Licensees run by lawyers with inadequate advice knowledge behind SOA stagnation

In a LinkedIn post this week, Dr Katherine Hunt, researcher, public speaker and former adviser, delved into why Statements of Advice (SOAs) are a “huge logistical bottleneck”.

Noting that even the “omnipotent regulator” knows SOAs are counterproductively long, full of generic information, ugly, disempowering to clients, and costly, Dr Hunt questioned why they continue to be “such a bottleneck”.

“Every other sector has moved on. Evolved. The grunt work of accounting is now mostly done by software that didn’t exist five years ago. Accountants aren’t known for their innovation.

“Yet at [the] university, we are still assessing SOAs by insisting students develop them from MS Word templates,” Dr Hunt explained.

This system, she noted, is not helping advisers evolve “a key compliance tool of the profession”.

According to Dr Hunt, there are two key causes keeping advisers in the SOA stagnation, including that “licensees are run by lawyers who don’t understand financial advice nor the ethical obligations of advisers”, and that universities are keeping SOAs entrenched in their curriculum.

These problems, she opined, will fix themselves when financial advisers are individually licensed and when licensees are service providers who exist to “make life easier”.

Moreover, Dr Hunt noted that universities need to choose to lead with innovation, much like they do in fields such as medicine.

“So, this is the plan, let’s lead as a profession on this, the universities will follow, and then the regulators will follow the universities,” Dr Hunt said.

The Quality of Advice Review (QAR) has suggested the removal of the requirement for SOAs to allow the profession to provide financial advice in a way that suits their customers. Many in the community, however, doubt advisers will move away from documentation entirely.