Why are File Notes so important?

Why are File Notes important in the financial advice process?

Because they help tell the story of the client and adviser journey, and make it possible to assess if the advice is appropriate and in the client’s best interest.

For example, a client (licensee) of Fourth Line recently lodged a SOA, Fact Find, and Files Notes for review by the Fourth Line system.

The licensee’s Compliance Manager was verbally informed by the adviser that …

“The client was cancelling their personal insurance cover as they were not willing to reduce the cover and had serious health issues, so replacement cover was not possible.”

The Fourth Line system was able to determine this was not actually the case based on the file notes provided. In fact, the files notes contradicted this statement to a significant degree.

Sure, files notes can be tailored to suit the narrative being put forward by the adviser, but often the advice issues discovered by Fourth Line are advice process issues, not malicious intent issues.

In this case, the adviser followed the correct advice process in recording contemporaneous details in files notes, although the communication with their licensee was a little confused because of the exact nuances of the facts of the case in question.

When evaluating the appropriateness of advice against legislative, regulatory, ASIC interpretations, and AFCA determinations, the importance of contemporaneous files notes cannot be understated.

The lack of files notes is just as critical a factor as it means the advice within the SOA may not be able to be properly corroborated, which can then lead to exception flags and advice warnings.

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Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs. 

For information email: info@fourth-line.com.au