Increase Insurance ROA Overview

The purpose of this RoA Insurance Increase guide is to help in the generation of a Record of Advice (RoA) in the New Advice Framework, utilising best practice principles. The guide is aimed at ensuring the document provided is compliant and produced in the most efficient means possible.

Risk Researcher Steps

Determine if the existing insurer can meet the new cover requirements

Your first task is to determine if the existing insurer can accommodate the new requirements for your client. In this demonstration the clients have increased their mortgage from $1,500,000 to $1,900,000 in order to renovate their home. Your advice is to increase their Death and TPD cover by the extra $400,000.

If the existing insurer can meet the new requirements, no further investigation is required.

Risk Researcher Restriction

Risk Researcher cannot give you the premium difference between what the client is paying and what they would be paying, since Risk Researcher only quotes on any amount as if it is all a new product. Therefore you will need to consult with the insurer to get the amount the client will need to pay extra for the increased insurance initially and for the whole amount in later years. These figures will be used later in the Fees/ Commission Disclosure section.

Model the changes in Risk Researcher

Select Client Menu > Comparison Tools > Risk Researcher > Scenario Index > Click on Create Scenario

Details > Personal Details

Check that the data has come through correctly from Key Details.

Details > Current Situation > Existing

In the Action column, find the row with the policy you are recommending have the increased cover. Change the action to Review. This is required any time you are providing advice on a policy.

If this is the first time you have changed this to Review, you will likely see this screen, which is used to help Risk Researcher complete the Replacement Policy advice screens. In this instance, because the recommendation is to maintain the existing policy, you can either click to specify which product the client has then click Link, or skip this by clicking on Cancel. (we recommend, though, that you get in the habit of linking the policy details)

Details > Current Situation > Cover Selection

The existing cover will appear here once Review is selected. Ignore this. No further action is required as no new product details are being sought.

Details > Current Situation > Global Options and Commission Structure

In both cases, no further action is needed.

Click Next

Premium Estimates > Review tab > Existing policy (in this case AIA Australia)

Scroll down to find the existing product, indicated by the pink row colouring.

Scroll to the right of the page to ensure that the existing policy still shows the tick in the Rec box to the right of screen.

This is important for later screens when we indicate that this product is to be varied.

Click Next

Premium Estimates > Policy Recommendations

In the Status column, amend it to Vary.

Premium Estimates > Policy Recommendations > Vary Existing Policy screen

Amend the Total Premium, Premium (Super) and Premium (Non-super) fields to reflect the information given to you by the existing insurer.

Click Save.

A policy variation row then appears, showing the just amended figures

For a recommendation of new product, you would amend the Commission disclosure via Actions > Fee Disclosure. Because Risk Researcher doesn’t know the new premium and the product is not new, XPLAN cannot automate the process here. Commission disclosure is handled for this RoA within the Advice Constructor.

Commonly you would also be selecting Actions > Replacement Advice, but again, this is not a replacement, so no replacement tables are needed.

Commencing the Advice

Important: The Record of Advice (ROA) Licensee Standard and the ROA Guide provides guidance to advisers as to when an ROA can be used to document further advice to existing clients and what must be included in an ROA. This also includes when a verbal ROA and written ROA is to be used and what in timeframes these documents need to be executed and/or provided.

Access the Advice Constructor Wizard

Select Client Menu > Wizards (NAF) > Advice Constructor

Name Your Scenario

Enter a Scenario Name and click on Create Scenario:

Entity Advice Selector Page

Select the Entities

Select the entity/entities the advice relates to.

Click Next

Entity Advice Selector Page

Type of Advice Documents

Select RoA stand-alone from the Advice Document Selector

Click Next

Introduction ROA

RoA Setup

Select the appropriate options to create your RoA.

Click Next

Scope of Advice

Verbal Advice

Make the appropriate notation if verbal advice was provided to the client and if the client requested a written copy of the RoA, if applicable.

Scope of RoA

Enter the scope of your Hold RoA, ensuring it is client specific.

Strategies Recommendations Page

Add the Increase Insurance Strategy

Within the Strategy Recommendations section, Click Add

Select the appropriate strategy for the client or partner and amend the Strategy Name to reflect your strategy. (Increase in this case)

Review the prepopulated text in the Description, Reasons and Risks and Consequences tabs, and tailor to your client’s circumstances.

In the Description text field, you will get a generic table for both Increase and Decrease. The above screen shot shows a partly edited Increase table.

Hint: it will be easier to edit this table in Post Merge as you cannot delete the unused table.

After amending the text in all 3 tabs, select Save

Click Next

Risk Recommendations Page

Defend the recommendation.

Risk Researcher Scenario

Select the relevant scenario from the drop down list.

Insurance Products Recommendation Reasons

Explain why the existing product was recommended.

Complete the Reasons text box.

Insurance Products Recommendation Consequences

Complete the Consequences text box.

Non-Approved Products

Note if the recommendation includes and Non Approved Products

Click Next

Additional Information Page

Understanding Series and PDS

Note how the Understanding Series and PDSs are to be provided to the client (if required). NB: While usually good practice to reference the Understanding Series, there is no Understanding Series reference for this strategy.

Note: in the above example, we would need to consider if the PDS for the product has changed since we last referenced it. Consider whether the existing product with AIA was recommended as a new, replace or hold recommendation in the relevant SoA. In this example, we will make reference to the AIA PDS as we might know it has changed since the last time it was referenced.

Click Next

Fees, Costs and Disclosures

Add any RoA Fees and Costs

Within the ROA Fees and Costs, Click Add

Add in the details on any Ongoing or Initial Adviser Service Fees, which are to be disclosed in the RoA, before clicking Save.

In this example, we will use this page to record at least 2 different disclosures:

1. The Upfront Commission on the extra premium the client will be paying,

2. The Ongoing Commission on the total ongoing premium amount the client will now pay in later years, and, if relevant

3. Any fees related to the advice.

• The Upfront Commission.

1. The amount of extra premium the client will be paying – as provided by the insurer.

2. The percentage of Item 1 which is paid by the client

3. The percentage of Item 1 on which upfront commission applies.

• The Ongoing Commission

1. The amount the client will be paying on the full cover in Year 2 – as provided by the insurer.

2. The percentage of Item 1 which is paid by the client.

3. The percentage of Item 1 on which upfront commission applies.

• Any fees related to the advice

Note: Whether this 3rd item is required depends on whether the client is paying a fee for the advice. In the above example, the client is paying an ongoing service fee that includes advice, at a review, of their insurance and investment position.

Additional Disclosures

Select any additional disclosures that need to be included into the RoA.

Click Next

Merge ROA

Merge from XPLAN

Merge out your RoA by selecting Advice Document.

Once the RoA has been generated, it will appear in the XPLAN notification envelope.

Post Merge Editing of ROA

Word Edits

Strategy Table:

Amend the text that wasn’t already amended. Highlight and delete the rows that are not needed.

Extra Product information:

• Remove the empty text, heading and table.

• Amend the Fee Disclosure Information

Perhaps amend the “Advice Fee” to better represent what the fee is.

Additional information:

Understanding Series – in this case, there is no Understanding Series, so either don’t select when in the Advice Constructor Wizard, or delete references here.

Information about your new product:

PDS reference: If you need to/choose to reference the PDS for the AIA Insurance (in this example), then note that you will need to show where on AIA’s website you can find the PDS. You could copy into the RoA the URL, then add some text on where to find the PDS:

Click on http://www.aia.com.au/en/individual/our-products/priority-protection-life-cover.html and then click on “Download PDS."

Table editing:

Make the required post merge edits to the RoA document, by updating the FSG / PDS Information.

Remove lines that are not needed and amend those you do need, such as the AIA PDS details - Version 17, Dated 16/12/2017 (from the first page of the PDS that is sourced from the URL you’ve just quoted).