{"id":640,"date":"2015-08-13T11:02:41","date_gmt":"2015-08-13T01:32:41","guid":{"rendered":"https:\/\/fwgs.net.au\/?p=640"},"modified":"2015-08-13T13:01:59","modified_gmt":"2015-08-13T03:31:59","slug":"the-documents-part-3-needs-analysis-introduction","status":"publish","type":"post","link":"https:\/\/fwgs.net.au\/the-documents-part-3-needs-analysis-introduction\/","title":{"rendered":"The Documents Part 3 – Needs Analysis (Introduction)"},"content":{"rendered":"

Under the Future of Financial Advice (FoFA) Reforms, there is a specific requirement under law to act in the best interests of your client when providing personal advice (\u2018the best interests duty\u2019).<\/p>\n

The new requirements have been introduced with the aim to improve the quality of advice and ensure that the advice you give is:<\/p>\n

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  1. appropriate for the client;<\/li>\n
  2. in the client(s) best interests; and<\/li>\n
  3. that the client(s) priorities rank ahead of your own<\/li>\n<\/ol>\n

    Prior to the FoFA reforms, responsibility for the advice given by advisers previously rested with the licensee. Under FoFA, each individual adviser (i.e. not the licensee), will be responsible for the advice they give and may face civil or administrative sanctions should they breach their obligations under the law.<\/p>\n

    Acting in the client\u2019s best interests<\/strong><\/h4>\n

    You need to demonstrate<\/strong> that you have acted in your client\u2019s best interests when you give personal advice. To do so you need to demonstrate that you have satisfied each of the following:<\/p>\n

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    1. that a \u2018reasonable advice provider\u2019 would conclude that the client would be likely to be in a better position as a result of your advice; and<\/li>\n
    2. that you have complied with the safe harbour steps.<\/li>\n<\/ol>\n

      When administering the law, ASIC will ask whether a \u2018reasonable advice provider\u2019 would believe that the client is likely to be in a better position if they follow your advice.<\/p>\n

      Safe Harbour Steps<\/strong><\/h4>\n

      Complying with the seven safe harbour steps will assist you demonstrate that you have acted in the client\u2019s best interests under law. The Needs Analysis document demonstrates that an advisor knows their client<\/strong> which satisfies the first three ports of the safe harbor.<\/p>\n

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      1. Identify the client\u2019s circumstances through client\u2019s instructions<\/li>\n
      2. Identify from the client\u2019s instructions, their objectives, financial situation, and needs. Where possible, try to capture this information in the client\u2019s own words.<\/li>\n
      3. Identify the subject matter of the advice and the client\u2019s relevant circumstances<\/li>\n<\/ol>\n

        Safe Harbour Step 1 is detailed in the next article.<\/p>\n

        Other articles in this series<\/h5>\n