Advocis unveils draft of best practices manual

(March 3, 2004) Advocis has released its new best practices manual, seeking commentary from regulators, organizational partners and members. The complete manual, with feedback incorporated into it, will be released in the fall.

“This comprehensive advisor toolkit takes a holistic approach to the advisor-client relationship, effectively elevating it from a transaction-focused relationship to one that places emphasis on the practical process of financial advice-giving,” says Donna J. Muirhead, Advocis’s vice-president of professional development.

“The implementation of such best practices inevitably protects not only advisors by reducing errors and oversights, but most important offers consumers a form of protection,” she says. “It instills confidence in knowing that as receivers of financial advice, they can expect and depend on the advice being of the highest professional standards.”

The manual includes commentary, real-life examples, checklists, templates and forms reflecting the issues raised in errors and omissions (E&O) claims, the ethical challenges identified by standard-setting bodies, legal cases and conduct hearings.

“Now that we’ve published best practices, there is now a set of standards out there,” says Roger J. McMillan, chair of Advocis’s best practices committee. “Future E&O deliberations are now going to refer to our standards as being the best professional standards.”

The goal of the team assembling the best practices manual was to “set the bar” for measuring professional standards and practices.

“The manual speaks to the ‘how-to’ aspect of compliance and was designed to provide a very practical everyday methodology based on the practice standards of the Financial Planners Standards Council,” says McMillan.

Reducing human error

“Ultimately we want to reduce the advisors’ exposure to E&O claims, thereby reducing their premiums and operational costs,” says Rick Johnson, Advocis’s director of practice advisory services.

He sees advisors using the manual as a checklist to reduce human error, comparing it to an airline pilot’s checklist. The next step toward implementation of this checklist will be introducing it to Advocis members.

Beginning this month, the association will launch a series of cross-country seminars to introduce the best practices manual to members and Johnson says the group is in the final development stages for a two-and-a-half-day workshop that walks advisors through the process of advice giving, using the manual as a textbook.

One of the challenges faced in drawing up the best practices manual was the fragmentation of the financial services industry.

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McMillan points out that the advisor can modify the template provided in the manual to suit their own business — regardless of product licence or compensation structure.

“It goes into several disciplines, including financial planning, investment management and insurance. In doing so, it fills a very large void in a fragmented and confused industry.”

The best practices manual is a compilation of best practices from various other sources which McMillan says “transcends the traditional best practice standards,” because the single designation practice is falling by the wayside.

“As you go through the multiple designation processes, it becomes evident that you find yourself guided by a plethora of codes of conduct and several versions of perceived best practices, each related to the particular accrediting body and many overlapping each other.”

To find out more about Advocis’s best practices manual, including how to purchase your own copy, please click here.

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What do you think of Advocis’s best practices manual? Share your thoughts about this latest initiative by Canada’s largest advisor association with your peers in the Talvest Town Hall on Advisor.ca.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(03/03/04)

Steven Lamb