Rhett Das (left) and Joel Ronchi

Regulatory changes have seen a drastic improvement in the quality of Statements of Advice, there is still room to improve the evidence behind the advice process according to a pair of compliance experts.

Fourth Line has reviewed over 10,500 SOAs in the last four years ago and 5000 since ‘Red October’.

Fourth Line CEO Joel Ronchi tells Professional Planner there has been a drastic focus on improvement over the last four years.

“Very rarely we’ll see the [type of advice] from 20 years ago where it’s just product focused,” Ronchi says.

“The issues we pick up and around advice process; the way the adviser has gone about creating that documented evidence they put together.”

The findings are similar to observations from Integrity Compliance director Rhett Das who says the quality of advice documents he reviews has improved compared to five years ago.

However, Das cites a few areas where advisers still struggle, including the propensity for advisers to “speak in strategies”.

“I contrast that with solicitors where a client will go to a lawyer and ask for advice and the lawyer will be precise on getting the instructions then write the advice,” Das says.

“A lot of the advice documents we see, the client will come to them [with life details] and you can see all that in the fact find. Then you get the advice document and it goes straight into strategy.”

Insufficient intent

As a separate example, Ronchi points to advice that involves alternative strategies and products, and making sure there is sufficient evidence around the rationale and risk profiling.

“Where flags have been raised in our reports is a result of a lack of sufficient evidence or connection between what the SOA says and what the supporting advice creation documentation says,” Ronchi says.

“It’s not negligence, it’s not poor behaviour or advisers trying to get one of their clients.”

Das previously worked for the Financial Ombudsman Service, the precursor to AFCA, as a panel case manager before a stint at Centrepoint that preceded his current business.