SoAs ineffective at engaging consumers: ASFA

The cost of providing a Statement of Advice (SoA) to superannuation funds members can be as much as $2,200 higher than a Record of Advice (RoA), according to the Association of Superannuation Funds Australia (ASFA).

In the association’s submission to the Quality of Advice review, ASFA said the average cost on-charged to a super fund member for an SoA was $1,500-$2,500. This compared to $300-$500 to provide a RoA.

While ASFA acknowledged the value of a SoA, it said it was “not always an effective means of engaging with a consumer” in relation to advice.

This was because SoAs could be lengthy documents which consumers found hard to understand because of their detailed content.

It recommended certain advice topics were addressed through an RoA or simplified advice document rather than an SoA. A templated RoA could be provided by the Australian Securities and Investments Commission (ASIC) to ensure consistency.

“We expect this will reduce the cost of receiving advice and allow for shorter, more targeted disclosure about the advice that is easier for consumers to engage with.”

It would also have the benefit of reducing time spent by funds on explaining disclosure requirements to members.

“ASFA members have indicated that the first 10-15 minutes of a simple phone-based appointment for intra-fund advice is typically used for the adviser to go through the various disclosure requirements. Given that the consumer in this scenario is an existing member of the fund and will not be directly charged for the intra-fund advice, some relief in this area would be appropriate.”