MyNextAdvice supports financial advice industry with compliance solutions

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MyNextAdvice has announced it is developing additional solutions to help the financial advice and mortgage broking businesses deal with their emerging and growing compliance obligations.

Within the Australasian region, Australia’s financial planners have been subject to FASEA’s Code of Ethics since 1 January 2020, while a new Code of Professional Conduct is slated to begin in New Zealand in early 2021. On the other and, mortgage brokers in Australia will be legally compelled to comply with new Best Interests Duty (BID) requirements from 1 January 2021.

Meanwhile, several regulatory developments will take effect from 30 June 2020 in the USA. These relate to the Securities Exchange Commission’s (SEC) Regulation Best Interest (Reg BI) initiative requiring advisors to act in the best interest of retail customers, which is to be regulated by the Financial Industry Regulatory Authority (FINRA). The other important change is that the CFP Board will commence formal enforcement of its Ethics and Standards of Conduct that became effective in October 2019.

“All of the new compliance obligations have a single focus. To ensure better consumer outcomes and to help lift trust and confidence in the financial services sector” said Dr Ray McHale, CEO. “That being the case, it follows that clients deserve to have a say about whether their adviser/broker has complied with the new obligations. They should be asked about their experience of working with their advice provider because the feedback, when combined with other evidence, can authentically validate if compliance obligations have been adhered to and expected outcomes achieved” he continued.

The capacity to be able to mitigate client complaints using authentic and contemporaneous client feedback is also an important consideration in the current environment.

MyNextAdvice is a cloud-based service that enables advice businesses to understand their client’s experience, identify growth opportunities and pain points, and apply lifetime value calculations to predict future profitability of client relationships. Businesses can then quickly implement recommended strategies to address performance issues and adopt a client centric, continuous improvement model.

“We fundamentally support client-centricity and have been measuring many of the values that underpin the new compliance obligations, such as trustworthiness, honesty, integrity, competence, diligence and best interests, for a number of years. So, it makes a lot of sense that we leverage our expertise and experience to enhance our current services so our users can generate specific data to demonstrates their compliance.” Dr McHale said.

The MyNextAdvice platform is well positioned as a true business improvement solution that supports the key goals that all advice businesses pursue; namely, growth and compliance.

From a growth perspective, MyNextAdvice uses intellectual property developed over a number of years to measure the strength of client relationships based on a range of factors that are proven to impact outcomes such as trust, satisfaction, retention and advocacy. “Understanding the individual strength of each client relationship, as well as collectively, is critical in an increasingly competitive and changing environment. Both financial planning and mortgage broking were once very transactional industries driven by the sale of product, but that has now changed and they recognise the value of ongoing client relationships. After all, the value of each relationship aggregated across the business defines the value of the business.” McHale added.

Although many licensees are well advanced in their preparations for the new compliance obligations, much of this has focused on updating systems and processes to ensure the capture of specific activities during the advice or loan process. The universal acceptance that clients also have a key role to play is less evident.

“Some have a policy of consistently seeking client feedback, but this often involves measuring surface level metrics like NPS which is not well suited to the new compliance environment and lacks the explanatory power to identify what the next steps should be. Some others may use mystery shopping, which can be quite expensive, while the remainder don’t yet do much at all to gather feedback.” said McHale.

Most client feedback services are severely constrained by their inability to provide actionable insights for improved performance. “While they tend to have good front end capabilities to collect data and provide some reporting, users frequently tell us that this causes a great sense of frustration and powerlessness because there is no clear guidance on what the results mean or what the definitive next steps should be” Dr McHale continued.

MyNextAdvice does not monetise the data it collects. All client feedback remains confidential to the user because it’s important that broker/advisers see feedback as a business improvement opportunity. “But we do believe in the power of data to illuminate performance and, as part of that, we create internal and anonymised external benchmarks to help our users identify best practices and improvement opportunities associated with key elements of client relationships and compliance obligations” said Dr McHale.

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