I’ve heard a lot about ‘risk’ in recent weeks when it comes to DDO. However, it’s important to remember that ‘risk’ isn’t an amorphous grey blob, it’s a number of issues, each with different likelihood, significance and mitigants.
So, let’s talk about risk baby…
Risk isn’t one thing.
‘Risk’ would have to be one of the most overused, and misunderstood terms in financial services.
For instance, when it comes to investments, when we say ‘risk’, we’re really talking about volatility. And ability to bear losses.
So when it comes to DDO implementation, let’s have a look at the risks issuers and distributors are currently facing:
1 – not being ready in time. Likelihood: medium but decreasing*. Impact: medium (assuming you’re not on ASIC’s radar or course). Mitigants: get on it team! But remember that 5 October 2021 is the start date, not the end date. Don’t spend too much time trying to imagine what might happen in the future and building for every eventuality (Q: exactly what IT do we need for sig dealings? A: probably none to start with!) but do make sure that you have the systems and processes in place and ready to roll.
*well I HOPE it’s decreasing because you’re getting organised…
2 – not realising there’s a sig dealing or other review trigger brewing. Likelihood: low. Impact: severe. Mitigants: use Wattletree to understand your customer base, differences between distributors and get forward notice if something is going sideways.
3 – not asking questions up front when a new customer tries to buy a product. OK team, is this actually a risk? I say no. Here’s why… Let’s say that a little old lady buys your product. Is this a problem? In itself, no. If lots of little old ladies buy your product (assuming your target market isn’t little old ladies) then YES, that’s potentially a major problem. But because you’re using Wattletree, you find out long before it’s become a regular occurrence, and you take action to position your product differently.
4 – relying on adviser attestations. Most people put this in the solution bucket, not the risk bucket! But I’m not so sure. It’s not the good advisers you need to worry about, it’s the less-than-competent or occasionally, the bad apple. Given that they will probably all attest that the client is in the target market, how are you reducing risk for your business? There is only one way to attest who your product is ACTUALLY being sold to and in turn, help hold these apples to account when it matters (hint, it’s Wattletree).
5 – look, I’m sure there are lots of other risks to think about. My point is that you need to consider each risk individually, and decide what to do about it. DDO is a great opportunity to do things differently, don’t let it go to waste!
If there’s a burning DDO question that no-one seems to have a good answer to, or you just need to understand how Wattletree works in more detail, please get in touch. I invite you to shoot through your Q’s using the below form or alternatively you can call me on 0417 970 818. There’s no such thing as a silly question*
*OK, we all know that’s rubbish but you know what I mean!