As many dealer groups  are in the midst of adopting 515 product research into advice production, we thought it would be useful to share some of our key learnings here. We as a business had to adopt 515 research a few years ago (2018) and the process to learn at the time was challenging to say the least! However after many thousands of SoAs, we have broken our process down into a simple format and have condensed our learnings as follows:

Learning #1:

Always compete your product research first – the last thing you want is to be 3-4 days into your advice production process and then realise an alternative platform / product comes out looking more attractive to your client. This leads to delays in production as well as increased costs from reworking the advice and sections of the SoA. Completing your research first ensures the rest of the advice production process runs smoothly and to time.

Learning #2:

How many product comparisons are required? We have found that regulators and compliance essentially want to identify if the client is losing out in anyway as a result of product recommendations

Recommendation No. of alternative products required
Retain / Rebalance None, assuming ‘Platform review’ has been scoped out
Rollover / Transfer Current (like-for-like), Recommended, and an alternative on the APL*
*If the current platform is not on the APL, then 2 alternative platforms need to be considered

Learning #3:

What constitutes a correct like for like comparison? This was a tricky one for us initially as well. The basic concept is to identify what the costs would have been to the client, if the recommended portfolio was implemented within the client’s existing platform.

The issues arise when trying to rebuild the client’s recommended portfolio within their existing platform – as not all the recommended funds are available within these platforms. Our team, therefore, runs through the following decision making process:

  • Is the recommended investment option available within the current platform – if so great! In the event it is not however, we would need to swap the recommended investment option with another investment within the existing platform, which is:
      • Invested in the same asset class mix
      • Invested within a similar investment style – active/passive

Learning #4:

What constitutes compliant product recommendations based on 515? The biggest compliance focus points we have found were the following:

  • Is there a significant increase in ongoing investment fees as a result of moving the client’s account?
  • Are there significant buy / sells cost or tax implications when selling down the client’s existing investment?
  • Will the client be losing any significant benefits within their existing platform  – insurance, untaxed components, beneficiary structures, etc?

In the event that any of the above are answered yes, there needs to be substantial reasons / benefits for the client to proceed with the product change.

We hope the above learnings have been useful to you! Do you have any additional takeaways from your 515 journey? If so – we would love to hear back from you!

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