Legal requirements for SoAs only part of the problem

Many of the issues raised recently around producing compliant Statements of Advice (SoA)s can be overcome without changing legislation, according to The Fold Legal (The Fold).

Managing Director of The Fold, Claire Wivell Plater says that with a couple of minor exceptions, the legal requirements for SoAs can readily be met if advisers have a good understanding of what information is required in an SoA, what information can be left out, and how to effectively document their advice in writing.

“One of the first steps licensees can take is to shorten SoA templates,” she says. “Most are far too long and contain far too much unnecessary information. This actually interferes with the advisers’ ability to communicate their recommendations and to explain how the recommendations will help clients achieve their goals. In relation to SoAs, we really need to be adopting the philosophy that less is more.”

The minor exceptions Ms Wivell Plater talks about relate to information that has already been disclosed. “If an adviser has an ongoing fee arrangement with the client, they should not be required to include information about their fees in every SoA, or even to incorporate it by reference,” she says. “The client receives this information in their annual fee disclosure statements. Similarly, there should be no need to repeat information about associations and relationships that have already been disclosed.”

Ms Wivell Plater also says the requirements for information about platform recommendations are unrealistic and simply do not reflect the manner in which advisers select and recommend platforms.

The Fold offers a concise SoA template and SoA workshops that help advisers understand how to prepare SoAs and assist licensees in reviewing their SoA templates.