While they still need to build up confidence with the technology, advisers are slowly starting to recognise the pros of video Statements of Advice.
James Wortley first introduced video SOAs into his practice, Enlightened Financial Solutions in Mackay, in 2018 – a year after it obtained its own AFSL.
“Like all new beginnings, we wanted to reinvent the financial advice process but concentrate on the client experience at every step,” he tells Professional Planner.
“It never made sense to me to provide an SOA that needed to be holistic in nature, but that clients found too complex and unnecessarily long-winded. An SOA should be an easily read document that every client can understand. However, it has somehow become a document of protection for the licensee and the financial adviser.”
Corey Wastle, CEO of Verse Wealth in Melbourne, has similar views.
He launched video SOAs in November last year after hearing a Financial Planning Association podcast on the topic.
“We moved very quickly because we, like other advice firms, felt the SOA is the biggest anchor point in our client experience,” he says.
“But it’s time consuming and costly to produce. We felt it was a detraction from a great client experience. The documents are long-winded, jargon-laden and full of duplication. Consumers don’t expect them, nor do they want them and for many, they are too confusing, overwhelming and disempowering.”
Meeting the compliance bar
Fraser Jack, founder of The Cyber Collective Australia, says advisers are still doing much of the same with a video SOA, such as all the research and working out the best strategies for clients. The difference is the recording of the meeting, be it online or in person.
During the process, clients are asked whether they understand what’s being discussed and if they’re happy to keep moving on. In that way, he says planners are getting a demonstration of understanding and an authority to proceed from the client.
“You’ve captured that conversation in real time as a video file so what happened in the meeting is 100 per cent the truth,” Jack says. “When you get to the end, you cover off on the things the Corporations Act requires to be in an SOA.”
Additionally, the client receives a copy and can rewatch it at any time.
But Wortley observes that personality can be introduced into the process by providing advice through video.
“We can provide advice live to clients by recording our meetings which saves a lot of administration time,” Wortley says. “For more complex advice, we found that our paraplanning time had reduced.”
Wastle adds that advisers can send a video SOA to the client prior to the meeting. “The clients consume that before they come in so they can take what might have been a 90-minute meeting and make it a 45-minute meeting,” he says.
“We get informed consent verbally from the clients in the meeting most of the time so we can just move ahead immediately with the implementation of the advice. We don’t need to wait for them to take the SOA away for a few weeks to read or reread it.”
Jack believes video SOAs stand up in court and may help reduce professional indemnity insurance premiums. “There is no more mucking around with lawyers working out who said what when you have just listened to the conversation,” he says.
In addition, he says video SOAs can be used to train new staff and help identify advisers who aren’t doing the right thing.
Overcoming the cons
So given the advantages, why are not all advisers rushing to introduce video SOAs?
Jack believes one reason is the licensing and compliance regime that’s been embedded over many years. “It’s very deep and there’s a lot of legal disclaimers,” he says.
Another reason, he says, is confidence with the technology and “flicking between software and screens”.
Wortley would agree. He says finding the right technology to record the videos and building the processes within his business were the main business challenges for his firm.
“From the client experience side, the main issue was clients that struggled with technology or didn’t have the technology,” he says.
“In these cases, we would get the clients to watch the video in the office and then the financial adviser would drop in to answer any questions and make sure the clients understood the advice and got their consent. The other challenge is cyber security. How do you make sure the client information is protected and secure?”
Getting onboard
Wortley notes the FPA has built a SOAP box set with all the information needed to implement video SOAs. The FPA is also running workshops on the topic across Australia in March.
To get started, Wortley recommends talking to planners that have implemented video advice in their businesses.
“Make sure you map the advice process from start to end to understand the pitfalls in your current business process,” Wortley says. “Ensure your compliance audit company understands the video advice process. And always look from a client perspective in everything that you do.”
