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Why a Record Of Advice?
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In terms of the Financial Advisory and Intermediary Services Act (FAIS) a financial
services provider must maintain a Record of the Advice (ROA) and to furnish this
ROA to you, the client, which reflects the basis on which my advice and recommendations
is given.
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What is Advice?
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Advice means any recommendation, guidance or proposal of a financial nature, by
any means or medium, given to any client or group of clients on financial products
with the intention of getting the client to consider:
- Purchase of a financial product, or
- Investing in a financial product, or
- Any transaction in relation to a financial product, including a loan or cession,
aimed at incurring liability or acquiring rights/ benefits in any financial product,
or
- Varying, replacing, terminating or investing in a financial product, or
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This applies irrespective of whether or not such advice:
- Is incidental to the financial planning affairs of a client, or
- Results in any transaction, purchase, investment, variation, replacement or termination
being affected.
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What Advice is NOT Advice?
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For the purpose of FAIS, advice does NOT include factual advice given:
- On the procedure for entering into any transaction relating to a financial product
- In relation to the description of a financial product
- In response to a routine administrative inquiry
- Relating objective information about a financial product
- Any promotional material
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Advice Also Excludes General Information
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In terms of FAIS, advice also excludes:
- An analysis or report on a financial product without any express or implied recommendation
as to its suitability for a client
- Advice given by a board member or management, of a pension fund organisation or
friendly society or trustees or board member of a medical scheme to its members,
on the benefits enjoyed or to be enjoyed by such members.
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The Record of Advice as Evidence
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The ROA will be a crucial document that a financial advisor can submit to the FAIS
Ombud to should a dispute arise.
The ROA effectively lays out a trail of the transaction/s with the client, disclosures
made to the client and the information that the advice was based on at the time
that the advice was given.
It would be one of very few documents that would play a crucial role in determining
the outcome of any complaint.
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