The short version: section 9(1) of the General Code of Conduct requires a provider to keep a record of the advice given to a client that reflects the basis on which the advice was given, and in particular four things.
- A brief summary of the information and material on which the advice was based. The client's circumstances, objectives, financial position, existing products and risk profile, as gathered under the section 8 suitability analysis.
- The financial products that were considered. Not only the one recommended: the record must show that alternatives were looked at.
- The product or products recommended, with an explanation of why they are likely to satisfy the client's identified needs and objectives. This is the heart of the record and the part most often written too thinly.
- Where a product replaces another, the replacement comparison. The actual and potential financial implications, costs and consequences of the replacement, as required by section 8(1)(d), must be recorded.
The record must also be given to the client in writing, and records must be kept for at least five years. Those two duties are what turn a good meeting into a defensible file.
What the minimum leaves out
A record that only ticks the four items will pass a light-touch review and fail a hard one. Compliance officers and the FSCA look for evidence that the advice was suitable, not just that a form was completed. In practice a strong Record of Advice also shows:
- The engagement details. Date, time, place, who was present, and whether the advice followed a full or limited analysis. "Not recorded" is a finding waiting to happen.
- The quantified need. Life cover of R2 million is not a recommendation until the record shows why R2 million: income replacement to the end of dependency, education, debt, estate costs, less what is already in place.
- The assumptions. Inflation, real return, drawdown rate, estate costs, tax. If a figure rests on an assumption, the assumption should be in a table the client can see.
- Fees and remuneration. Investment management charges, platform fees, advice fees (initial and ongoing) and commission on risk products, in rand and percentage terms, with the effective annual cost per product.
- Risks and disclosures discussed. Product risks, exclusions and waiting periods on risk cover, liquidity, and the consequences of not following the advice.
- The client's decision. What the client accepted, declined or deferred, in their own terms.
- Matters arising. Contradictions in the information supplied and what the adviser still needs to confirm. Recording open questions is a sign of diligence, not weakness.
A working structure
Most South African practices settle on a structure close to this, and it is the one Tallify drafts to:
| Section | What goes in it |
|---|---|
| 1. Header and engagement | Client, adviser, FSP and licence number, date, time, place, persons present, record reference |
| 2. Client circumstances and objectives | Personal and family position, financial position, income and expenditure, objectives, risk profile |
| 3. Analysis performed | Needs summary: need, amount required, already provided, shortfall, priority |
| 4. Advice given and products | Per need: the products considered, the product recommended and why; products considered and not recommended |
| 5. Fees, charges and remuneration | One row per cost component; the disclosure paragraph |
| 6. Risks and disclosures discussed | Product risks, exclusions, replacement consequences |
| 7. Client decision | Accepted, declined, deferred, with reasons |
| 8. Declarations and signatures | Adviser declaration; client acknowledgement of receipt |
| 9. Filing and matters arising | Where the record is kept, follow-ups, contradictions to resolve |
Common findings in reviews
- The recommended product is named but the reason it suits the client is a single generic sentence.
- No alternatives recorded, so the "products considered" requirement is unmet.
- Replacement business without the section 8(1)(d) comparison.
- Figures that appear from nowhere: a cover amount with no calculation behind it.
- Fee disclosure limited to "as per quotation".
- The record exists but there is no evidence the client received it.
- Versions overwritten, so the history of the advice is lost.
Checklist
- Engagement details complete, including who was present.
- Summary of the information the advice was based on.
- Every need quantified with the arithmetic visible.
- Assumptions in one table.
- Products considered listed; product recommended explained per need.
- Replacement comparison where applicable.
- Fees, charges and remuneration in rand and percentages, with EAC per product.
- Risks and disclosures recorded.
- Client decision recorded.
- Copy given to the client, with evidence.
- Filed with a reference, versioned, retained for at least five years.
How Tallify helps
Tallify drafts the Record of Advice and the supporting needs analysis from the adviser's meeting notes, in the structure above, with the arithmetic in tables, an assumptions table, the fee disclosure, and a "matters arising" list of everything the notes left unclear. Every figure that rests on an assumption is flagged for the adviser to review. The draft is emailed to the adviser as a Word document; the signed version goes on a versioned register with the history kept for the regulator. Nothing is filed until the adviser signs it.
This guide is a practical summary, not legal advice. Check the current text of the General Code of Conduct and your FSP's compliance manual.
Questions
Is a Record of Advice the same as a financial needs analysis?
No. The needs analysis (section 8) is the work: gathering information, analysing it and identifying suitable products. The Record of Advice (section 9) is the record of what was advised and why, based on that analysis. Practices usually keep both on file, and the record refers to the analysis.
Does the client have to receive a copy?
Yes. The Code requires the provider to give the client a copy of the record in writing. Many practices have the client sign it as well, which is good practice rather than a requirement.
How long must a Record of Advice be kept?
At least five years. The FAIS Act and the Code require records to be kept for a minimum of five years from the date of the advice or the termination of the product, and a practice's own retention policy may be longer.
Can software draft a Record of Advice?
Yes, as a draft. Tallify drafts a Record of Advice and needs analysis from an advisor's meeting notes, structured to the Code, with every assumption stated and every figure flagged for review. The advisor remains responsible for the content and signs the final document.