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Is this the antidote to audit anxiety?

By 18 September 2019June 16th, 2021Announcements, Technology

Historical Adviser behaviours are being reshaped by the regulator on the back of Report 515 and the Safe Harbour provisions

“I’ve been acting in the best interest of my clients for over 20 years… since I started this business”, said an adviser at a recent industry event. “And that’s why they have nice homes, cars, holidays and their kids are at quality schools!”

This all too common cry comes echoes across the financial planning industry where advice givers are adapting to a new regulatory environment where their advice, specifically record keeping and advice documents, need to clearly demonstrate best interest.

Common wisdom states that successfully managing behavioural change is best done when the process and output is measured and until recently, measuring advice quality was done by reviewing a few files per adviser at the end of a twelve month cycle.

So, once a year, every year, it’s audit time.

The chance for the licensee to show compliance through an independent review. And with it comes a wave of anxiety that washes across every member in the practice. Which files will be reviewed? What will they find? Could I have done the wrong thing? What if they find something? What will happen?

Until now, the annual human review was the foundation for regulatory compliance. Stressful, anxiety inducing and consistent.

But times are changing! It’s a tighter regulatory environment with higher expectations from ASIC. These new standards are coinciding with a new capability built on smart technology where computers can interpret information in documents and provide insights to the user.

We have all been using Natural Language Processing (‘NLP’ is used in spellcheck) and Machine Learning (‘ML’ drives your email spam filter) as subsets of ‘AI (Artificial Intelligence) for years but now there are useful applications in the financial advice industry.

ASIC Commissioner, John Price, said on 4th May this year that:

“There is a need for organisations to have the right technology to deliver good outcomes, which is where RegTech comes in. Using the right data and the right analytics to see where the problems might be and respond to those problems.”

ASIC has since hosted a symposium on August 22nd this year where advice file review businesses, including TIQK, demonstrated that technology is now capable of supporting a pre-vetting process. This is where all advice is quickly and comprehensively reviewed prior to it being sent to the customer.

Shifting the weight of advice review prior to advice delivery using technology brings many operational advantages in any practice or licensee. These include key risk identification, workflow efficiency, objective feedback and adviser training.

Most importantly, the risks identified in technology supported pre-vetting are rectified the and there providing evidence or rectification and an ongoing confidence of advice quality… and a reduction in end of year audit anxiety!

How would your organisation benefit from a more proactive approach to advice review and the opportunity to positively impact the emotional state of the advisers in the process?