Will this dramatically change how advice is delivered or will things largely remain the same?
There are two points I would make for any practice considering the future of their advice process.
Keep doing what you’re doing
Firstly, try not to get too caught up into what may or may not happen.
We have seen many reviews come before. We are still in the very early stages of this one. A final report is still to be prepared, and then proposed legislation would need to be debated, and passed, through both houses of parliament.
Indeed, the industry itself is divided on this and many other changes being proposed. With the current make-up of the parliament, it is anyone’s guess as to what may happen. There are already signs that consumer groups and the media will fiercely oppose a move to a more laissez-faire advice model.
The point is that, as a practice owner, I wouldn’t be changing how I plan or run my business now at this early stage.
Radical change or business as usual?
Secondly, if this proposal does find its place into law, what will a world without the requirement to provide ROAs and SOAs look like?
Such a change would mark a massive U-Turn in policy making. But, in the end, I don’t think the financial planning process will dramatically change for firms who were always committed to best practice anyway. Nor, in my view, will this bring an end to advice documentation.
High-quality firms will continue to follow best practice principles, even if they are not strictly required. We can debate the semantics — whether to call it an “SOA”, a “Financial Plan”, a “Letter of Advice”, or a “Review Report”, etc but it is difficult to see a move away from documentation entirely.
The advice process, at its core, involves many steps including fact finding, goal setting, strategy development, risk profiling, product consideration and ongoing review. The need for great software and processes will remain as important as ever. A “hotline advice model” may work for some segments of the market but won’t become the norm for holistic advice firms.
We would, in principle, welcome a move towards greater flexibility and professional judgment in how Advisers present their advice.
As a software provider, we can see how a “substance-over-form” approach would open new possibilities, including concise reporting, graphic-rich content and a greater focus on strategy and outcomes, rather than a fixation on compliance.
Vincent Holland, Plutosoft
Documentation will be required. What is currently lacking is documents that create client engagement. Get rid of the lawyers.