Regulator must embrace simple SOA approach

29-Oct-2013

By Krystine Lumanta

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Australian financial advisers want ASIC to accept that simplistic statements of advice (SOA) are a way of better communicating with clients and do not constitute poor advice.

At the FPA Professionals Congress held earlier this month, a panel of FPA Best Advice Awards judges discussed the issues of documenting quality advice, particularly better ways to express and communicate information to clients.

Despite the SOA being a compliance document, it was no longer appropriate to provide complex SOAs to clients, therefore the use of basic language and simple charts was encouraged and should be employed by the wider advice industry, the panellists said.

During the session’s question and answer period, a delegate said he applauded the idea of simplicity and questioned how the industry could gain the corporate regulator’s support on the matter.

“But can we please engage the regulators on taking the same tack?” he said.

The comment was met with vocal support from the audience.

FPA general manager of policy and government relations Dante De Gori said the industry association acknowledged there was a need for ASIC to understand a more simplistic approach to SOAs.

“That’s one of our biggest challenges – convincing the regulators that simplicity doesn’t mean that the advice is inappropriate or isn’t right,” De Gori said.

Unified  Financial Services managing director and fellow panellist Michelle Tate-Lovery said the SOA was a collaborative process that occurred through the document itself.

“The plan is built with the client with very clear goals and there also needs to be discussion around the trade-offs, if any,” Tate-Lovery said.

“With the clarity of advice, it always helps making sure that after each strategic point, which can be complex in some cases, that there’s a simplification at the bottom of each strategy telling the client in very simple language what that means to them.”

Furthermore, the use of tables, charts, graphs, PowerPoint presentations, images from the Internet and whiteboards were other effective ways of ensuring the client understood the information in the SOA, she said.

“There’s no fancy software – we’ve used the whiteboard because you don’t need a fancy program for that, just neat handwriting,” she said.

“Our graphs come from Xplan, but that just came from the spreadsheet, which needs to be massaged, so spend the time to format it properly, colour-code it, change the entries and break up the income so that the client can see their specific income.

“For so long we’ve been taught that [the SOA] is a compliance document, but I really take the view that it can be an effective engagement tool.”

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