Practice Guide for Financial Planners

Yesterday I talked about financial planning from investors' perspectives. Today I turn to the compliance issues faced by financial planners. Many IFA do not have a robust compliance system to ensure giving fair treatments to clients.

Last week FSA fined an IFA £63,000 for failing to properly apportion roles and responsibilities to its senior management and for not having systems in place to ensure that its advisers were trained and competent. Even FSA did not highlight any serious mis-selling cases of this firm, poor management had already been a subject of penalty.

In setting a compliance system for financial planners, an operating manual which incorporates all essential regulatory requirements should be prepared. But many firms (especially those not parented by large financial groups) do not put resources on this aspect.

Recently the Institute of Financial Planners of Hong Kong (IFPHK) has published the Practice Guide for Financial Planners. This handbook, which sets out the compliance issues in the six-step planning process, may provide very useful reference materials for the practising firms.

I appreciate the following merits of this handbook:

• Comprehensive - All essential regulations in HK in connection with financial planning are summarized there.
• Practical - A large number of examples and case studies are given to facilitate learning.
• Remindful - Tipping points and self-assessment checklists are included in each chapter.

I think this handbook can be used by financial planning firms for preparing their operating manuals and training materials.