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ManagementInformation
and its use within an IFA scenario
Management Information (MI): Application of management
techniques to collect information, communicate it within and outside
the organization, and process it to enable managers to make quicker
and better decisions.
Management Information System (MIS) is a system or process that
provides information needed to manage organizations effectively.
Management information systems are regarded to be a subset of the
overall internal controls procedures in a business, which cover the
application of people, documents, technologies, and procedures.
Management information systems are distinct from regular
information systems in that they are used to analyse other
information systems applied in operational activities in the
organisation.
2011
Lee Werrell
CEI Compliance Limited
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Introduction to Management InformationBy CEI Compliance Limited
Page | 2 Version 1.0 Sept 2010www.ceicompliance.co.uk Your Compliance Partner
The basic rules needed for designing or improving any management information
that we need is, to make it;
Relevant: Consider what is specifically relevant to your firm and who needs
to see it or be aware of it. Accurate: There is no point in making decisions based on rough figures or
perceptions of performance.
Timely: How often does this need to be measured? Weekly; Monthly:
Quarterly? Who needs to see it and when? Does it need to be collated first?
Acted upon: What are the key triggers? We know all about KPIs but what
levels are acceptable? Be clear on what you are looking for and what you
will do with it when you know.
Recorded: Write down in hard or soft copy what you do when you gather
the information, why it is important and actions you will take at various
thresholds or breaches. Circulate the results to those who need to know andincorporate any decisions in policy reviews.
The next item on your agenda has to be to
decide how the information is going to be
collected and used. How is it;
Gathered or sighted. New
business register, Continuous Professional
Development (CPD), Key Performance
Indicators (KPIs), Key Risk Indicators (KRIs),training logs, compliance consultants reports,
audits, TCF customer surveys, Not taken up(NTU) or Not proceeded
with(NPW) applications, trail commissions, fees, training courses applied for
or attended etc.
Analysis. How is this information collated? All information for everyone
(name and shame) or certain data for Senior Management? Are there to
be graphs, tables, bar charts or coloured segments to show progress,
advancement on certain issues? Decide how you wish to present the
information.
Circulation. Who needs to know and what level do they need to know? An
adviser may need to know % of target for themself and their team, but
management may need to know lapse rate and case scores specifically.
Action. Hold regular 1:1 meeting with staff. Set trigger points and action
plan frameworks to include remedial training or enhanced supervision.
Measurement. How are these elements to be measured and moved on?
What trends are there; are tolerances being met? Do you need to use a
scorecard? (See article on implementing the balanced scorecard in small
and medium sized firms at http://www.cei-compliance-limited.co.uk/bsc/).
Do not leave these fundamental steps to fall into place, because without them
any further planning is unstable.
Did You Know? Between
April and September
2010, the FSA fined 5
companies over 850,000
in cases involving
inaccurate, misleading or
non-existent MI. Dont
get caught out.
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Introduction to Management InformationBy CEI Compliance Limited
Page | 3 Version 1.0 Sept 2010www.ceicompliance.co.uk Your Compliance Partner
You have now decided what you are going to obtain MI on, and what you are
going to do with it when you have got it, so now what?
Now you have to look at the business processes and decide what you considerrelevant. To give you some ideas you could look at;
Financial Position: Can you present to Senior Management that the
company is meeting the FSAs own funds test and meet all liabilities as they
fall due?
Financial Rewards: Can you identify incentives or rewards that may
encourage inappropriate behaviour amongst the management, staff or
advisers?
Span of Control: Do all individuals have the resources and adequate
support to fulfil their role to the standards set by the company? Risk Management: Can you demonstrate that you have assessed and
prioritised all risks and can evidence that risks are mitigated or
accommodated accordingly as well as the culture displaying that TCF is
fully embedded?
Recruitment: Can you evidence that all Fit and
Proper checks have been completed on all
advisers and that previous complaints, concerns
or other issues have had a satisfactory
explanation or that periodic credit and other
checks have provided comfort that there areno issues with advisers acting inappropriately?
Competence and Qualification: Can you
identify the gaps in advisers knowledge and
experience and take appropriate action to
ensure any skill gaps are remedied or provided for? Can you confirm all
advisers are adequately supervised?
Turnover and retention: Can you confirm that the reasons for leaving are
specifically individual and not endemic?
Advice Process: Can you confirm that advisers are giving suitable advice
and that their cases are being monitored adequately? How are the advisers
risk rated? Do we know what sources of business are used by each adviser?
Product/Provider Selection: Can you satisfy senior management that
products are adequately recommended according to the client risk rating
and that an appropriate range of products are considered for
recommendation?
Financial Promotions: Identify financial promotions campaigns and their link
to profitability or additional business generation? Identify any root causes
from complaints (either end of next working day or regulated, as
applicable)?
Complaints: Identify root causes and/or areas of concern for advisers or
teams? Confirm all staff are aware of their responsibilities? Identify average
time of complaints investigations and resolution?
CEI Compliance can assist you in
preparing all of your compliance
monitoring, risk register and
remedial work planning.
Call them today on 0800 689 9 689
or go online at
www.ceicompliance.co.uk
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Introduction to Management InformationBy CEI Compliance Limited
Page | 4 Version 1.0 Sept 2010www.ceicompliance.co.uk Your Compliance Partner
Current Practices
How do you know if what you are doing is good or bad? Surely if it works for you, it
is OK? It is your business after all.
The FSA have conducted studies of good and bad practices and while we are
not going to provide each area duplicated in this document, we have
reproduced some for you to get an idea of the things that are not bad practices,
but could be better.
Good Practice
T&CThe T & C scheme included completing
an initial risk assessment for each adviser
by grading each of them. This would
take into account industry experience,qualifications, complaints, types of
business they would be writing, Key
Performance Indicators (KPIs) and the
results of file reviews. The three grades
determined how much supervision each
adviser needed.
Financial PromotionsThe firm had a procedure in place thatrecorded customer queries and
complaints received about their
financial promotions. The results were
measured and analysed enabling the
firm to identify areas of concern and act
upon them.
Poor Practice
The principal at the firm considered
that because he trained and trusted
an adviser, he didnt need to formally
review his work. There was some formof training programme in place for a
less experienced adviser. However,
the lack of suitable monitoring and
review procedures meant there was a
real risk that customers could receive
poorer quality of advice and the firm
was exposed to the risk of future
complaints.
The firms website was not included in
its Financial Promotions checklist.
Therefore, the firm did not remove out-
of-date and inappropriate material
from its website.
So to assess if your Management Information System is relevant, accurate, timely, acted upon
and recorded, you will need to answer a number of questions. Here are some examples;
Can you adequately assess the financial soundness of the people you recruit?
Are new recruits adequately supervised?
Can you identify weak areas of the advice process for individuals or a team?
When was your Compliance Manual updated?
Has the sales process changed since it was last documented?
How well does your review service for clients work?
Where there have been changes in circumstances for clients, do you review the
previous advice?
When were your processes last tested and checked?
How do you measure your complaints; purely by numbers?
Are you comfortable of the impact of your advisers remuneration?
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Introduction to Management InformationBy CEI Compliance Limited
Page | 5 Version 1.0 Sept 2010www.ceicompliance.co.uk Your Compliance Partner
If you do not assess and measure your firms recruitment procedures to ensure they aresufficiently robust, you could make inappropriate appointments. Identifying and
addressing the root causes of staff turnover is good business practice. It could mean
lower recruitment costs.
By identifying the level of competency of new advisers and understanding the type ofbusiness they will bring to your firm, you can assess if this is appropriate for the adviceand services being provided to your customers and you can assess your firms ability to
adequately supervise them. This will reduce the risk of your firm giving customers poor
advice.
Not assessing and measuring how your firm identifies gaps in adviser skills and
knowledge or the quality of the training could lead to poor advice. Not measuring key
indicators such as persistency rates, replacement business and complaints may hide
issues which could develop into larger problems later.
These failures could lead to costly remedial action or regulatory discipline in the future.
So we have seen that assessing information gathered from key areas such as financialpromotions, complaints, recruitment and training and competence, can help you
measure the standards within your firm, identify risks, highlight where standards can be
raised and helps to protect your business. These areas are high traffic areas and if you
are involved in sales yourself, can be very demanding and detracting from your own
business.
CEI Compliance can help provide a full compliance
support service, reducing required management time,ensuring all areas are up to date and working for your firms
long term benefit. Call 0800 689 9 689 today or goonline at www.ceicompliance.co.uk
This whitepaper was written by Lee Werrell FInstSMM MCSI Cert PFS, founder of CEI
Compliance Limited. Lee is contactable at any time and welcomes enquiries from
all businesses. Call 0800 689 9 689.
free guide
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