Many SOAs lose sight of best interests
Not enough Statements of Advice (SOAs) succeed in making clear what is in a client's best interest, according to a new e-book compiled by Dover Financial Advisers - ‘101 Common Mistakes in Statements of Advice'.
The e-book, developed by examining the most common mistakes made by advisers in issuing SOAs, concludes that there is a consistent theme — "that the SOAs do not meet the essential standard for all financial advice: that the SOA must make clear that the advice is in the client's best interests".
In an email to advisers informing them of the availability of the e-book, Dover Financial Advisers' Adrian McMaster said that when it came to the client's best interests, SOAs fall short in one of two ways.
He said the first was making clear that the advice was in the client's best interests.
"This might be the case where an adviser recommends a change of product, for example. When we contact the adviser to discuss, it turns out that there are genuinely good reasons for the change. In those cases, we simply ask that the SOA make these reasons clear. The idea is that the client reading the SOA can see exactly why the new product is better suited to their situation. Problem solved."
McMaster said the second type of mistake was where the advice is not in the client's best interests. "The ‘client's best interests' is a broad concept and includes things that are sometimes overlooked, such as the affordability of any product that has been recommended (if a product is too expensive for the client to buy, the advice to purchase it cannot be in the client's best interests); or the specific circumstances of a given client (one size does not fit all when it comes to financial planning)."
McMaster said the mistakes identified in the e-book were those which had been identified by Dover running all of its advisers' SOAs through compliance checks.
He said the e-book exercise had evolved out of trying to identify the top 10 mistakes made in SOAs but it just kept growing.
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