Stage 2 - Discovery

Chapter 6

Fact Find

The Affinia Fact Find or another approved fact find must be used for all clients to ascertain their needs, goals and objectives and determine what service or advice they are seeking.

To show you have acted in the best interests of the client you will need to show that you have completed reasonable enquiries into their circumstances. What constitutes ‘reasonable enquiries’ will differ from client to client and you will need to use your judgement to determine what the client’s relevant circumstances are.

Some factors that you should take into account when determining whether you have made reasonable enquiries include:

  • If the advice is scaled: if the client is seeking scaled advice there may be some sections of the Fact Find that are not relevant
  •  Subject matter of the advice: if the advice the client requires is complex or involves complex financial products you may need to make a broader range of enquiries
  • Financial literacy of the client: if it is apparent that your client has a low level of financial literacy you may need to make additional enquiries
  • Incomplete or inaccurate information is provided: if the information the client provides appears to be incomplete or inaccurate the Representative must make reasonable enquiries to obtain compete and accurate information.

When conducting the Discovery process with clients remotely, please refer to the Affinia remote advice procedure in the documents and links section of this chapter.

It is better to obtain too much information rather than not enough 

Below is a comprehensive example of establishing goals and objectives and matching these with a client’s advice needs. This approach results in determining the scope of the advice and the advice journey for the client.

Goals Matrix

 

ASIC 515 Consideration

 Key Issue Considerations
 

Making inquiries where information is incomplete or inaccurate: s961B(2)(c)

Note: This is a safe harbour step.

 

Where there is incomplete or inaccurate information (including inconsistent information) about the customer’s relevant circumstances, the adviser should clearly demonstrate what steps they took to obtain or clarify information.

Advisers should use their knowledge, skill and judgement to identify incomplete or inaccurate information that is required to provide the advice sought by the customer on that subject matter.

In some cases, where the information is incomplete or inaccurate, the adviser should consider whether they should decline to provide advice.

Agree the Client's Needs, Goals and Objectives and The Scope of Your Advice 

The final step in the Discovery stage is to agree with your client what their needs, goals and objectives are, and what the exact scope of your advice will be.

The following should be agreed with the client in writing before you begin Stage 3 – Analysis:

  • The Cllient's needs, goals and objectives
  • Their timeline to meet these
  • The scope of your advice

At first glance some of the client’s needs, goals and objectives may be conflicting, or may relate to different stages of their life. It can be useful to map their stated needs, goals and objectives against a timeline to determine which have the highest priority both now and at future stages in their life.


ASIC 515 Considerations

Key Issue Considerations

Identifying the customer's objectives: s961B(2)(a).

Note: This is a safe harbour step

Personal advice should ensure that a customer’s objectives are specific, measurable and prioritised: see RG 175.218(c). These objectives may include, but are not limited to:

  • Cash flow management and budgeting
  • Debt reduction or repayment
  • Building savings and wealth
  • Superannuation advice
  • Planning for retirement
  • Personal insurance advice
  • Investment of a lump sum

The reasons or objectives that prompted the customer to seek advice should be clear and recorded in the customer’s
own words. Both the customer file and Statement of Advice (SOA) should clearly explain why the customer is seeking advice and the outcomes the customer wants to achieve.

If a customer file and SOA are based on pre-determined or leading instructions, and questions from a ‘fact find’, this does not allow each customer’s relevant circumstances to be taken into account and is likely to result in advice that does not reflect the customer’s relevant circumstances.

Key Issue

Identifying the customer's financial situation and needs

Note: This is a safe harbour step

 The adviser should identify, discuss and document all relevant aspects of the customer's financial situation and needs, such as:
  • Their financial position (i.e. income, expenses, assets and liabilities)
  • Their personal circumstances (i.e. age, relationship status and family situation)
  • Their health status
  • Any foreseen changes to their personal or financial position (i.e. inheritance, home renovations, divorce, new baby, sale of business, retirement, redundancy, job or career changes)
  • Any existing insurance arrangements (including insurance held within their superannuation fund)
  • Their insurance needs and the relative priority of those needs.

The customer’s financial situation and needs should be recorded in the customer file (e.g. in a fact find or file note summarising the conversation) and summarised concisely in the SOA to the extent that this information provides the basis of the advice given.

Determining the Scope of Advice and Scaled Advice

Scaled advice is advice where the scope of the advice has been limited in some way.

Determining the scope of advice is arguably the most important part of the discovery process. It is here that the client and you, as their Representative, determine what services and advice the client is seeking. You must use the Fact Find to determine the subject matter of the advice the client is seeking before you can determine the scope of the advice.

The scope of the advice provided must allow you to provide advice that is in the client’s best interests in the context of their needs, goals and objectives.

The Affinia Scaled Advice Scenarios and Objectives Matrix can help you in this step.


Scaled Advice Scenarios

Do you have the right qualifications, experience and Affinia Authorisation?

Once the needs, goals and objectives and the scope of the advice have been agreed, you must consider whether you have the right qualifications and experience to provide advice that will be in the best interests of the client.

Before you can provide advice in some areas the Representative must get specific authorisation from Affinia. The table below shows what authorisations are required to provide which types of advice.


Risk Adviser & General Advice - Risk Associate Adviser & General Advice - Risk + Super only Financial Planner - Risk + Super + Managed Investments Practice Authorised Representative
Minimum educational competencies RG146 Specialist requirements – life insurance RG146 Specialist requirements – life insurance and superannuation Diploma of Financial Planning (ADFP) or equivalent industry related degree / CFP + industry accreditation re SMSFs & Margin Lending RG146 Specialist requirements – life insurance
Products Risk Risk, Superannuation (no investment advice) Risk, Investments and Superannuation utilising full managed fund APL and portfolio construction Authorisation to deal and arrange ONLY – not authorised to provide any advice.
Margin lending No No No – Unless separate authorisation is provided based on competency No
Gearing No No No – Unless separate authorisation is provided based on competency No
Tax effective investments and structured or complex products No No No – Unless separate authorisation is provided based on competency No
SMSF (set up of SMSF, ongoing advice on SMSF portfolio, advice on Insurance, advice to wind up an SMSF) No No No – Unless separate authorisation is provided based on competency No
Direct equities, ETFs and Listed Securities (utilising approved broker and research) No No No – Unless separate authorisation is provided based on competency No
Estate Planning (providing advice and assistance) No No No – Unless separate authorisation is provided based on competency No



ASIC 515 Considerations

Key Issue Considerations

Assessing the adviser's expertise s961B(2)(d)

Note: This is a safe harbour step.

Advice reviewers should make an objective assessment about the competence and experience of the adviser. This includes consideration of the adviser’s authorisations, education, experience and memberships as recorded on ASIC’s financial advisers register.

If the adviser is not trained or authorised to provide the advice sought by the customer on that subject matter, they should decline to provide the advice.

Strategy Development

Strategy Development

Section Three - Advice Handbook

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