As statements of advice (SOAs) move into the rear-view mirror, advisers are learning to adopt innovative documentation strategies.
In December 2023, Minister for Financial Services, Stephen Jones, unveiled the final tranche of Delivering Better Financial Outcomes. One of the key changes, Jones announced, was that SOAs will now be replaced by an advice record that provides information in plain English.
He said at the time: “The record must be clear, concise and effective and actually help the client make an informed decision about the advice they have received. It must address the following matters:
- The subject matter.
- The advice – such as product recommendations and strategies.
- The reasons for the advice – such as the information about the client that the adviser considered.
- The cost of the advice to the client and any benefits received by the adviser.”
The removal of SOAs had been previously recommended by Michelle Levy in her final Quality of Advice Review report, prompting industry experts to share what “fit-for-purpose” documentation could look like.
Vital Business Partners (VBP), which offers outsourced paraplanning services and financial planning administration, has further explored how advisers are transitioning their workload in response to this regulatory evolution.
“As the tide of regulatory transformation rises, the Australian financial advice community is not standing by idly. The push towards ‘fit-for-purpose’ documents has ignited a forward-thinking overhaul in the way advice is prepared and presented, signalling a readiness to embrace a future marked by streamlined client communication protocols,” the firm wrote.
One way advisers are refining advice documents is by removing information which clients can easily access in product disclosure statements. This prevents clients from feeling overwhelmed with product comparisons, VBP stated.
The outsourced business also emphasised the “pivotal role” of paraplanners, who remain integral to areas including research, scenario modelling, and document accuracy.
While the rise of video SOAs has heightened fears that paraplanners are replaceable, industry commentators have said it instead presents an opportunity for paraplanners to upskill their technology expertise and adapt to what advisers need.
“Despite document simplification, the depth of analysis supporting advice must not waver, echoing the Quality of Advice Review’s emphasis on comprehensive, client-focused advice methodologies,” VBP continued.
New artificial intelligence (AI) tools have also been launched which automatically produce SOAs, such as Guideway Financial Services’ AI paraplanning avatar and an AI-powered service led by Raiz Invest founder, George Lucas.
However, the push towards simpler advice documentation, whether in written or video form, is not without its sceptics.
“Certain advisers advocate for the retention of detailed comparisons and analyses within client documents, arguing that such depth fosters transparency, builds trust, and elucidates the rationale behind specific financial recommendations.
“The quest, then, is to strike an optimal balance between efficiency and transparency, ensuring that even if not all detailed analyses make it to the final client document, the foundational research and rationale remain meticulously documented and accessible.”
