Use of general research for advice 'under challenge'
The days of relying on general research from research houses for the provision of advice is "under challenge right now" from the Australian Securities and Investments Commission (ASIC), according to research consultant Rob Mcgregor.
"ASIC is no longer going to accept outdated research, and a basic subscription to a research house is no longer going to be enough to satisfy the regulator, McGregor said at the Association of Financial Advisers conference.
This is because the regulator is "now really focused on the quality of research and due diligence that goes into recommending a product to a client", he said.
Stating there is a "real disconnect between advisers and research in regards to investment advice", McGregor added that "the days of getting a research report and sitting on it are gone".
He added that if the word 'monitoring' is used in a Statement of Advice, thereby giving clients the impression you are monitoring a recommended product, advisers will need to put every effort into actually monitoring that product.
In addition, McGrgeor said "methodologies around portfolio construction" used by advisers are areas that ASIC is "looking hard at now".
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