A change in legislation is not required in order for advisers to ensure they have compliant SOAs in place, Ms Wivell Plater said in a communication issued yesterday.
“One of the first steps licensees can take is to shorten SOA templates,” she said.
“Most are far too long and contain far too much unnecessary information. This actually interferes with advisers’ ability to communicate their recommendations and to explain how the recommendations will help clients achieve their goals.
“In relation to SOAs, we really need to be adopting the philosophy that less is more.”
However, the financial services lawyer and compliance consultant – who will be speaking at the upcoming ifa Business Strategy Day – says there are a number of “minor exceptions” that advisers and licensees should be aware of.
“If an adviser has an ongoing fee arrangement with the client, they should not be required to include information about their fees in every SOA, or even to incorporate it by reference,” Ms Wivell Plater explained.
“The client receives this information in their annual fee disclosure statements. Similarly, there should be no need to repeat information about associations and relationships that have already been disclosed.”
Duh, this is why we said the FDS was pointless because we have already told the client how much his fees are in the SoA and asked him to sign a service agrement.
If you read cases that have come before FOS, Super Complaints Tribunal, and COSL, the overwhelming theme is that these bodies believe that SOAs should contain much more information, particularly pertaining to disclosure of risks, warnings, and limitations of the advice provided.
When it comes to a complaint, the dispute body generally focuses on “what was in the SOA”. This is the only concrete evidence of ‘what was said’ during the advice process.
SOA’s are now redundant. With no super or investment commissions, a mandated best interest duty, fee disclosure statements and Opt-In, there is simply no need for SOA’s anymore. We should be able to operate in the same way as doctors, accountants and lawyers. File notes which support the advice is in the best interest of the client. Nothing more. This is the trade off which should have occured with FOFA.
“Shorter SOA Man” – as a longstanding paraplanner, I agree wholeheartedly that SoA’s could and should be much shorter. Not only would this be basic common sense but would actually meet ASIC’s original objective.
However, you cannot blame COIN (or any other software provider) for this. The SoA templates are set by the dealer groups. Believe me, Rubik’s life would also be a lot easier if the SoA’s weren’t they way they are.
Ironically, the dealer groups – in turn – blame the lawyers saying that the legal advice is that they have to have all this info to meet legal requirements!
I’d love ASIC to take action against a dealer group for having SoA’s that are too long. This would set a standard for all dealer groups. But, because they never have, the lawyers point to the current SoA’s and say that they must be what ASIC want.
Or yeh! SOAs exist because of lawyers. Without their intervention in the SOA structure and drafting SOAs would be under 10 pages total. Unfortunately the ambulance chasing mentality of the legal profession means we are forced to engineer advice to combat the growing litigious, “its someone else’s fault”, attitudes propagated for gain by the legal profession.
Wouldnt it be great if the software companies like Coin actually shortened their templates.
Given these legal benefits and further to significantly increase the efficiencies of providing advice.
Coin, any action on these long over due changes required to your long winded templates?
Eureka !!!!
Common sense at last – come back Mark Twain, there is still a chance to find that elusive un-common commodity
But will dealers listen.
Anyone who has competed against lawyers knows the best tactic is to say as little as possible
correct we are doing things twice and three times extra cost to clients
SOAs on amounts under $100K should be waived if an adviser has a certain education level and so many years of experience. Should also be waived for smaller sum insured premiums. That will then open the gates for more people to get cost effective and efficient advice rather than heading off to their Facebook brainwashed property spruiker free seminar. Give some credit to an adviser’s qualifications and experience for a change instead of treating everyone like newbies.