New consumer-centric financial product and distribution obligations from April 2021 offer astute financial advisers an opportunity to not only meet the requirements, but to gain an edge in achieving superior client outcomes and improve their business practices.
The new obligations state that retirement products must be appropriately sold and meet genuine client needs, with continual enhancements to ensure outcomes are met. While such standards appear sensible and are consistent with international practice, last year’s Royal Commission into financial services demonstrated that a large portion of the industry is not fulfilling these basic requirements, but are instead misselling products with poor value.
Many businesses may find it difficult and time consuming to develop adequate business practices, leaving them with less time to focus on clients. However, Dynamic Asset’s ready-solution results in satisfied clients with professionally managed portfolios minus the fuss. We not only ensure compliance with the new obligations, but we also free up your valuable time to deepen client relationships - giving your advisory business an edge.
We achieve this by applying a ‘bucket’ approach to strategic asset allocation, where the adviser selects from a suite of fit-for-purpose portfolios that are designed to meet a target return or match a client’s risk tolerance through a cycle. Our focus is on achieving a targeted return that is based on a client’s goals while protecting their capital. This differs from the traditional approach, where a client’s risk profile is used to determine their asset selection and in turn, benchmarked investment returns; this method rarely works, since markets can be inefficient, leading to high volatility, and a client’s feelings towards risk has little to do with their actual investment goals.
Aligning your client’s portfolio with their actual objectives using Dynamic Asset’s goals-based portfolios will help your business demonstrate that it adopts a consumer-centric approach, helping you better manage your non-financial risk. In addition, outsourcing your investment research, portfolio construction and reporting to Dynamic Asset will free up your time to generate new business.
ASIC is current consulting on draft guidance for the new obligations; find out more in Consultation Paper 325 Product design and distribution obligations.
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