Paraplanners fear sidelining by video SOA
While some paraplanners fear that video SOAs could replace their profession, it could instead present an opportunity to upskill.
Following the government's response to Michelle Levy’s final Quality of Advice Review’s (QAR) report in June, many advice professionals are questioning what SOAs will look like in the future.
Stephen Jones, Minister for Financial Services, has stated that he will “replace the unwieldy statements of advice with something that is fit for purpose” and consultation will be held on what the new document could look like.
Industry experts expect video SOAs to gain popularity post-QAR, as it simplifies lengthy and burdensome documentation.
Hayley Knight, director of Contract Paraplanning Services, shed light on what the new form of SOA could look like.
“A video statement of advice is basically presenting the advice online. There is documentation, but it's not in the paper format that we've come to understand what a statement of advice is,” she told Money Management.
“The idea is to replace that 80-page document and create a more interactive and engaging advice presentation format.”
In particular, video SOAs are transforming the role of paraplanners, who are now less occupied with administrative tasks and more focused on technical and strategy-related work.
“It's so much more consistent with what the adviser wants, rather than it becoming this huge bottleneck that takes weeks to come out and then the client ends up going cold,” Knight said.
As new forms of SOAs alongside the QAR shift the industry, paraplanners are being steered away from high-risk contract work and into more stable, full-time positions.
The director continued: “They're not quite sure what [video SOAs] means for them. They see it as a threat potentially because it's so different to what they're familiar with.”
Rather than being fearful of losing their job, the director encouraged paraplanners to upskill their technology skills and adapt to what advisers need.
“Advisers will always need paraplanners, but they just won't look like what they have been for the last 15 years. They're going to look like very technical, strategic and highly skilled people who can help the adviser to present that video SOA,” she said.
Moreover, Knight sees less of a demand for internal paraplanners and a greater need for client service officer (CSO) roles.
Last week, Money Management spoke with short-term advice resourcing firm Tempie about how the QAR will drive greater demand for temporary paraplanners and support staff during busier periods.
Knight echoed this, as she noticed a growing demand for outsourced administrative and back-office support.
In the future, the purpose of a paraplanner will move away from solely producing documents to a more specialised, technically skilled position focused on strategy development.
“It's a really important time for paraplanners to upskill and a huge moment for advisers because we know SOAs in their current form are bottlenecks,” she said.
“It's a huge opportunity for both parties to come together and create something amazing.”
Industry’s SOA experiences
Knight was a member of the Financial Advice Association Australia (FAAA) SOA Technology Working Group, which led a project aimed to provide advisers with a clearer picture of how SOAs are evolving.
“It was primarily advisers who said ‘we know that the SOA is a bottleneck, it takes a lot of time, it's expensive to produce’ and based on the research that the Financial Planning Association (FPA) did, clients are actually not even reading it most of the time,” she said.
The industry-led project, headed up by former FPA general manager of policy and advocacy Ben Marshan, worked alongside ASIC to re-evaluate how SOAs could be produced more effectively.
“It's a really interesting time for financial services, especially paraplanning, because you've got the introduction of the video SOA and the QAR. Both things are putting into question the SOA in its own form as a document,” Knight reflected.
“Advisers still want something to present to their clients, but they don't want that huge document. They want something that's efficient both in time and money, but also engaging for their clients.”
Research conducted by the FAAA and personal anecdotes from advisers conveyed one consistent message.
“The feedback I'm getting from video SOAs is that the clients love it. They don’t want to sit down and read through a huge document that’s full of disclosures and disclaimers. They want to understand what the advice is and they trust the adviser to give them the right strategy.”
AUTHOR
Jasmine Siljic
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The idea of a video SOA poses many unanswered questions and I fail to see how it reconciles with existing standards.
To me it seems there is an infatuation with reducing workload (at the cost of rigour and integrity) to reach what superficially appears as a foregone conclusion.
Advice may be delivered by video but that does not mean an SOA should be replaced by video (or some web app).
One issue I have with video SOAs is that if the video is pre-recorded, then the client cannot be engaged properly throughout the presentation of the "SOA". If the client(s) cannot be engaged in ongoing discussion and the more granular details of an SOA (the assumptions in the modelling/decision making for example) and with the proper disclosures, then I believe the standard for free, prior and informed consent is not met. Many of these elements exist for a reason and they get thrown out with the bathwater when someone wants to prioritise the shiny new thing and their own convenience. This is only one of many issues.
A video recording will have less detail and less interaction than presenting an SOA to a client in person.
If some advisers want to sit in front of a camera and present advice then that's ok, but the law and standards should not be bent for them. I acknowledge that we live in an age of edutainment, infotainment and shortening attention spans. However, rigour should not be sacrificed for a quick dopamine hit for some inclined advisers and their clients.
Another issue is that for the FASEA standards and legal requirements to be met, all the background work for what is needed to produce the current type of SOA has to be completed anyhow. This SOA demonstrates the rigour of this work to the client and to the licensee.
You also don't hear the clients of lawyers/solicitors complaining that their legal advice isn't entertaining or engaging enough. The same goes for accountants and other professions.
I agree, we have an obligation to ensure our advice is clearly understood and while it might be the sexy thought of the moment I think it will be short lived.
We do need a better way to present advice though