Advice firms ‘don’t have to wait for QAR’ for video SOAs

As part of the government’s Quality of Advice Review (QAR) changes, announced by Financial Services Minister Stephen Jones in December 2023, the previously promised changes to statements of advice (SOAs) were confirmed.

Minister Jones noted that SOAs would be replaced with an advice record that provides clients with “helpful information in plain English”.

“The record has to be clear and concise and effective and actually help the clients make an informed decision about the advice that they have received, and it’s pretty straightforward,” the minister said.

Alongside a revamp in SOAs, a modernised and flexible best interests duty will apply to all providers of advice and will, at its core, have the existing primary obligation to act in the best interests of the client and to prioritise the interests of the client in the event of a conflict.

Part of the expectation, and indeed the intention of the QAR’s recommendation from reviewer Michelle Levy, is that these changes will open the door for innovation in delivering these advice records, including the use of video.

Speaking on the latest episode of the ifa podcast, Corey Wastle, chief executive of Verse Wealth, explained how his team had implemented video SOAs into the business and why financial advisers don’t need to rely on the government amending legislation to utilise the format.

“We launched our own version of video SOAs in November 2022, so about 15 months ago now, and I’m glad to say it’s been really successful from a client point of view, from an adviser point of view, from a team point of view,” Mr Wastle told ifa.

“The initiative was born about by seeing the work the FPA was doing, running their workshops and all the content they put together on the FPA portal at the time. This is Fraser Jack and Ben Marshan. And we kind of piggybacked off the hard work they had done into the regulations and legally what needs to go in an SOA and how it can be delivered and so on.”

Among this work conducted by the then-FPA (Financial Planning Association of Australia), which has since merged with the Association of Financial Advisers (AFA) to become the Financial Advice Association Australia (FAAA), is a video toolkit titled, the Statement of Advice Project (SOAP).

Launched in June 2022 with the aim to guide members to efficiently serve clients while complying with necessary regulations, the SOAP box set is a series of 14 videos designed to arm financial planners with the tools required to create SOAs through a video format.

FAAA CEO Sarah Abood commented at the time that SOAs can end up “clouding the actual advice” given to clients. Moreover, she labelled any efforts made towards making advice more efficient and usable by clients “a critical step forward for the profession”.

Mr Wastle explained that Verse took inspiration from the FPA’s project and launched its own version of video SOAs just four weeks later.

“We did it quite quickly. In a nutshell, what we’ve done is our SOA is now a digital folder. Think like a Dropbox folder titled [client name] statement of advice, and in that folder is some different documents that work together to be a compliant statement of advice,” he said.

“The two main documents in there are the recorded meeting and a document called a summary of advice. Our summary of advice is basically what our SOA used to be, but we’ve cut out all of the jargon, the duplication, the unnecessary tables, all the wordiness, and we’ve taken like an 80-page document down to a 20-page document. It’s gone from 15,000 words on average to 3,500 words on average. Plenty of beautiful pictures in there.

“It does, I think, quite a good task of articulating not just the advice, but the why behind the advice and how it impacts the client’s values, intentions, financial wellbeing. And it’s the kind of document that’s easy to digest as a client, the kind of document you’d want to get.”

There is also a much lighter load for paraplanning as well, Mr Wastle said, reducing the time needed from around eight and a half hours to just two and a half hours, while also obtaining client consent within the meeting.

“We’ve captured the informed consent from the client because every meeting is recorded. We don’t need to do file notes. It doesn’t matter whether meeting is Zoom or in person, we record it,” he explained.

“It means that we’ve really streamlined the delivery of ongoing advice around ROAs and so on. A lot of that gets delivered in the meeting and, in short, we’ve made the business more efficient.”

Licensees need to be open-minded

While Mr Wastle said there are clear benefits for financial advice firms putting video SOAs in place, licensees could be a hurdle in moving away from the standard document.

“I think most firms would describe the SOA paraplanning as the biggest operational challenge in their business and one of the biggest detractors from the client experience. It’s been a long-running problem and QAR, in some ways, will hopefully really help address that, but you don’t have to wait for QAR,” he said.

“I think if you understand the regulations of what has to go in an SOA, which isn’t a lot, and how it can be delivered, and you’re willing and your licensee is open-minded to you thinking from a client experience perspective rather than a compliance perspective.

“First and foremost, you can do some of these things and do them well and, in turn, potentially be a far more compliant business. You’ve got every single conversation recorded. I think that helps from a risk governance point of view as well.”

Verse Wealth, for instance, operates under its own AFSL and, as a result, has been able to avoid running into that roadblock.

“That gives us a lot of autonomy, so not all are going to jump at the opportunity, but it’s a genuine opportunity to improve the business, improve the client experience. It’s been done. It’s been done by a number of firms now and done well, so I’m happy to chat with others if they want a bit of guidance,” Mr Wastle added.