The case for retaining SOAs
The idea of doing away with Statements of Advice (SOA) is misguided, according to an advice consultancy, and advisers should instead consider how they can produce them efficiently to capture clients’ attention.
There was talk in the Quality of Advice Review of scrapping Statements of Advice as advisers found them overly wordy and time-consuming.
But Patrick Flynn, advice innovator at Simply Kaizen consultancy, said the lack of viable alternative meant it was likely most advice firms would continue to use a single, definitive advice document for some time to come.
He said: “Regardless of what may come through the Quality of Advice Review, use of multimedia, or otherwise, there will always be significant benefits in a single document that covers everything at that point in time and has a linked authorisation for signature. Whilst the name, mode, length, style, and more may change those benefits shouldn’t be dismissed out of hand,” he said.
“As a powerful risk management tool, this is likely to be required by licensees and Professional Indemnity insurers for some time to come.”
Rather than hoping for their demise, Flynn said advisers should focus on how an SOA could be produced efficiently and how they could ensure they were likely to be read by a client.
This included three key questions to consider when including content:
- Does this improve the client experience, do clients value it?
- Does its inclusion improve risk management?; and
- Is the time taken to produce worthwhile and can we do so efficiently?
A key part of this thinking was making the document less about page volume and more about the clients’ attention span as they were unlikely to read a whole document. While they may read 100% of a document that takes 30 minutes to read, they may only read 25% of one that takes two hours.
“Attention span is a limited resource, and if you blow it you’ll have them reading the first few pages of your boring document, skimming the next few, and outright skipping the rest. That’s not in anyone’s interests.”
To combat this, advisers could consider alternative options such as giving a video summary, stressing its importance, giving the document prior to the meeting to allow clients to prepare and modern document design including images and accessible language.
They should consider the weight given to risks and disadvantages in the document and the value of including every low or unlikely risk.
“Not all risks are equal. Given we only have limited minutes of client attention, every bit of text added means that we reduce the likelihood other text will be read. Or, each unlikely and low-impact risk addressed reduces the chance a client actually reads and understands a high risk.
“A more appropriate format would be to consider the genuine risk to the client, consider the weight applied to each, and even exclude smaller risks.”
AUTHOR
Laura Dew
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Does this improve the client experience, do clients value it?
Does its inclusion improve risk management?; and
Is the time taken to produce worthwhile and can we do so efficiently?
I would say "no" to all of your questions!!
Treat the client with respect. A written confirmation of matters discussed and agreements reached should be a minimum expectation. Call it whatever you like.
Getting rid of SoA's is a red herring. The quality of advice review is not about getting rid of an advice document (whatever form it may take), it's about getting rid of excessive red tape regulation that is designed to trip up advisers and feed ASIC's ego and wallet. An advice document should be about giving a client advice to put them in a better situation and work towards meeting their objectives. It should not be about being a compliance exercise which is the current situation and leads to a poor document designed for ASIC, not the client.