Praemium Ltd · ASX:PPS

Praemium — SMART Compliance — Conference Presentation (March 2010)

20 slides from Praemium's conference presentation, March 2010

  1. Slide 1: Strengthen your core business and outsource the rest

    Session 7A - Strengthen your core business and outsource the rest Brett Walker Director SMART Compliance www.smartcompliance.com

  2. Slide 2: Agenda

    Agenda • What is your core business? • What should (or could) be outsourced • What shouldn’t (or can’t) be outsourced • Implications for your business • Monitoring your ESPs • Q&A

  3. Slide 3: So, what exactly IS your core business

    So, what exactly IS your core business • Are you in the business of: • helping others achieve their financial goals? • managing investment portfolios? • growing your client/recurring income base? • something else • This might be your Head Space/Passion

  4. Slide 4: Pity you can't just do that all day, isn't it?

    Pity you can’t just do that all day, isn’t it? • Harsh reality of business life: • Running an office • Employing/motivating people • Complying with ASIC/FPA/AFA etc. • Non-core can be a bore.

  5. Slide 5: Decision time

    Decision time • So, how much time do you want to spend on your core business compared to “the rest”? • A rhetorical question I know • The obvious solution is to outsource and we all do it already most of the time anyway • BUT (drum roll) HOW best to outsource?

  6. Slide 6: What should (or could) be outsourced

    What should (or could) be outsourced • Commercial imperatives Time v. dollar cost (value for money) • Legal imperatives Liability shifting, risk mitigation • Regulatory imperatives ASIC world view – what and how to outsource

  7. Slide 7: Commercial drivers

    Commercial drivers • To do or to spend (bang for your buck) • Trusted outsource partners (“black box dilemma”) • Maintaining control • Exit strategy

  8. Slide 8: Legal realities

    Legal realities • Cannot outsource legal risk per se • FOS determination 18959 (Basis) • Privacy and confidential information • SIS Reg 4.16 – material outsourcing agreements (see ASIC’s RG2.168 below)

  9. Slide 9: SIS Reg 4.16 as a guide

    SIS Reg 4.16 as a guide A material outsourcing agreement must: (a) be in writing; and (b) state the commencement date of the agreement; and (c) contain default arrangements and termination provisions; and (d) provide for dispute resolution; and (e) contain liability and indemnity provisions; and (f)

  10. Slide 10: Regulatory issues

    Regulatory issues • ASIC RG2.166-169 • ASIC expectations – RG2.168 • ESP selection • ESP monitoring • ESP damage control

  11. Slide 11: RG2.168

    RG2.168 RG 2.168 If you are going to outsource any of your activities under your AFS licence (whether or not within your corporate group), we expect that you will have appropriate processes in place to ensure that you: (a) have taken due skill and care in choosing a suitable service provider; (b) wi

  12. Slide 12: AFSL outsource ideas

    AFSL outsource ideas • Research • Systems (CRM, portfolio management) • SOA preparation • Risk profiling • Compliance management • Training • Book keeping • Call centres • Document storage • Tax, legal expertise • Non-core financial services expertise • Credit expertise

  13. Slide 13: What shouldn't (can't) be outsourced?

    What shouldn’t (can’t) be outsourced? • Reasonable basis (KYC, KYP) • Legal responsibility for your core functions • Legal responsibility for your representatives • Licensing obligations

  14. Slide 14: Making outsourcing work

    Making outsourcing work • RG2.168 • ESP selection • ESP monitoring • ESP damage control • We need a tool kit for each

  15. Slide 15: ESP selection

    ESP selection • ID the function • Cost/benefit of using an ESP to deliver • Putting job out to tender • Due diligence on potential ESPs • Written terms of engagement (a pre-nup) • Consider SIS Reg 4.16 • Referees

  16. Slide 16: ESP monitoring

    ESP monitoring • Build the process into TOE • Commit to regular review • Not pretend reviews, substantive checks • Ask what an ESP could get wrong that could close your business • Make that your key focus in reviews • But check the rest as well – (in)efficiency indicators can be a red alert

  17. Slide 17: ESP damage control

    ESP damage control • ESP becomes insolvent • ESP key person is incapacitated • You decide to terminate the ESP • TOE should contain worst case directions • TOE should contain Dispute Resolution clause • SIS Reg 4.16 is a convenient guide

  18. Slide 18: In closing …

    In closing … • Consider what it is you like to do (passion) • Consider what else you have to do (drudgery) • Cost/benefit analysis of DIY (time) • Outsource intelligently (smarts)

  19. Slide 19: And remember …

    And remember … • Use RG2.168 to guide your ESP relationship • Use SIS Reg 4.16 as a guide to ESP contract terms • Be cautious when using “black boxes” • Consider ESP due diligence for referral partners But, most important of all … • Put a concrete value on your time up front

  20. Slide 20: QUESTIONS?

    Strengthen your core business and outsource the rest QUESTIONS? Brett Walker Director SMART Compliance www.smartcompliance.com

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