The Financial Planner Article
do you earn a maximum monthly commission of R80, what clients expect of you?
The Financial Planner Article explains more about how financial planners are advising clients on healthcare. They also have many stakeholders with different requirements and expectations. This article serves to address what is expected of you from the various role players in return for the monthly commission payable.
Healthcare brokers are regulated in terms of the provisions of Medi- cal Schemes Act 1998. The Financial Advisory and Intermediary Services Act (FAIS) of 2002. These Acts require accreditation with the Council of Medical Schemes. They also require approval as an authorised financial services provider with the Financial Services Board.
In order to give advice on healthcare and medical schemes, an advisor has to meet the requirements as set out in the FAIS Act and to ensure that they are licensed correctly and to have a valid FSP number. A healthcare broker therefore has to comply with both the requirements of the FAIS Act and the Council of Medical Schemes and can be held accountable by both the FAIS ombudsman and the Registrar of Medical Schemes.
The Council of Medical Schemes published a Broker Code of Conduct, Minimum Service Levels and Code of Ethics in February 2002 that it expected healthcare brokers to comply with. When the Policy Document on the Requirements for and the Process with Regard to the Accreditation of Health Care Brokers and Broker Organisations was published in March 2013, the reference to the Code of Conduct was removed from the Act since compliance therewith vests with the FSB.
The minimum service levels included the following:
- Interpretation and application of the scheme’s rules to the client’s situation and to explain any aspect of the Rules about which the client may be uncertain or ignorant.
- Analyse the client’s needs and advise which benefit option is best suited based on the client’s financial status and individual circumstances.
- Facilitate the relationship between the scheme and the client. This may involve:
- Making all reasonable efforts to resolve any problem which the client experiences with the scheme promptly and efficiently.
- Advising and assisting the client to gauge the impact any proposed or actual change in the scheme rules may hold.
- Making himself available to attend at least one meeting per year at the request of the client, in meeting between client and the scheme or its administrators to provide expert advice and support.
- Maintain complete and accurate records of all interactions, including key points of advice given and action taken from each interaction.
- Respond to client correspondence without delay, no more than 14 days from receipt.
- Return calls or faxes within 3 days unless on vacation/incapacitated in which case within 3 days of getting back to work.
- If absent for more than 1 week, make reasonable efforts to inform clients of absence
The code of ethics detailed the standard that healthcare brokers are expected to adhere to and this included that the advisor should:
- Act honesty, fairly with due skill, care and diligence in the best interest of his client and the integrity of the medical scheme industry.
- Compliance with all laws regarding broker activities and the conduct of business generally.
- No unfair discrimination.
- Fair treatment to all clients equally.
- Will not act in a way that undermines the Council of Medical Schemes, Medical Schemes Act, Registrar of Medical Schemes or encourage clients to flout or contravene the provisions of the law.
- Shall not exploit clients for own personal gain.
- Shall not give out false, inaccurate or misleading information.
- When communicating with clients or potential clients be respectful of their wishes.
- Take into account consequences for client when giving advice.
- Make clients aware of their rights and obligations.
- Maintain confidentiality of client before, during and after termination of the relationship, no discussions with any party regarding a client and the advice given.
- No communication, advertisement or announcement that is unfair, misleading or ambiguous.
- Avoid conflicts of interest.
The Financial Planner Article – Medical Schemes
A healthcare broker must apply for a contract with the registered medical scheme that they wish to work with. These contracts normally include provisions that the healthcare broker:
- Encourages the client to pay premiums, no collection of premiums by the healthcare broker themselves.
- Not to change the wording of any document. Not publish any material without consent of the scheme. Uphold the image reputation of the scheme, use electronic mediums professionally.
- Not to accept non-compliance, to conduct oneself in an ethical and distinguished manner, maintain confidentiality.
- Completes initial and ongoing product training.
- To be familiar with rules of scheme and benefit options.
- Ensure that they have the required skills and knowledge.
- Compliance with all regulatory and statutory requirements.
- Advise the scheme when CMS accreditation is no longer active.
The service that the scheme expects the healthcare broker to provide may also include:
- Introduction of members – solicit the enrolment of prospective members, recording of information, delivery of initial administrative forms, explanation to members, presentation of service and products to members, keeping concise and accurate records of enrolment of members.
- Interpret and apply the rules of the scheme to members individual situation and explain any aspect members
are unsure of. Facilitate relationship between the members and scheme, resolve problems, advise and assist any proposed or actual change, reply to members without unnecessary delay.
Most clients do not understand the complex healthcare environment and find the various options and terminology used by the schemes confusing. Perhaps their greatest need is in understanding how the various options work and assistance in making the right decision when choosing a scheme and an option within the scheme.
Clients may expect the following from you as their chosen healthcare broker:
- Clients will expect to deal with someone who is licensed and accredited correctly with all statutory bodies.
- They will expect you to be professional in all your dealings, to disclose conflicts of interest and to make the relevant introductory disclosures.
- They will expect you to respond timeously to any queries and to assist them in resolving any issues with the scheme.
- Clients will expect that you are knowledgeable about the schemes you represent in terms of the key statistics, benefit options, pricing and processes.
- Adequate disclosure of relevant material information, including disclosure of actual or potential own interests, in relation to dealings with clients as well as by the requirements for adequate and appropriate record keeping.
- Assist them in getting value for money and understanding the benefits on offer.
- Explanation of the application process, underwriting and membership acceptance.
- Unbiased, independent advice, in their best interest.
- To keep the client informed of their options and communication at year end revision time to evaluate the best option for the coming year.
The Financial Planner Article advise:
Provision for healthcare is important and expensive. For many families this cost is the first or second on their list of monthly expenses. Employing the services of a financial advisor who has expertise as a healthcare broker. This can ensure that their medical scheme choice is supported by sound advice, proper guidance as well as post sale support.
by Zoe Riley, CFP® Financial Advisor, Riley Financial Solutions(Pty)Ltd
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