Anecdotal evidence suggests that growing use of the Record of Advice (ROA) could render the Statement of Additional Advice (SOAA) redundant within the planning industry, partially driven by the global financial crisis.
ROAs were introduced via a Corporations Act amendment in December 2005, intended to be used in conjunction with SOAAs, but some advisers say they now either rarely use or don’t use a SOAA.
ROAs were introduced after major industry concerns about the amount of paper work involved in issuing an SOAA for simple investment changes.
WB Financial general manager Glenn Pearce said the dealer group’s “incidence of using SOAAs has declined in direct proportion to our increase in the use of ROAs”.
“The things we used to incorporate into SOAAs can now be dealt with by an ROA, which is a lot more concise and a far easier document to complete.”
He said the ROA is “suitable when a client’s goals and objectives haven’t changed and where, for example, he or she merely wants to put additional money into an existing fund”.
“We are now routinely putting these sorts of additional investments, which you tend to get a lot of currently, into the ROA rather than SOAAs.”
Pearce added that he believes the trend to use ROAs is becoming standard in the industry, driven by the adverse impact on client investment activity by the global financial crisis.
“Either clients are requiring only small incremental changes that can be handled under an ROA, or they will require a major change to their investments, in which case we predominantly will redo a Statement of Advice (SOA).”
Financial Wisdom general manager Tim Browne said the dealer group had made a conscious decision some time ago not to use SOAAs any longer.
“We decided that SOAs, ROAs and file notes are the appropriate way to cover the advice needs of our clients,” he said.
