Only minor changes need to be made to the legislation governing Statements of Advice to make them more effective, The Fold Legal has advised.
Managing Director of The Fold, Claire Wivell Plater, said the legal requirements for SoAs can readily be met if advisers have a good understanding of what information is required in an SoA, what information can be left out, and how to effectively document their advice in writing.
Ms Wivell Plater said licensees needed to take steps to shorten their SoA templates, by removing unnecessary information. She observed that lengthy SoAs actually interfere with an adviser’s 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,” she said.
If the Government were to proceed with legislative change, as proposed by the Association of Financial Advisers (AFA) in its submission to the Senate’s Scrutiny of Financial Advice inquiry (see: Disclosure, SoAs Next Advice Battleground?), Ms Wivell Plater said only minor amendments were needed, such as removing duplicate information.
“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,” she said. “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.”
