Dover Practice Notes

  • March 20, 2018

    Practice Note 32: Recommending an Insurance Switch – Dover’s guidelines

    When reviewing a Statement of Advice (“SoA”) which recommends a product switch/replacement advice, our Compliance team will assess the appropriateness of the recommended switch against the following considerations: Due consideration of the existing policies What does this mean? Has this been effectively demonstrated? Before recommending advice to switch or replace a client’s existing product, a […]
  • February 7, 2018

    Practice Note 31: Best Practice Guidance on the ‘follow up’ process regarding ongoing clients

    What should you do? Draft a follow up letter We recommend that all clients be contacted at least once every six months and we have provided you with an example of how you should draft your contact letter. This is disclosed further below. You should, of course, modify the template below to suit your practice […]
  • January 22, 2018

    Practice Note 30: s923A of the CA – restricted words/terms

    ASIC adopts a strict position when it comes to the use of certain words and expressions relating to the independence of financial advisers pursuant to the Corporations Act 2001 (the Act). According to section 923A of the Corporations Act 2001 (the Act) financial service providers (both the AFSL and Advisers) can only use the restricted […]
  • January 5, 2018

    Practice Note 29: Top 5 tips for improving your SOA

    1. Proofread your advice While this tip sounds obvious, we have found through our reviews that it often gets overlooked.  It is important that you proof read your work to ensure you have included everything you wanted to say in your SOA and ensure that your SOA looks and sounds professional, while being easy for […]
  • December 20, 2017

    Practice Note 28: Let’s Talk About Bitcoin

    The following article was written by one of our advisers, James Melhuish of Money Works. We think it’s a well written original and thoughtful article. It seems like you can’t walk from one side of the street to the other at the moment without someone asking “have you heard about Bitcoin?” Well yes, we have. Thankfully […]
  • November 20, 2017

    Practice Note 27: Dover’s guidelines in relation to preparing a Record of Advice (RoA) – further advice

    RG 175 states that an SoA does not need to be given in the case of further advice. In scenarios where the advice is on the same basis as the original SoA and the client’s circumstances have not significantly changed, a further advice RoA may be prepared. It is however not always appropriate to prepare […]
  • October 25, 2017

    Practice Note 26: Are you providing credit advice?

    Dover holds an Australian Credit License (ACL) and is authorised to provide credit advice since the introduction of the credit licensing regime in 2010. However, Dover does not license any of its advisors to provide mortgage broking advice. Other credit licensees or aggregators (as they are commonly known) do this very well and Dover advisors […]
  • September 28, 2017

    Practice Note 25: FDS and Renewal Notices

    Since 1 July 2013, advisers have an obligation to provide a ‘Fee Disclosure Statement’ and ‘Renewal Notice’ to their clients if they are receiving an ongoing adviser fee. Four years on and some advisers still struggle with this requirement. I don’t blame them. It is hard for advisers and dealer groups to keep up with […]
  • August 29, 2017
  • July 17, 2017

    Practice Note 23: Hybrids and Subordinated Debt

    What are bank hybrid securities and what purpose do they serve?[1] There are 3 types of bank hybrid securities: Capital notes; Convertible preference shares; and Subordinated notes. These products are designed to be loss-absorbing products that provide a layer of security for the bank’s depositors at the expense of the hybrid investors. Warning If the […]
  • February 9, 2017

    Practice Note 22: Dover’s compliance processes for SOAs

    Dover’s advisers know how seriously Dover takes its SOA review process. 100% compliance is a must, with a particular emphasis on the advice being in the client’s best interests and appropriate to the client, and an assumption that the client is conservative unless the client says otherwise and a reasonable financial planner would agree. Dover […]
  • February 9, 2017

    Practice Note 21: Dover’s policy on annuities

    Over the last few weeks we have reviewed several SOAs recommending annuities to clients. They have all been similar. The idea is a (very) conservative client concerned about the risk of losing capital pays say $500,000 to a life office in return for a fixed payment for life of say $20,000 a year. Variations are […]
  • February 7, 2017

    Practice Note 20: Why paying off non-deductible debt is always the best investment

    Non-deductible debt is expensive debt. Non-deductible debt should always be paid off as a priority over any other investment. If your client earns more than $180,000 a year they face an effective marginal tax rate of 49%, made up of 45%, plus a 2% Medicare Levy and a 2% Temporary Budget Repair Levy. This means […]
  • February 6, 2017

    Practice Note 19: Avoid an excessive number of low dollar value shares

    Dover encourages direct share investments. In a post FOFA fee for service environment the first step in creating a viable and sustainable fee for service practice is to actually provide the service, not refer it off to someone else. In this context “the service” includes regular advice on specific share investments, with an emphasis on […]
  • January 20, 2017
  • January 19, 2017

    Practice Note 17: Advising on direct shares

    Dover encourages advisers to recommend clients invest directly into the share market where it is appropriate to the client and in the client’s best interests. The first step in creating a fee for service based practice is to actually provide the service, and not merely refer the client to a fund manager who then provides […]
  • January 19, 2017

    Practice Note 16: ASIC case studies of poor advice

    ASIC is notoriously quiet in providing advisers with examples of good financial planning advice. This is a pity, because ASIC examples of good financial planning advice would help create a benchmark for advisers; a minimum standard they had to meet to ensure their advice was in the client’s best interests, was appropriate to the client […]
  • January 19, 2017

    Practice Note 15: SMSF gearing strategies

    ASIC has expressed concerns regarding certain strategies involving SMSFs borrowing to buy residential property. The concerns focus on the appropriateness of the advice to the individual client’s circumstances and, in effect, whether the strategy is in the client’s best interests. All SOAs have to be approved by Dover’s compliance team and MLA Lawyers before they […]
  • January 19, 2017
  • January 16, 2017

    Practice Note 13: Your client’s risk profile

    Advisers will be aware Dover discourages risk analysis questionnaires. Our thoughts are detailed in our Friday Reflection dated 23 December 2016, which you can read here: The Pitfalls of Risk Analysis Questionnaires. You should read this Friday Reflection before you read this practice note. State the facts: clear, concise and effective Dover discourages risk analysis questionnaires […]
  • January 16, 2017

    Practice Note 12: Maintaining a minimal balance in an old super fund for insurance benefits

    Advisers often recommend clients retaining a minimal balance, say $10,000, in an old super fund when transferring benefits to a new super fund. The purpose of retaining this minimal balance is to retain the benefits of life, TPD and risk insurance in the old fund. For example, a client may have $400,000 with an industry fund, […]
  • January 12, 2017

    Practice Note 11: Personal assets are not assets for financial planning purposes

    A perennial problem involves clients insisting their personal assets such as cars, furniture, white goods, favorite CDs from the seventies, and so on, are assets for financial planning purposes and should be included in the client’s summary of financial position.The client’s preferred position may look like this:Table summarising financial positionHome$600,000Super (CARE)$40,000Cars (cost)$36,000Household effects (cost)$100,000Total assets$776,000Home […]
  • January 11, 2017

    Practice Note 10: Risk insurance SOAs and an insurer’s claims management reputation

    Most financial planners were shocked to learn about Comminsure’s claims management strategies. These have been well chronicled, in particular by Adele Ferguson and others from the “Money for Nothing” expose, which featured on the ABC’s 7.30 Report, and elsewhere, in March 2016. This prompted Dover to introduce extra training for advisers to alert them to the […]
  • January 11, 2017

    Practice Note 9: Why vulnerable clients need extra TLC

    Dover’s practice notes are intended to help advisers understand what comprises good advice. Sometimes the best way to understand what comprises good advice is to look at an example of poor advice, and consider what should have been done if the advice was to be truly in the client’s best interests. To be in the […]
  • January 9, 2017

    Practice Note 8: A rule of thumb for advising normal risk insurance clients

    Financial planners must ensure their advice  is in their client’s best interests, is appropriate to the client, and prioritises the client’s interests. We explain the legal basis for these concepts, and how in practice they merge into one simple “best interests duty” to ensure your client is better off as a result of your advice […]
  • January 8, 2017

    Practice Note 7: An explanation of the best interests duty

    Background Financial planners have always been required to act in their client’s best interests and in a way that is appropriate to the client and prioritizes the client’s best interests over the adviser’s interest. Their obligation to do so is a fundamental feature of the Common Law duty of care owed by a professional to […]
  • January 4, 2017

    Practice Note 6: Dover and reverse mortgages

    Dover believes reverse mortgages should be considered where appropriate for the client and will in many cases be appropriate for older clients struggling to get by on the old age pension who have reasonably large amounts locked up in their family home. Dover encourages advisers to see reverse mortgages as a planning tool for older […]
  • January 4, 2017

    Practice Note 5: Why Dover does not allow investments in gold

    It not uncommon for an adviser to suggest a client invest in gold, in one form or another. The SOA comes through to the SOA review team, they identify the offending suggestion, observe gold is not on Dover’s approved product list, and refer it through to Terry McMaster as the Responsible Manager for a determination. […]
  • January 4, 2017

    Practice Note 4: Can a client have more than one investment risk profile?

    Just before Christmas we posted a long overdue Friday Reflection dealing with Risk Analysis Questionnaires. It prompted a number of advisers to ask whether we thought a client’s superannuation investment risk profile could be, or even should be, different to their non-superannuation investment profile. One adviser thought a good example was a young couple saving/striving […]
  • January 4, 2017

    Practice Note 3: A very long term strategy for a very intelligent client

    Our thoughts on financial planning for doctors have always been about getting the next generation set up, with control and choice over how they live their lives. It’s now moving on to the generation after that. This is an extract from a recent piece I wrote: Some thoughts The Australian property market has averaged 10.5% […]
  • January 3, 2017

    Practice Note 2: Kick starting a new SMSF practice

    An adviser called in for a meeting. He is from interstate and was literally staying around the corner enjoying our beautiful Black Rock beach summer environment. He did not have an appointment, but we were happy to see him and went for a coffee at a nearby café. He works from home and has been […]
  • January 3, 2017

    Practice Note 1: Handling a claim involving non-disclosure of a health condition

    An adviser rang in to say a new client had developed a health condition and was unlikely to work again. The client had life, TPD and income protection insurance with a bank insurer arranged by a bank financial planner some six years earlier. The Dover adviser helped the client lodge a claim for income protection […]

Disclaimer: This is a Dover Practice Note and is intended to be for information only. While it seeks to provide practical assistance and explanation, please note the guidance and examples in this Practice Note do not constitute legal advice.

The Dover Group