obligations, it has developed a detailed APL policy which is available on the Nextplan website - see the Research tab on the Nextplan website. Although a product may appear on the APL, it remains the advisers’ professional responsibility to conduct an independent assessment of the financial product and its features prior to the provision of advice to a retail client, to ensure that the financial product is suitable for clients’ needs and personal circumstances. Some products may be deemed approved for advisers to use, but this does not guarantee that they are appropriate for every client and may not suit an individual’s goals or risk tolerance.

Investment Committee

The role of the Nextplan Investment Committee is to make decisions concerning the establishment, maintenance and review of the Nextplan’s APL and related policies and procedures. Its functions include:

Conducting and considering research and research reports and other investigations, including due diligence, in relation to financial products and financial product issuers;

Monitoring and reviewing financial products on the APL; Removing financial products from the APL; Approving applications for inclusion of financial products on the APL; Setting accreditation and training requirements for Nextplan advisers; Ensuring that matters related to the APL are communicated to advisers; and Obtaining legal or other professional advice on any related matters.





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After each monthly meeting of the Nextplan Investment committee, the APL is emailed directly to each Nextplan adviser, with the first page outlining any additions, deletions or suspensions being highlighted in red font.

This new version of the APL replaces the previous version on the Nextplan website each month.

Establishment of the APL

Nextplan’s AFS Licence allows Nextplan and its authorised representatives to provide financial product advice for certain classes of financial products. These products are categorised under the following headings with their relevant criteria for APL inclusion:

Australian equities Global equities Property and Infrastructure Fixed interest Specialised Alternatives Multi Asset Equities ETF's Insurance Life insurance bonds Nextplan Wealth exclusive Superannuation SMSF

MDA services: Nextplan’s AFS Licence does not allow for MDA services.

Margin lending facilities: Nextplan’s AFS Licence does not allow for Margin Lending services.

A full outline of the Approved Product Policy philosophy is available on the Nextplan website, under the Research tab.

Removal of financial products from the APL

The Investment Committee may remove a financial product or category of financial product from the APL at its discretion. Products whose current research rating changes to no longer meet the minimum APL requirements are considered non-approved products.

Research Houses

Nextplan’s currently preferred investment product research provider is Lonsec. We use “recommended” or “highly recommended” as our benchmark.

We will consider the research of another reputable Research house if Lonsec has not provided a rating, or if there is additional research which supports a product. Eg We will accept the research of another reputable Research house, such as Zenith, Morningstar, Chant West etc., if Lonsec does not provide a rating of a particular product, providing this research is of similar status to Lonsec. i.e.: Zenith – Highly recommended or Recommended, or Morningstar - 5-star or 4-star rating. i.e like for like.





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You can purchase Lonsec at reduced rates if you are interested.

This can be changed whenever considered appropriate on the recommendation of the Committee and with the approval of the Nextplan Board.

Additional Approval Requests

In the case where a product does not meet the minimum Lonsec rating, or is not currently listed on the Nextplan APL, Investment Committee approval must be provided before the product can be recommended. See the “Application for Additional Product” form under the Research tab on the Nextplan website if you wish to add additional products to the Nextplan AFSL.

When an Adviser has completed the “Application for additional product” form (under the Research tab on the Nextplan website), all accompanying research must be submitted to the Nextplan Investment Committee justifying the use of this product.

Nextplan has recently moved from placing the onus on the Nextplan Investment Committee for product inclusion decisions, to placing this responsibility squarely at the Advisers feet.

This means that in most cases when an Adviser wishes to use a product not currently on the APL, and has submitted the requirements as above, with a like for like comparison from one of the Research houses, then this product is added for use by this adviser under the Nextplan APL terms.

If an adviser wishes to use a product that is not rated as the above requirements, but can demonstrate with detailed evidence as to why this product should be allowed for their exclusive use, then if the case is justified, then this product will be allowed for use by this adviser only.

The onus lies with the adviser to “know the product” and keep abreast of any changes that may affect the use of this product.

Changes in research ratings

If the rating of a product changes and would no longer be considered to hold a “recommended grade” status, or other information becomes available that indicates a product is no longer suitable for clients, advisers must take the following steps:

1. Identify any clients with that product 2. Consider whether a recommendation to change is in their interests. 3. If yes, provide an appropriate advice document to the client and, if authorised, implement that

advice. 4. Keep file notes of the decision.

It is expected that a product switch will be in the clients’ best interests where the product no longer meets the required standards to be considered within Nextplan’s APL. However, in some cases the impacts of switching might outweigh the benefits, such as capital gains tax implications or exit fees. This is a judgement call that each adviser has to weigh up based on the available information at the time – and all decisions need to clearly be documented, agreed to and signed off by the client.

Accreditation of Advisers





www.nextplan.com.auTo ensure that all Nextplan advisers achieve and maintain an adequate and consistent standard of knowledge and skills in relation to financial products and services on the APL, Nextplan will require advisers to complete accreditation training in particular areas of practice.

In some cases, this accreditation will exceed the minimum levels set by ASIC’s Regulatory Guide 146. This will occur, where in the view of Nextplan management, these classes of products require a higher level of knowledge and skill than is required by the minimum RG 146 requirements.

Advisers only need to complete the additional accreditation for the areas in which they are authorised.

Accreditation requirements:

Self-Managed Super Funds: Advisers must complete an industry recognised accreditation course before recommending the establishment of an SMSF or providing advice on the investments within an SMSF.

Securities: Advisers who recommend specific direct securities to clients, as opposed to managed funds or SMA-type products with issuer-selected securities, must complete the Kaplan’s ASX Accredited Listed Product Adviser Program, or another course deemed appropriate by Nextplan, prior to providing this service. Advisers who incorporate share broker recommended portfolios into their advice, or who have SoAs prepared and issued by share brokers for provision to the Nextplan clients, are not required to complete additional accreditation.

Replacement Recommendations for Existing Financial Product

Snapshot: It is possible that you may have to include this information in every Statement of Advice even if you meet with a client for the first time!

For example, if that client has an amount of money in an ordinary savings bank account and requires a higher return, and you recommend that the money be invested in a Managed Investment you have in fact recommended that the client replace one financial product (the savings account) with another financial product (the Managed Investment).

If your advice is or includes a recommendation that the client dispose of, or reduce the client’s interest in, all or part of a particular financial product and instead acquire all or part of, or increase the client’s interest in, another financial product additional information must be included in the SoA. This extends to the switching of investment options within a product.

The requirement that you must have a reasonable basis for a recommendation applies equally to situations where you make a recommendation to replace an existing product held by a client. You must carry out sufficient research about the client, the existing product and the proposed product, to be confident that the advice is appropriate for the client. Copies of the research material used to support the recommendation are to be placed on the client’s file.

The following additional information must be included in the Statement of Advice to the extent that the information is known to, or could reasonably be found out by you:

i. any charges the client will or may incur in respect of the disposal or reduction; ii. any charges the client will or may incur in respect of the acquisition or increase;

iii. any pecuniary or other benefits that the client will or may lose (temporarily or otherwise) as a result





www.nextplan.com.auof taking the recommended action;

iv. information about any other significant consequences for the client of taking the recommended action that the providing entity knows, or ought reasonably to know, are likely; and

If you are aware that; the client will or may incur charges as mentioned in subparagraph i or ii; or the client will or may lose benefits as mentioned in subparagraph iii; or there will or may be consequences for the client as mentioned in subparagraph iv, but,

you do not know, and cannot reasonably find out, what those charges, losses or consequences are or will be the SoA must include a statement to the effect that there will or may be such charges, losses or consequences but you do not know what they are.

Therefore, the additional information that may need to be included in a SoA are (but not limited to):

Transaction costs Entry fees Exit fees Taxation implications Centrelink implications Loss of insurance Loss of government guarantee

In order to meet the above requirements, you will be required to research the existing product/s and the recommended product/s. This includes an investigation into (but not limited to):

Fees Features/Benefits

We consider that the advice will generally only be appropriate if it would be reasonable to conclude that the net benefits that are likely to result from the product (or investment option) to be acquired, or into which further investment is to be made, are better than under the existing product (or investment option) which is to be disposed of or reduced.

Advice will often be appropriate if there are overall cost savings for the client and it would be reasonable to conclude these are likely to override the loss of benefits that are of value to the client.

The determination of whether there are overall cost savings for the client must take into account all the circumstances, including the cost of the replacement (i.e. making the switch) and the advice provider’s fees, if they are payable only if the switch is made.

Inappropriate superannuation switching advice - An example

Imagine that a client has three different superannuation accounts with three different trustees. They approach a planner for advice about how best to consolidate their superannuation.

The planner recommends that the client consolidate all of their superannuation accounts into a new fund, which will have higher ongoing fees than the combined fees of their old superannuation accounts. The new fund would offer certain additional benefits to the client including:

the ability to switch between options daily; a more varied menu of options; and





www.nextplan.com.au reports and educational material that are easier to understand.

There is nothing in the client’s relevant circumstances to indicate that these benefits would be of particular relevance to the client.

Commentary

This advice would be inappropriate. It is not fit for purpose and a reasonable planner would not conclude that it is likely that the client will be in a better position if the client follows the advice.

Talk to the client to understand their current circumstances and what is important to them to ensure that your basis for switching align with their goals and objectives. For example, if the additional benefits are of importance to the client in the above scenario then most likely this advice would be appropriate for the client.

E.g. If the clients request you review their superannuation fund, this goal is not clear enough, you need to understand why they want to review their superannuation fund, what is the issue with their current superannuation fund? What would they like in a superannuation fund (ability to purchase shares etc)? Please ensure there are detailed file notes in regards to your discussions with the client in particular to their goals and objectives.

Gearing

Snapshot! The loan to value ratio (LVR) must not exceed 65%. The client file should show an analysis of the client’s cash flow and the affordability of the strategy and the SoA should explain the risks of the gearing strategy.

Gearing advice is where advisers recommend that clients borrow money to invest with. Common examples include margin lending, home equity loans or personal loans. Nextplan’s professional indemnity insurance policy specifically requires that any gearing advice must meet the below requirements. Nextplan’s licence does not allow for Margin Lending with any client.

LVR The loan to value ratio (LVR) must not exceed 65%. The LVR is calculated by dividing the loan amount by the total investment amount.

Cash flow analysis The client file should show an analysis of the client’s cash flow and the affordability of the strategy.

Risk discussion The SoA should explain the risks of the gearing strategy. This may include:

General: “You should understand that while gearing can magnify the increases in your investments, it can also negatively increase your losses. For example, if you invested $200,000 of your own money and the value





www.nextplan.com.audropped 10% the new value would be $180,000 and you would have lost $20,000. However, if you invested $200,000 of your own money plus $200,000 borrowed funds and the value dropped 10% the new value would be $160,000 you would have lost $40,000.”

Home equity loan: “The ability to draw on equity on your home loan is a lower risk strategy than a margin loan; however, you should be aware that this will increase your mortgage repayments. In the case that you are not able to repay your mortgage, you risk the lender forcing the sale of the property to repay the debt.” In the case that the client’s employment income is heavily relied upon, income protection insurance must be considered. A risk analysis for income protection insurance is required, and a recommendation must be included in the advice if the client’s existing income protection insurance is insufficient.

Structured products As particular structured products can be quite complex, it is important that you make sure that they are suitable for your clients and also explain how the products work.

For example: Hedge funds may have limited redemption period or a lack of visibility into the underlying

investments, include higher risk derivatives and long/short strategies. Capital protected products incur a cost for the capital protection and may only provide capital

protection if the investment is held for the full term, sometimes five or seven years. There may also be exit penalties if the investment is redeemed prior to the investment term.

Hybrid securities- different hybrid securities have different risk ratings, with some being defensive and others growth-oriented. The liquidity the particular hybrid security should be explained as well.

If you cannot adequately explain, or clients cannot easily understand, the structure, operation and risks of the product, it might not be appropriate to recommend it to the client.

Self-Managed Super Funds (SMSF)

The Statement of Advice containing a recommendation to establish a Self-Managed Super Fund (SMSF) must clearly explain the additional responsibilities involved. These include, but are not limited to:

Correctly establishing the SMSF, Applying for its own Tax File Numbers and Australian Business Numbers, Opening a bank account, Establishing an investment strategy and ensuring that investments are made in line with that

strategy, Keep minutes, Complete regulatory returns and pay taxes such as PAYG, Ensure the fund is audited and lodge tax returns by the due date.

You should also clearly explain restrictions of the fund, such as a maximum of 4 members and where there are individual trustees, all members must be trustees and vice versa.

The advice must also outline the affordability of running a SMSF fund in the SoA, and the effect this may have on the client’s cash flow, as there are different costs applicable. A recent Productivity Commission declared that a minimum balance of $500,000 should be applied to any client BEFORE an SMSF is recommended. Nextplan believes a minimum starting balance for a SMSF is ideally around $200,000; for figures below that, establishing a SMSF might not be in the client’s best interests due to the fees involved.





www.nextplan.com.auHowever, each case is different - and you must ensure that the client is well aware of why they are considering an SMSF and that the costs are clearly outlined and agreed to. If in doubt, please ensure you discuss with your Nextplan Adviser Support and Compliance Manager before proceeding.

A switch from an APRA-regulated super fund to a SMSF is considered super switching, so the super switching requirements must be met, showing why a switch to the SMSF is appropriate and necessary.

Also see the Minimum Training Requirements section for information on SMSF authorisations.

Presenting financial planning recommendations

Snapshot! When presenting recommendations, you must help the client to understand how the advice achieves their goal, the factors and assumptions critical to the recommendation, the relevant risks in the recommended strategies, any conflicts of interest and costs of the advice.

Presenting the recommendations to your client allows you to determine how well the recommendations meet their expectations, how willing they are to act on your advice and whether any further changes are necessary. As always, any conflicts of interest that have not been previously disclosed should be disclosed before moving forward as should the impacts of such conflicts. If you have a personal interest (ownership of over 10% of the products holdings or a stakeholder relationship) in a product or service, you must inform your client in writing of your interest.

All chosen strategies must be appropriate to your clients’ circumstances, objectives and any assumptions established during the financial planning process. In the event that you cannot identify a suitable strategy, product or service, you must notify your client in writing as soon as possible. You must state why you cannot find a suitable solution (refer back to objectives, needs, priorities, circumstances, assumptions etc) and suggest a course of action for the client’s consideration.

Implement Recommendations

Authority to Proceed

Once you have discussed in detail the recommendations in the Statement of Advice and the client has a comprehensive understanding of these recommendations, the client must sign and date the Authority to Proceed found in the SoA before the adviser can proceed with the implementation process. This must be retained on the client’s file at all times and must be completed before any advice is implemented.

Execution Only Standard

Execution Only occurs when a prospective, or existing client, declines Personal Advice and instructs an adviser or support staff to purchase / withdraw / switch / funds from a specific financial product or purchase / cancel / amend personal insurance without any advice or influence from an adviser or support staff.





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Advisers must follow the AML/CTF process where a client decides to purchase/ instruct them for a specific financial product.

Key Principles Client must decline the offer for personal advice. An adviser can only provide an execution only service where the client requests a specific

transaction on a specific financial product without anything said or done to influence the client’s decision. The client instruction must be appropriately file noted. Where it is reasonable, the adviser should request a written instruction from the client in relation to ‘execution’ services.

Ensure the client has the latest version of the FSG Advisers must provide the PDS where the client is purchasing a new financial product. Execution Only Document must be provided to the client.

Execution Only that offers a new financial product can ONLY be provided regarding Superannuation and Investments.

The thinking behind this, is that a client may come to you and ask for an Australian Super product – because they like the advertisements.Or they want to invest in BHP shares, because their mate told them it was a good idea.Nextplan do not believe that any client will come to an adviser and specifically request a TAL Income Protection product. They will not have the required knowledge to make such a proper Execution decision. The difference between Personal Advice and Execution Only

Personal advice is a recommendation, or statement of opinion, that is presented in a way that a reasonable person might expect one or more of the client’s objectives, financial situation or needs was considered. Examples in recommending a specific product based (Super/ Investment/ Insurance) personal client information.

Due to the nature of adviser/ client relationships, almost anything said about a financial product could be reasonably taken as a recommendation. Therefore, it is vital to exercise caution when discussing or providing any information on financial products.

Execution Only requires the client to decline personal advice and instructs an adviser to purchase/ withdraw/ switch funds from a specific financial product or purchase/ cancel/ amend personal insurance without any advice or influence from an adviser.

Snapshot!Client questions can only be answered in a factual manner or via reference to the relevant PDS. If the client seeks advice a SoA/RoA must be provided by following the usual Advice Process Standards as outlined above and other applicable standards.

When It Is Not Appropriate to Provide Execution Only

‘Execution Only Service’ is not appropriate in all circumstances. If identified that the client is not able to make a reasonably informed decision, ‘Execution Only Service’ should not be utilised. E.g. Vulnerable clients should not be provided with an ‘Execution Only Service’ at any time.





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Refer to the Vulnerable Client Standard for more information when dealing with vulnerable clients.

The following situations are also excluded from ‘Execution Only Service’: New Insurance Products Establishing Employer Superannuation Non-commutable Allocated Pensions (TTR strategies) Gearing strategies Establishing, closing or altering the structure of an SMSF Reverse Mortgages

Execution Only Procedure

In order to assist client execution only transactions, the adviser must adhere to the following procedure.

After implementing an execution only transaction, the adviser must provide in writing to the client an Execution Only Document. This provides a document warning to the client that they should seek personal adviser from a professional regarding their investments and/or insurances and their personal needs and circumstances.

Please refer to Execution Only Document in Implementation section of Nextplan website.

Execution Only Process Details

Step 1 – Confirm FSGConfirm with the client if they have updated FSG version. If not, provide the client with an updated FSG.

Step 2 – Ascertain client’s instructions

The adviser will need to clearly establish client’s instructions and confirm with them that no personal advice is sought from them in relation to the transaction. The adviser needs to determine whether the client has provided all terms of the transaction. The client must decline the offer of advice.

Step 3 – Provide client with a warning

Before implementing an execution only transaction, the adviser must make the client aware that by choosing not to receive personal advice from them, they run the risk of implementing transaction which may not be appropriate for their situation, needs and objectives.

Step 4 – Provide a PDS to the client (in those circumstance where they are wanting to invest into a new product)

Where the client wishes to invest into a new product, provide a PDS for the client to read (hard copy or electronic). The adviser may be called upon to explain elements of the documents to your client.Where a client wishes to invest into an existing product, confirm with the client if they have a PDS, where possible provide the client with an updated PDS or alternatively direct them to contact the PDS provider of updated PDS.

Step 5 – Implement the transaction

Complete all application forms

Step 6 – Prepare a File Note

Prepare a file note which should clearly articulate the execution only transaction request by their client. Ensure details of the FSG provided (version number and date provided) are adequately capture, explained the relevant sections and the client reaction.

Step 7 – Issue an Execution Only

Complete and issue an Execution Only Document to the client to confirm the transaction that was implemented and disclose any fees charged and/or commission earned. A no advice warning is embedded into the template.





www.nextplan.com.auDoucment to the client

Where a client wishes to withdraw funds and no advice is provided by the Authorised Representative in relation to this, there is no need to disclose any fees in relation to this unless a fee for service is charged for the service. As no commissions with be derived from a “withdrawal” transaction, commission would not need to be disclosed.

The client file should contain: The completed Execution only document A file note with context regarding the transaction including any warnings provided (noting that the

client attended the meeting with the intention of purchasing/ redeeming/ switching the product and that not express or implied recommendations were in relation to the product)

Details of FSG and the relevant Product Disclosure Statement provided.

Use the template to ensure that your client is aware that you are not providing them with any advise & disclose any fees that will apply to the transaction.

Examples:

Snapshot!In all situations, the adviser must offer an advice option. If a client declines the offer, the adviser should provide a verbal warning to the client. This should be recorded within the file notes and later in the Execution Only document.

Example 2A client contacts an adviser and wants to commence a $200,000 Challenger Annuity for 5 year period with a stipulated residual value option within his existing pension portfolio. The client informs the adviser to utilise the funds from the nominated cash account to purchase this annuity product.

SolutionThe adviser must provide the client with a FSG and Challenger PDS. The adviser needs to complete a file note of the above conversation and the provide Challenger Annuity quote. The adviser must complete the Execution Only document. The application can then be completed and submitted.

Example 3An existing ongoing service client contacts the adviser and wants to make switch within their existing portfolio.

SolutionThe adviser ensures the clients has the latest or current FSG. Then completes a file note reflecting that the client declined the offer of advice, warnings of the risks of no advice were provided and a specific instruction was received. The adviser must complete the Execution Only Letter. The forms can be then completed and submitted.

Example 4A client contacts an adviser and requests to cancel existing life/ TPD cover of $250,000 with Asteron which is held in their personal name.

Solution





www.nextplan.com.auThe adviser must provide the client with a FSG. The adviser needs to complete a file note of the above conversation. The adviser must complete the Execution Only document. Appropriate documentation should then be completed and submitted.

General Advice

General Advice aka Financial product advice consists of where an adviser does not consider a client’s relevant circumstances (i.e. their objectives, financial situation or needs); and it has been clarified with the client that no personal advice will be provided.

Providing General Advice is a financial service which requires an AFSL with an authorisation to give General Advice, or be an authorised representative of such a licensee, unless an exemption applies.

An example of General Advice is explaining the Transition to Retirement Strategy without considering personal circumstances.

General Advice - Further Requirements

When providing General Advice, the adviser must provide the client with a General Advice Warning that:a) The advice has been prepared without taking into account their objectives, financial situation or

need and b) The clients should consider the appropriateness of the General Advice provided, in light of their own

objectives, financial satiation or needs, before acting on the advice; andc) If the advice relates to the acquisition, or possible acquisition, of a particular financial product, the

client should obtain a Product Disclosure Statement (PDS) (if required) relating to the product and consider the PDS before making any decision about whether to acquire the product.

Note 1: Reasonable steps are required to ensure that the client understands the warnings which have been provided. This warning must be given at the earliest opportunity.

Additionally, it must also be clear, to any reasonable person, that a client’s objectives, financial situation or needs have not been taken into account; the warning itself will not suffice.

Note 2: Advice may be regarded as Personal Advice if it is presented in a way that means a reasonable person might expect one or more of the client’s objectives, financial situation or needs were considered, and therefore recommendations made.

Fact-based InformationObjectively ascertainable information, the truth or accuracy of which cannot be reasonably be questioned. The information provided could not be viewed by a reasonable person as intending to imply any recommendation or opinion about a financial product.

Factual based information can be provided to clients even if you have Personal Information about the client.

An example would include providing a client the superannuation contributions limits for 2020/2021.

Securities TradingWhere a client instructs you to buy or sell securities on a market, because of your advice or not, you must retain the following records:





www.nextplan.com.au1. The client’s name 2. The instruction (share name, volume, price, buy/sell) 3. Who gave you the instruction 4. The date and time you received the instruction 5. The date and time you transmitted the instruction to the executing broker 6. The date and time the broker notified you of the execution of the instruction

If a client instructs you to place an instruction with a stockbroker to buy or sell shares at “the market price” (i.e. no specific price) the Act prohibits you from placing an instruction to buy or sell shares in that same entity/entities for your or our own benefit or any associate of you or us or from instructing another person to enter into such a transaction until the client’s order has been transmitted to the stockbroker.

Advice Implementation

Snapshot! Advice should be implemented within 30 days of the SoA being provided to the client. If something changes and the advice is no longer appropriate, do not implement the advice.

Once the Authority to Proceed has been signed and dated by the client, the adviser may proceed with the implementation process. It is important to ensure that the advice that is implemented is the same as that recommended in the advice document.

Prior to implementing any recommendations or execution-only services, you must meet legal requirements in identifying your client (see the Anti Money Laundering and Counter Terrorism Financing section). It is also a good idea to set out what steps must be taken in the implementation process and who is responsible for carrying out each step.

It is Nextplan’s policy that advice should be implemented within 30 days of the SoA being provided to the client. If implementation occurs outside this time, there is the possibility that something in the client’s relevant circumstances may have changed. If the 30-day period expires, you should make sure that the advice is still appropriate for the client by confirming that there have been no significant changes to the client’s personal circumstances. This can be documented by a file note.

In the event that circumstances change before a financial planner has implemented advice and the advice becomes inappropriate to the client, the adviser must:

1. Not implement the recommendations 2. Document the basis for declining to implement 3. Advise the client within 7 days that the advice has not been implemented and the reason(s) why.

Where the client’s direction to implement is likely to significantly impact upon their confirmed objectives and/or previously implemented recommendations you must inform them in writing of any costs, benefits, risks or adverse consequences.

It is strongly recommended that you avoid presenting and implementing advice on the same day. To give clients the opportunity to consider and understand the advice, it is recommended that there is a delay of at least one business day between presenting and implementing the advice.

Time Critical Advice (TCA)





www.nextplan.com.auA SoA includes information that is important and should be read by the client before they make a decision on whether to follow the advice.

In some rare cases, the client’s situation may necessitate the implementation of advice prior to providing the SoA. Examples include where a client needs income protection insurance as part of their employment and cannot work until it is in place, or an end of financial year super contribution very close to 30 June.

If you feel that it is in the client’s interest for the advice to be implemented before the SoA is provided, you should seek approval from your Nextplan Adviser Support and Compliance Manager before the transaction. You will be guided through what information must be provided in TCA SoA in the absence of the full SoA.

Once approved by Nextplan, the full SoA must be provided to the client within five working days following the Time Critical advice.

Reviewing Advice

Snapshot! Make your client aware of their responsibilities in relation to having their investments reviewed. Determine any action that needs to be taken based on the client’s current financial situation and provide a written account of this advice.

As a financial planner you should communicate to your client the fact that financial planning is an ongoing process that may require updates in response to changes in a client’s personal circumstances, the market or financial legislation.

A mutual agreement must be reached on the respective roles and responsibilities (if any) of yourself and the client in ensuring their financial situation is being appropriately reviewed.

Prior to conducting a review, the client must be made aware of the differences in the initial financial planning process and the review process (such as purpose, costs, scope etc). These differences should be provided in writing to the client as a Terms of Engagement document.

In conducting a review, you should compare the client’s current situation to previously confirmed objectives and previously implemented recommendations and determine what additional action – if any – needs to be taken. It may also be necessary to re-evaluate initial assumptions (e.g. Inflation rate, tax rate, projected returns etc). Following the review, you must provide your client with a written account of any changes in their confirmed objectives, personal circumstances and implemented recommendation(s). It should also state any recommendations to the client to continue the previously implemented recommendations (if applicable) and any new/amended recommendations you are making. A template of a Record of Advice is available on the Nextplan website.

Nextplan Advice Vetting Process

1) Purpose





www.nextplan.com.auThe Vetting program ensures that Advisers are consistently providing advice at the quality and standard expected of them by Nextplan. It also enables the Adviser to better understand Nextplan’s requirements when providing advice.

Vetting assesses all parts of the advice process excluding the presentation and implementation of the advice process. Vetting involves the submission of a client file for review of a proposed Statement of Advice/ Record of Advice and supporting documents including (but not limited to):

Evidence of provision of FSG Completed and signed Personal and Financial Workbook (including insurance needs analysis and risk

profile questionnaire where appropriate) Due diligence analysis documents and strategy workings to support recommendations (cost/benefit

analysis, product comparisons, etc.) Statement of Advice (including signed Authority to Proceed) Record of Advice (and include SoA referred to) Evidence of documents provided (PDS, other research) File notes supporting the advice process AML/CTF documents Ongoing Service Agreements (signed) Fee Disclosure Statement and Opt-In acknowledgement (if issued)

Your Nextplan Adviser Support and Compliance Manager will assess the quality of the proposed advice before it is presented to the client and determine whether any issues are present. The vetting process does not assess the actual implementation of the advice.

2) When is Vetting required?

There are three elements to Nextplan Advice Vetting.

1: Due Diligence:As part of the Appointment process to join Nextplan, you were asked to provide two complete files for review. This is part of our “due diligence” process in appointing you – and as such we call these your “due diligence” files.

Very soon after your appointment, you will receive a call from your Nextplan Adviser Support and Compliance Manager to discuss this process and they will provide you with their observations and a report of these files.

2: Pre-Vetting Process:Once you are appointed you will become part of the Pre-Vet process.

Pre-Vetting applies to Advisers under the following conditions:

a) New Advisers to Nextplan – First three (3) Advice Documents (if comprehensive advice) or two (2) of each advice areas covering Insurance, Investment and Superannuation, Retirement Planning / Income streams.We also request any specialised areas of advice are treated through Pre-Vet. i.e., Aged Care or SMSF advice – again any 2 advice documents.For Transition SoAs we require the first 6 documents to allow us to cover off most areas of advice.





www.nextplan.com.aub) Existing Advisers as an outcome of an Advice Document Review (ADR) - Next two (2) Advice

Documents.c) Existing Advisers obtaining a new authorization / specialist accreditation. e.g. SMSF, Aged Care,

Business Insurance - Next two (2) Advice Documents.

3: Advice Document Review: (ADR) aka Adviser AuditNextplan’s Adviser Support and Compliance Manager will audit your files at least once a year, and more so, if required.

It’s simple – Know your client and Best Interests are the two pieces of legislation that sit within the Corporations Act.

We will measure whether the scope of advice is clear and transparent.

How clear the recommendations are (whether the clients would understand it).

Whether there is a clear demonstration of how the recommendations meet the clients’ objectives.

Whether sufficient regard has been given to costs, loss of benefits and alternatives.

In assessing the advice for compliance purposes, these provide us with our guiding points.

There is an expansion of this area later in this document.

3) What advice must be submitted to attain vetting clearance?

It is important both for Nextplan and the Adviser to have confidence that an appropriate level of competence can be demonstrated in giving advice across a range of advice strategies, authorisations and accreditations. Consequently, Advisers need to attain vetting clearance for each of their specific authorisations and specialist accreditations according to the following groups:

Risk protection Superannuation Investment Retirement income streams Specialist Accreditations Self-Managed Super Funds Direct Equities Business Insurance Aged Care

4) How to Submit a file for Vetting?

A file is to be submitted for vetting once all the relevant information has been gathered and completed. This would involve meeting the client, undertaking a needs analysis, formulating the (proposed) strategy and documenting within the relevant advice document, including all necessary file notes.

We ask that please submit the Advice document in Word format so we can make comments in the document using the review function.





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When you receive notification that is time to undertake an Advice document review, we will ask that these files are best provided electronically via Worksorted. Or you can provide us with access to your software program if that is easier.

The steps required to upload these documents into Worksorted are as follows:

Login to Worksorted: Click on Client Click on Client List Click on the client that has been nominated for your review as outlined in this letter above. Once

client page opens, scroll down the page and you will see “Advice details and documents”. The first tab is AML / CTF documents.

Click on + button Click on “Drop files here or click to upload”. Your document library will then open. Click on the appropriate file and it will appear in this box. If

you choose the wrong one – click on the rubbish bin icon. Once added – move on to the next tab and repeat. Work your way to the bottom of the list adding the appropriate files.

Once you have uploaded these documents – please email your Nextplan Adviser Support and Compliance Manager to advise that this has been done.

5) Incomplete Submissions

Your Nextplan Adviser Support and Compliance Manager will only commence reviewing a client file once all the required information has been provided. A preliminary check will be conducted to ensure all relevant documentation has been provided, and you will be notified to provide missing documents.

In the event not all relevant documentation has been provided the submission will be assessed as incomplete. The Adviser will be required to resend the submission with all required documentation and attain a successful vetting result prior to providing the advice to the client.

6) What is the Vetting turnaround?

Upon receipt of all relevant information and documentation, the vetting turnaround time is usually 5 business days.

7) How many submissions are required to receive Vetting clearance?

The Adviser will need to submit two (2) vetting requests for each authorisation and specialist accreditation, and 6 across Transition SoAs.

Nextplan require each advice document to be approved before it is presented to a client, until the Adviser has been advised (via email) they have attained vetting clearance.

8) Time Critical Advice Situation





www.nextplan.com.auWhere the situation arises that you may be required to provide time critical advice for a client you must try and contact your Nextplan Adviser Support and Compliance Manager immediately before, or if this is not possible then immediately straight after the event, by email, outlining why this advice was time critical. A Statement of Advice is then required to be delivered to the client within five (5) days from the time critical advice document being presented.

9) Execution Only/ Nil advice documents

Where the situation arises that you may be required to provide an execution only service for a client you must contact your Nextplan Adviser Support and Compliance Manager before providing and explaining why the service is being offered. An Execution Only Document is then required to be delivered to the client.

10) Priority Service

Where the advice is not time critical, but there are pressing commercial and/or customer needs, an Adviser may request a “priority vetting” service. The request should be submitted to the Nextplan Adviser Support and Compliance Manager outlining the special circumstances (the reason for urgency) and the date required. The Nextplan Adviser Support and Compliance Manager will apply reasonable endeavours to these requests and will inform the Adviser of the expected turnaround.

11) Multiple File Submissions

It is preferred an Adviser only submits one file submission for review at a time. This supports the Adviser to both learn and demonstrate competent application of the standards. This will also allow the Adviser to implement Advice Vetting feedback and recommendations to future file submissions.

12) Vetting Outcome

The advice quality outcome will be one of the following:

a) “Approved” : to receive “Approved”, the file must not have any “significant” issues. You will receive a report stating that the request is “Approved” or “Approved with amendments”. Regardless of which outcome is received, any issues identified and/or noted as observations must be rectified before presentation of the advice to the client.

b) In these instances where the issues identified are relevant to the advice document, the Nextplan Adviser Support and Compliance Manager will require that the advice document, having been updated accordingly, is emailed back to them as your confirmation that changes have been applied, prior to presentation to the client is required.Where the issues raised are relevant to areas of the file that are not provided to the client, your Nextplan Adviser Support and Compliance Manager may not request that the changes be emailed to them as confirmation, however you must rectify all requirements within the client file.

c) Not Approved : To receive “Not Approved”, the file would have at least a number of “significant” issues. “Not approved” indicates that significant issues have been identified. All issues must be corrected, and the file re-submitted to the Nextplan Adviser Support and Compliance Manager. Advice cannot be provided to a client while a file is ‘Not Approved’ until the file is again reviewed by the Nextplan Adviser Support and Compliance Manager and “Approval” is received. A re-submitted file which is subsequently ‘Approved’ does not count towards an Adviser progressing off a pre-vet





www.nextplan.com.austatus.It is recommended that where vetting is required, that the client presentation appointment is not confirmed with the client until the Adviser has received confirmation that the file has been approved.

13) Multiple Authorisations and Accreditations

Some advice files may contain advice which covers more than one area of authorisation and/or specialist accreditations. If the Adviser is on pre-vetting for any such areas, the file is to be submitted for vetting. The areas of advice (e.g. risk insurance or SMSF) will be separately assessed. As a result, a single file submission may result in both ‘Approved’ and ‘Not Approved’. For example: a file contains advice on SMSF and risk insurance. Both areas will be considered separately when determining a vetting outcome. Therefore, it is possible that the file receives ‘Approved’ for risk insurance and ‘Not Approved’ for SMSF.

14) How do I cancel/ terminate a vetting request I have submitted?

In the instance the Adviser wishes to cancel a vetting request i.e. a client no longer wishes to proceed with the advice.

To terminate any request you have submitted, the Adviser is required to communicate via email to the Nextplan Adviser Support and Compliance Manager and outline the reasons why and confirm that the advice is not being presented to the client.

15) What if I have some queries relating to issues not covered via compliance standards/policies?

If an Adviser has any unique situations which are not covered by the Nextplan compliance standards or policies, the Adviser will need to contact the Nextplan Adviser Support and Compliance Manager to discuss.

16) Adviser required to return to pre-vetting requirements

If an Adviser is required to return pre-vetting requirements as a result of an outcome from an ADR, or for some other reason, such as management direction, it is possible that the pre-vetting requirement will be limited to a particular authorisation or specialist accreditation. For example, if the significant issues all relate to the provision of risk advice, the pre-vetting condition will be limited to the risk insurance authorisation.

However, if the significant issues were more fundamental or general in nature, pre-vetting may be required for all authorisations and specialist accreditations.

17) Clearance from pre-vet

Advisers are required to be given a clearance from vetting from the Nextplan Adviser Support and Compliance Manager for each of their authorisation and/or specialist accreditation areas. To receive clearance, the Adviser needs to achieve ‘Approved’ for at least two out of three submissions.

If clearance is not achieved after three submissions, the Adviser is to receive formal coaching and development. This will usually involve reviewing the specific issues and coaching the Adviser to better understand the issues and associated compliance requirements.

Note: Advisers on coaching are not able to provide advice for the authorisation/s advice areas until coaching is completed. Following coaching sessions, the Nextplan Adviser Support and Compliance Manager will





www.nextplan.com.aunotify the Adviser that they are commencing the 2nd phase of pre-vetting requirements for the authorisation/s and/or specialist areas of advice.

To receive clearance from the 2nd phase of pre-vetting, the Adviser will also need to achieve ‘Approved’ for two out of three submissions. If this is not achieved within the 2nd phase of pre-vetting the Adviser may not provide further advice in the relevant area.

If the Adviser has not received clearance following the 2nd phase of vetting and that Adviser is a new entrant to both the Licensee and to providing personal advice to clients, then that Adviser will be afforded a third phase to achieve a clearance from pre-vetting. If clearance is not provided following that third phase, the Nextplan Adviser Support and Compliance Manager will refer the matter to the Board of Directors to determine appropriate consequences.

This may result in all further advice documents being completed by a Paraplanning service of Nextplan‘s choice (at the adviser’s expense) or termination from the Nextplan AFSL.

18) Vetting Feedback

The vetting outcome and areas of development will be recorded by the Nextplan Adviser Support and Compliance Manager in a formal report. This report will be sent via email to both the Adviser and Nextplan Admin for filing.

These reports can also be used to support any coaching and development that is required.

19) Vetting Period

Advisers are placed on vetting effective from commencement with the Licensee, due to gaining a new accreditation or being placed on consequence management pre-vetting. Reporting is provided to the Board of Directors on a monthly basis.

If no advice is submitted within the first 3 months, this is reported to the Board of Directors. There may be a decision made to withdraw the relevant authorisation or specialist accreditation from the Adviser for lack of use. Note that all Advisers, regardless of vetting status will be placed onto the Advice Document Review schedule for an audit to occur within a 6-12-month period from commencement with Nextplan. Further vetting requirements may be added or continued following the audit.

20) Non-adherence to vetting

The following are examples of non-adherence to vetting standards:a) Providing advice to a client where an Adviser has not attained vetting clearance for that

authorisation or specialist accreditation at the time of providing the advice.b) Providing an advice document to clients when a “not approved” report is received from the Nextplan

Adviser Support and Compliance Manager and the advice document has not been re-submitted for approval prior to providing the advice.

c) Providing an advice document to clients when the “approved with changes report” has outlined changes to be made which have not been applied to the advice document prior to providing the advice.





www.nextplan.com.auNon-adherence to vetting will be reported to the Nextplan Board of Directors and will require a detailed explanation, and if unsatisfactory, could lead to termination from the Nextplan AFSL.

Advice Document Review Program (ADR) aka Adviser Audit

1. IntroductionNextplan’s aim behind the Advice Document Review is to provide an engaged and trusted service that seeks to proactively minimize risk to our business, advisers and clients, through training and collaboration, advice assurance, incident management and solid reporting. The Advice Document Review tests appropriateness of advice and results from regular reviews are a key indicator of the overall quality of our financial planning services. They assist us to identify if, and where, we need to make improvements. The ADR program includes:

Advice Document Review - A formal review using a sample of client files to assess the capabilities of the Adviser to consistently meet the licensee’s expected advice standards.

2) How often am I subject to a ADR?You are subject to a Advice Document Review at least once per year.

3) What does a ADR consist of?This is where nominated files will be requested by the CEO of Nextpplan. The nominated files must be submitted, either via upload to Worksorted (preferable), or Dropbox, or access provided via paraplanning software, by the due date.

Your Adviser Support and Compliance Manager will then review the files and will identify: Whether the scope of advice is clear and transparent How clear the recommendations are (whether the clients would understand it) Whether there is a clear demonstration of how the recommendations meet the clients’ objectives Whether sufficient regard has been given to costs, loss of benefits and alternatives

Where issues have been identified, we will work with the Adviser to understand the cause of the issue and provide recommendations to help the Adviser improve capability and professionalism.

4) How many files will be looked at in a ADR?A minimum of two files will be requested and reviewed.

5) What files may be requested for a ADR?Any client file - either new business, ongoing services client or a client from a previous AFSL.

Your Adviser Support and Compliance Manager will aim to select a random sample of files. The files selected could therefore cover a range of strategies, products and advice types within the Advisers authorisation and accreditations.

6) What is the scorecard used in a QAR & how does it work?A scorecard will be completed for each file which is reviewed. The requirements are rated in terms of the risk of not meeting the standard - high, medium and low.





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Medium-weighted issues are related to processes and procedures whereas high-rated issues have a relatively direct impact on the quality of advice provided to the client.

7) Will I be provided with a scorecard/rating & how is it calculated?No. There is no scorecard at Nextplan. We believe that as an Authorised Representative you are the professional and know what you are doing. You should also know the client. We don’t. We will look at each file reviewed, and list issues identified, and compile a report of these issues to discuss with you at the conclusion of the review.

8) What happens after the Adviser Support and Compliance Manager has reviewed the files?Once the files have been reviewed, a ADR Report will be issued to the Adviser and a time will be made to discuss with the Adviser the findings. The Adviser will have the opportunity to provide any clarity and discuss the issues identified.

Of the issues identified, the Adviser Support and Compliance Manager will work with the Adviser to ascertain why issues are occurring. It is important this is identified openly, as this will then allow recommendations to be made which are designed to assist the Adviser in their capabilities and professionalism.

The report will also detail any required client remedial action and Adviser Development recommendations.

9) Will I be required to complete any actions post the interim ADR Report?As will be agreed to in the discussions, any client remediation required to correct the issues identified in the client files will be detailed in the ADR Report. All client remediation and file remediation is required to be completed within fourteen (14) days of receipt of the interim ADR Report, and these actions are mandatory, and not negotiable.

Once the Adviser has completed the required client, and file remediation, the Adviser is to notify the Adviser Support and Compliance Manager. The Compliance Manager will review the remediation and associated documents to ensure all issues have been completed adequately.

10) Non-adherence to ADR?If an Adviser cannot meet the submission timeframes for the ADR, as requested by the CEO, they will have their Nextplan Authorized Representative status and all revenue suspended.

Failure to meet the submission deadline, without communication with Nextplan Management, will result in the Adviser’s Authority being suspended. Failure to meet the newly agreed to submission deadline, without communication with Nextplan Management, will result in the Adviser Authority being suspended.

If after the issuing of the ADR report and discussions, an Adviser fails to undertake the required remediation issues, within the required deadline and to the satisfaction of the Adviser Support and Compliance Manager, then the Compliance Manager will report this issue to the CEO.

The CEO will then discuss this with the adviser, and if the Adviser response is unsatisfactory, then the Adviser will immediately have their Adviser Authority suspended. As a result, all Adviser remuneration will also be suspended. This suspension will only be lifted once satisfactory remediation has occurred.

If the Adviser is unable to conduct the required remediation, then Nextplan will execute whatever remediation is required. This may require Administrative, Paraplanning or the designation of a Nextplan Adviser to provide advice services to the client – which will be at the remediated Adviser’s expense.





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If the Adviser fails to remediate the client and file to the satisfaction of the Adviser Support and Compliance Manager, and continues to be uncooperative in this process, then this will ultimately lead to the Adviser having their Authority with the Nextplan AFSL terminated. If significant remediation is required as part of this process, the Adviser involved may then be placed back on a Pre-Vet process until all Advice documents are of the required standard as ascertained by the Adviser Support and Compliance Manager.

Breaches

Snapshot! If you become aware that an incident has occurred or may occur, you are required to notify a compliance team member as soon as possible. This helps to address potential issues early before they become serious or systemic.

A key obligation of AFS licensees is to have an adequate incident management system. This covers instances where an incident occurs that does not meet our obligations under the financial services laws or the conditions of our licence.

We are required by ASIC to monitor any incidents and report those which are deemed significant. We are also required to report when you are ‘likely to breach’ an obligation.

Our obligations as an AFS licensee, in order to prevent incidents, include: Do all things necessary to ensure that the financial services covered by the AFS license are supplied

efficiently, honestly and fairly; Comply with the conditions of the licence; Have adequate resources to provide the financial services covered by the licensee and to carry out

supervisory arrangements; Be competent to supply the financial services covered by the licence; Have trained and competent representatives; Take reasonable steps to ensure that authorised representatives comply with the financial services

laws; Have a dispute resolution system for retail clients; Have adequate risk management systems; and Have compensation arrangements for retail clients.

For authorised representatives, breaches could include the following: Not providing a Financial Services Guide, Statement of Advice (or other eligible advice document) or

Product Disclosure Statement to the client Not demonstrating a reasonable basis for advice Not conducting a risk tolerance assessment Providing financial product advice outside of Approved Product List (i.e. non-approved products) Not fully/accurately disclosing fees, commissions, other benefits or conflicts of interest Providing advice outside of authorisations Not meeting super switching guidelines Not meeting the continuing professional development requirements.

Recording and Reporting Incidents





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In the case that an incident is identified, it will be recorded in an internal register. Further investigation of the matter will also be conducted to determine if it is significant.

Circumstances that may indicate a significant incident include: 1. The number or frequency of similar previous incidents. An ongoing repeat of an incident may

indicate a continuing underlying systemic problem. The higher the frequency, the more likely a new incident will be considered significant.

2. The impact of the incident on your ability to provide the financial services covered by the license. If an incident reduces the ability or capacity to provide the financial service covered by the license, it may be considered significant.

3. The extent to which the incident indicates that your compliance arrangements are inadequate. If an incident occurs in an isolated instance, it may not be significant. However, if the incident indicates broader inadequacies in Nextplan’s compliance arrangements it may be significant.

4. The actual or potential financial loss to your clients, or you, arising from the incident. If the incident causes actual or potential financial loss to clients, it is considered significant, provided the loss was material. If the actual or potential financial loss to you resulting from the breach causes non-compliance with your financial requirements under your conditions, ASIC considers the incident to be significant.

It is important to note that self-reporting obligations are in place. If you become aware that an incident has or may occur, please notify a Nextplan compliance team member as soon as possible.

Notifiable Data Breaches Scheme (NDB Scheme)

From 22 February 2018, an amendment to the Privacy Act 1988 introduced mandatory data breach notification requirements, applicable to all eligible data breaches.

Under this legislation, there is a legal requirement that any affected individuals, as well as the Office of the Australian Information Commissioner (OAIC), be notified in instances where a data breach is likely to result in serious harm to any affected individuals.

The likely risk of serious harm could include physical, psychological, emotional, economic and financial harm, as well as serious harm to reputation and other forms of harm that a reasonable person would identify as a possible outcome of the data breach, e.g.:

identity theft loss of business or employment opportunities significant financial loss workplace or social bullying or marginalisation threats to physical safety

Why the need to notify?

The NDB Scheme was introduced to: strengthen the protections afforded to everyone’s personal information. improve transparency in the way that organisations respond to serious data breaches. give individuals the opportunity to take steps to minimise the damage that can result from





www.nextplan.com.auunauthorised use of their personal information.

What is a Data Breach?

A data breach occurs when personal information about one or more individuals (the affected individuals) held by an organisation is lost or subjected to unauthorised access or disclosure.

Examples of a data breach include when: a device containing customers’ personal information is lost or stolen. a database containing personal information is hacked. personal information is mistakenly provided to the wrong person. paper records stolen from insecure recycling or rubbish bins. an individual deceiving an organisation into improperly releasing the personal information of

another person.

Types of Personal Information that are more likely to cause an individual serious harm if compromised include:

sensitive information such as information about an individual’s health documents commonly used for identity fraud such as driver licence or Medicare card details. financial information • a combination of personal information

Under the NDB Scheme, when it becomes evident that a data breach has occurred, the breach must immediately be assessed to establish whether or not it is a Notifiable Data Breach, and if so, necessary actions taken as soon as practicable to ensure that any affected individuals and the OAIC are notified accordingly.

Actions to take in the event of a data breach:

Data Breach Response Guidance is in place at licensee level to ensure that in the event of a data breach the - containment and assessment- evaluation of associated risks to affected individuals.- notification of affected individuals and OAIC- prevention of future breaches

From an adviser/practice perspective, in the event of any data breach being identified, immediate steps should

- contain the data breach, assess, and document that no further clients are affected, and that the potential for further harm has been limited.

- take immediate remediation steps where possible.- engage your licensee Compliance Manager and immediately inform the Licensee Representative

(David Corridon). Consult with them to evaluate the breach to establish whether or not it meets the criteria for notifying the OAIC.

- If required, your Licensee Representative will escalate to the relevant forum so that the OAIC and affected individuals are notified.

Please note: Not all data breaches are eligible for notification. For example, if an entity acts quickly to remediate a data breach, and because of this action the data breach is not likely to result in serious harm, there is no requirement to notify any individuals or the OAIC.





www.nextplan.com.auIdentifying notifiable data breaches:

The notifiable data breaches (NDB) scheme requires regulated entities to notify particular individuals and the OAIC about ‘eligible data breaches’. A data breach is eligible if it is likely to result in serious harm to any of the individuals to whom the information relates. Whether a data breach is likely to result in serious harm requires an objective assessment, determined from the viewpoint of a reasonable person in the entity’s position.

Not all data breaches are eligible. For example, if an entity acts quickly to remediate a data breach, and as a result of this action the data breach is not likely to result in serious harm, there is no requirement to notify any individuals or the OAIC (see Example 1).

An eligible data breach arises when the following three criteria are satisfied:1. there is unauthorised access to or unauthorised disclosure of personal information, or a loss of

personal information, that an entity holds,2. this is likely to result in serious harm to one or more individuals, and3. the entity has not been able to prevent the likely risk of serious harm with remedial action.

Example 1 — email sent to the wrong recipient contained before serious harm can occur:

An adviser accidentally sends an email with an encrypted attachment to the wrong client. The attachment contains a Statement of Advice and other personal information. The adviser realises the error and contacts the recipient to delete the email with the attachment. The recipient confirms they have not accessed the file, and that they have deleted the email. The adviser contacts the Adviser Support and Compliance Manager and together they assess the remedial action taken, to conclude that whilst the file included personal information about the individual’s name, address, date of birth, business structure and ABN, personal finances and superannuation policy numbers, the assurance that the incorrect recipient ( the other client) deleted the file has prevented the likely risk of serious harm to the “intended” client. As a consequence, the adviser and Adviser Support and Compliance Manager determine that it is not an eligible data breach, and no further action is required.

Example 2 — loss of unencrypted storage media containing personal informationAn unencrypted memory stick containing the current files of clients on which an adviser is planning to work on from home over the weekend goes missing. Once the Adviser becomes aware that the memory stick is lost, s/he conducts an extensive search but fails to locate it. The information contained in the client files includes the names, salary information, TFNs, home addresses, phone numbers, birth dates, and in some cases health information (including disability information) of the clients. As the data on the memory stick is not encrypted, and there is a chance that the memory stick was lost outside of the Adviser Practice’s premises, the Adviser concludes that unauthorised disclosure may likely occur. Due to the sensitivity of the unencrypted information – not only the extent and variety of the information, but also the inclusion of financial and health information in the files – the Adviser’s risk assessment finds that there is a likely risk of serious harm to at least one of the individuals whose personal information is involved in the data breach. On this basis, the Adviser immediately engages their Adviser Support and Compliance Manager to assess whether or not it may be an eligible data breach for the purposes of the NDB scheme. The Adviser also takes immediate steps to contain and remediate the breach by contacting each of the clients to explain the loss of the memory device and what types of personal information were involved, as well as recommending mitigating steps that can be taken to limit and/or eliminate any risk of harm to themselves. If determined that a Notifiable Data Breach has occurred, the Adviser Support and Compliance Manager will assist in preparing a statement to notify the OAIC and affected individuals.





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Complaints Handling

Snapshot! It is imperative that you do not admit liability. If you receive a verbal complaint from a client, you should ask them to put it in writing as soon as possible. Upon receiving a written complaint immediately forward it to Nextplan’s compliance manager.

Many complaints against financial planners relate to some form of disclosure regarding matters such as fees, commissions and hidden costs or that the advice the client received was not appropriate for them.

A complaint is defined as “an expression of dissatisfaction made to an organisation, related to its products, or the complaints-handling process itself where a response or resolution is explicitly or implicitly expected” (Standards Australia, 2006).

Documents such as file notes, data collection workbooks, risk tolerance assessments, FSGs and SoAs can place financial planners in a much better position to defend a complaint as they can show that they took reasonable steps to ensure advice was given appropriately. Following Nextplan’s compliance guidelines can put you in a much better position in the event of a complaint.

Nextplan’s Financial Service Guide outlines information regarding the complaints procedure in the event that a client is dissatisfied. All Australian Financial Services Licence holders must have an internal complaints resolution scheme and be a member of an external complaints resolution scheme. For financial planning licensees, the Financial Ombudsman Service (FOS) is the relevant external scheme.

The Nextplan Adviser Support and Compliance Management team are all experienced to handle all complaints from clients. Generally, clients may have an aversion to complaining directly to the person who gave them advice and prefer to speak to someone removed from the situation. In making a complaint, clients will be required to lodge their complaint orally and in writing.

Our internal procedure maintains that a complaint needs to be handled objectively and in a timely manner. Complaints should be acknowledged as soon as possible, and clients should always be kept up to date with the progress of the complaint handling process.

Steps in the Complaints Handling Process 1. It is imperative that you do not admit liability. This will possibly void any professional indemnity

insurance claim.

2. If you receive a written complaint, you should immediately notify the Adviser Support and Compliance Manager and record the complaint in your complaints register. Generally, the adviser Support and Compliance Manager will handle all complaints, although it may be agreed between you and the Compliance Manager that you will deal with the complaint yourself.

One of the first steps is for the Adviser Support and Compliance Manager to notify Nextplan’s CEO.He will then decide whether the PI insurance provider should be notified of a potential claim. If you receive a verbal complaint from a client, you must ask them to put it in writing as soon as possible.





www.nextplan.com.au3. The Nextplan Compliance team has 45 days from the date of the initial complaint to investigate and

resolve the complaint, reviewing the matter impartially and based on supporting statements and documentation from both the complainant and the adviser.

Where it is agreed that you will deal with the complaint yourself, you have 5 business days in which to resolve the complaint. You should keep the Adviser Support and Compliance Manager informed as to the progress of the complaint and discuss any proposed client communication before it is issued.

Unresolved Complaints If complaints remain unresolved internally, after 45 days, the complainant has the right to take their

complaint up with the Australian Financial Complaints Authority (AFCA), the external complaints handling body for financial advisers.

Tips for Complaints Handling Do not admit liability. Admission of liability may void professional indemnity insurance cover. Avoid laying blame or becoming defensive. Empathise in a courteous manner. Establish the facts. Listen carefully to the complainant and ensure you and the client have

understood the problem. Clearly explain any rules or circumstances that are relevant. Explain to the complainant who will be responsible for handling the complaint. Maintain file notes of all conversations, emails and action to be taken. Seek to resolve the complaint over the phone in the first instance or arrange a meeting as soon as

possible. Advisers should notify Nextplan within 24 hours of the complaint being made and should

provide all documentation as requested. Monitor the investigation of the complaint to ensure timely resolution.

Software

Worksorted – CRM / Workflow / Revenue system• Worksorted is the software system that Nextplan provides to you as part of the adviser

offering.• Once appointed you will receive a username and password to Worksorted.• You can access Training Videos for Worksorted which are available via www.worksorted.com• Worksorted has three areas of expertise – CRM / Workflow and Revenue.• As part of the appointment process, you should have had client data transferred to / copied

across to Worksorted from wherever it was previously.• All client communications can be held within Worksorted – file notes, advice documents,

emails, applications, SoAs, RoAs etc. As you send an email from Worksorted to a client, it asks if you would like to file the email in the client file.

Nextplan has no preferred software program for the creation of Advice documents – and allows planners to utilise any program for CRM or SoA creation tool they choose.

We have negotiated discounted terms with Iress’s X Plan, Adviser Logic and Midwinter, which are below standard terms.

Nextplan has created all required templates across all areas:



http://www.worksorted.com/



www.nextplan.com.au Prospective Clients / Client data management FSG’s and Terms of Engagement Data Collection Risk Profiling SoA Preparation RoA and Further advice templates Advice Implementation Portfolio and Ongoing Service Reviews

Nextplan does have a current relationship with Adviser Logic and has all documents coded within their software platform for ease of SoAs.

We are currently in the process of exploring Xplan’s Model Office as another option.

Paraplanning

Paraplanning is the process of advice document preparation by a third party of behalf of an Authorised Representative.

ASIC’s explains, “Paraplanners perform functions such as collecting information from retail clients about their objectives, financial situation or needs, preparing draft Statements of Advice and assisting in the explanation of financial product advice to retail clients. We will not require Paraplanners to meet the training standards provided a person who does meet the training standards plays a material role in and remains responsible for (together with the Licensee), the provision of financial product advice to retail clients”. This means that a person meeting the training standards must:

review any draft Advice Document prepared by the Paraplanner with a view to assessing whether all legal obligations have been complied with, and take any necessary action to ensure such compliance (this may mean, for example, that person needs to obtain further information from the client or needs to alter the draft Advice Document), and

Using a paraplanning service does not negate your responsibilities as an advice provider. You must check the advice document before presenting this to the client and you remain responsible for the advice given to the client.

For example, you should check to ensure: Client goals, scope and information is consistent with the Fact Find and file notes Incomplete/inaccurate warning is included (if applicable) SoA clearly and correctly explains your advice. Replacement of product information is correct. Fees and commissions are correctly disclosed.

For issue to a Paraplanner Fully completed Personal and Financial Workbook including the Risk Profile Questionnaire. Fully completed Paraplanning Request form. Any necessary file notes, quotes, calculations, and assumptions.

Once the paraplanner has received ALL required information, and documentation, to complete the advice document, your request will be booked into the workflow queue. The paraplanner will then advise you of an expected completion date.





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Communication

It is stating the obvious, but one of the main reasons most people get upset in any relationship is due to a lack of communication.

So – let’s make all communication as streamlined as can be:

Client Relationships:

FSG and Service Agreements are concise and clear. Statements of Advice are easy to understand and address all issues. Reviews are undertaken in a timely manner and meet the expectations of the client. Clients are satisfied with the provision of services and prepared to sign off on an annual ongoing

service agreement as they are getting value for money.

Nextplan Relationships:

Please ensure that any issue that causes you, as a Nextplan Adviser any concern, is immediately brought to the attention of Nextplan Management. “A problem shared is a problem halved.”

We will always treat you with respect and professionalism; we ask that you also do the same. If in doubt – please let us discuss. Most issues are easily fixed, and with the combined experience

that we have within the Nextplan team, we can deal with, and rectify most issues.



FASEA – Code of Ethics: · Web view2021. 7. 27. · Nextplan Financial Pty Ltd. ABN: 24 167 151...

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Transcript of FASEA – Code of Ethics: · Web view2021. 7. 27. · Nextplan Financial Pty Ltd. ABN: 24 167 151...