Where does the solution to SoAs lie?

The solution to the complexity and time-consuming problem of Statements of Advice (SoA) lies somewhere between a one-page letter, as prescribed for accountants, and SoAs as they exist today, according to a panel.

Speaking at the SMSF Association conference in Adelaide, Marisa Broome, chair of the Financial Planning Association of Australia (FPA), said the main aim was for clients to understand their financial advice arrangements, something she said she could achieve without a 100-page SoA.

“There's got to be something in the middle that really makes that informed consent concept easily met,” she said.

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Broome said the solution may come from technology, plugging Ben Marshan, FPA head of policy, strategy and innovation, and his work on a digital SoA system for the FPA.

Association of Financial Advisers chief executive, Phil Anderson, said the solution lay in creating a level playing field between disciplines.

“We don't want one set of standards that applies to advisers and another set of standards that will apply in the SMSF space to accountants,” he said.

“I think that the accountants are going to be providing advice on establishment structuring and closing down and maybe a little bit in in the contribution space - I think less so in pensions.

“We got to make sure that we do two things here: one we make sure those basic requirements are in place and the second thing is… we got to move away from [100-page SoAs].”

Speaking from a client perspective, SMSF Association chief executive, John Maroney, said he found far more value from direct advice and investment related correspondences with his adviser rather than the 100-page SoA he was handed.

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What it takes to fix this is leadership. The government and regulators get together with advisers and clients to create a simple and consistent template that all advisers / licencees must use. It is in plain english, without pages of disclaimers and useless information that does assist clients. If ASIC spent as much time on this exercise as they do on prosecuting advisers for having a minor error on their FSCG (another useless document) then maybe we could fix this issue. The solution is easy, it just takes someone to stand up and take ownership of the issue and get it done.

Exactly, if they have a uniform set of advice templates that every adviser can use it will rule out all interpretations by every compliance officer at every licensee, and help reduce costs. Obviously this should have been done with fee disclosure and consent forms for product providers, but as we can see now its a sh*tshow. In addition, AFCA complaints for advisers should be moved to the single discipline body.

Wow somewhere between 1-100 pages? What a fantastic insight

i know. so valuable. these people just like hearing themselves talk.

How can we do shorter Statements of Advice, when ASIC is always telling us we need to include more (look at ASIC report 575 Improving SMSF Advice- the checklist is five pages long, also ASIC report 515 Reviewing Personal advice, the checklist is 8 pages long, another ASIC report 413 Review of Life Insurance, the checklist is 4 pages long). The main way to prove you have done something and shown it to the client, is to include it in the Statement of Advice with a signature. As for ASIC, there is no quick way of delivering advice, especially with the way they are demanding us to include all these things. ASIC needs to present a perfect Statement of Advice on insurance that shows us what it considers perfect advice sheet. But they wont do this. Same if they can show us what is perfect SMSF advice. But they wont do this. Truth be told, if you go 5 advisers with the same client info and ask for a plan. you would get 5 very different recommendations and ASIC can't cover them all, but the pressure they put on us is ridiculous.

If SMSFs are viewed as a tax vehicle rather than a financial product, we could remove the need for many SoAs. Contributing $27,500, withdrawal and recontribution strategies and starting retirement pensions are all about tax. If I receive an inheritance, the decision about whether to put the money into super, my own name, a family trust, etc is all about tax.

Ok cool, so where does that money go once it’s in the ‘environment’? All super funds are tax vehicles, be they industry, retail, SAF or SMSF. If there is only one asset, probably a CMA, then it’s called implied advice and you also have a duty under the COE/BID to make sure it’s appropriate.

I think you’re referring to strategy only advice which is possible but not if contributions are going in. They need to be sent somewhere. Sorry mate, once you’re advising (and charging, not a bloody finfluencer) it’s an SOA all day long.

ok, so give the job back to accountants. they will be happy with that.

The main change to SOAs that I have seen in my 30 years in the industry is the ridiculous amount of product comparison required both for investment and insurance. This combined with fds, opt in etc has little if any benefit to the end client and results in significant costs to both planners and clients.

Absolutely right. The requirement to compare against other products is so meaningless when it's not even a requirement to compare against decent products.
We all know of the handful of absolutely terrible funds with super high fees that you would never put your clients with.

I have, over many years, discussed with clients what they want in relation to advice. All they want to know is what is my advice and what does it cost. In terms of cost it is the bottom line not pages of cost breakdown. It's about time regulators stopped imposing what they think people want in terms of advice and actually ask them what they expect.

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