Alternative Products within SoA’s are still a little confusing as to when they are needed, therefore we have created a few examples of when alternative product scenarios are required.
Replacing a full service wrap (Client seeks advice of their current full service ‘XYZ’ Wrap)
Currently the adviser;
Investigates the existing product
Considers the client’s needs, objectives and preferences to costs and features
Then determines that another full service wrap product would be more appropriate
Before recommending a replacement to determine which product to recommend, the adviser must;
Complete a detailed comparison for the existing product and
Two other full service wraps
Therefore, please provide two alternative products within our SoA Manager/Order Agreement/Alternative Strategies and Alternative Products section and we will produce the comparisons on your behalf (at no extra charge)
Recommending switching from Super to pension
Recently retired client, the adviser provides advice to move to pension;
Client currently holds an existing ‘XYZ’ Super Fund
The adviser first investigates the existing product provider’s pension option to determine whether it meets the client’s needs
After considering the client’s preferences to cost and features, goals and objectives the adviser determines that moving to a Pension Fund in the same platform is appropriate to recommend.
Important to note;
All investigations including reference to other research process are evidenced on the client file
The adviser is not required to investigate alternatives as the existing provider’s equivalent pension product is appropriate and does not pay commissions.
Clients wants to consolidate three super funds (two industry funds and one Wrap)
The adviser first needs to;
Consider the goals and objectives
Preferences to costs and benefits
After deciding the Wrap product would be more suitable. Best Interest Obligations Licensee Standard requires an adviser to also investigate and compare another Wrap product. In the SoA, the adviser needs to;
Show evidence of the investigation recorded on the client file
Clearly reflect the cost comparison in the replacement table
Show the alternatives considered
And the reasons why they were discarded were noted in the alternatives section of the SOA
Therefore, please provide two alternative products within our SoA Manager/Order Agreement/Alternative Strategies and Alternative Products section and we will produce the comparisons on your behalf (at no extra charge).
Pension refresh into the same product – client with existing Transition To Retirement (TTR)
If the client has an existing TTR strategy and the adviser determined that it would be appropriate to complete a TTR refresh and the existing products remain suitable for the client.
Important to note; as the existing super and pension fund is being retained and does not pay commission, a detailed comparison with alternative products is not required.