Paraplanners remain essential despite shifts in SOA approach

The Financial Advice Association Australia (FAAA) has for some time now been running a video statements of advice (SOA) project, aiming to assist advisers in streamlining and simplifying record-keeping processes. Despite ongoing progress, Hayley Knight, director of Contract Paraplanning Services, holds the belief that video SOAs will not render paraplanners obsolete.

Taking to LinkedIn this week, Ms Knight said that after speaking with multiple advisers involved with the FAAA’s project, one consistent message she has heard is that “paraplanners will still be needed”.

“The advice still needs to be put together and the adviser wants to be in front of clients, not in front of a computer,” Ms Knight said.

She explained that video SOAs will merely result in an expansion of a paraplanner’s responsibilities.

“A key objective of the video SOA is efficiency. The more efficient the SOA process is, the more time the adviser can focus on growing the business and as a result, building the paraplanner’s workload,” Ms Knight said.

Moreover, she noted that video SOAs still need compliance regulation.

“A paraplanner plays a key role in making sure what is presented is compliant,” Ms Knight assured.

In a message directed to paraplanners, Ms Knight recommended that they start educating themselves about the concept of video SOAs and how they can be applied.

“There may come a time when your adviser wants to move in this direction and you will be one of the first people they will turn to,” she said.

Back in December, Minister for Financial Services Stephen Jones announced substantial alterations to SOAs as part of the government’s Delivering Better Financial Outcomes package.

In essence, the minister highlighted that the revamped SOAs will embrace a “principles-based advice record” approach, indicating a shift from the current comprehensive format to a more concise and transparent style, providing “helpful information in plain English”.

The new SOA must, however, meet certain requirements and address four key principles: the subject matter/scope, the advice – such as product recommendations and strategies, the reasons for the advice, and the cost of advice to the client and/or benefits received by the adviser.

The minister also clarified that the obligation to provide a record to the client will be maintained, while adviser record-keeping obligations will be updated. The focus is on making sure important information that guides the advice is included, without overwhelming clients with unnecessary details that might confuse them when making decisions.

“The record must be clear, concise, and effective, and actually help the clients make an informed decision about the advice they have received,” the minister said.

Speaking to ifa at the time, Philip Anderson, general manager of the FAAA, said the new-look SOA is a “much-standardised set of requirements” that shouldn’t be “100 pages” long, with the emphasis placed firmly on what the client needs to understand the advice provided, and not on what the provider needs to minimise their legal exposure.

“That’s a very important thing.”