In August 2017, we submitted our thoughts to ASIC in relation to its Consultation paper 284, looking at the improved use of SOAs.
We’re pleased to see the Financial Planning Association (FPA) has agreed with a number of our suggestions, which would make SOAs more suitable for tech-enabled humans.
We believe several changes are essential to deepen consumers’ understanding of financial advice in the statement.
The language in the example SOA is at times too complex and should be expressed in plainer English that can be understood by more people.
Today’s SOAs aren’t a powerful or appealing way to deliver information – after all, they are produced in a language and format that most people simply don’t understand.
Far from helping educate clients, this ‘foreign language’ only seeks to alienate and confuse them.
Convoluted language is a danger within the example SOA put forward by ASIC.
It requires consumers to ‘find’ relevant information, and once found only a subset of consumers would be able to understand it.
The words and concepts are too complex and unfamiliar. Let’s make the complex simple and ‘de-jargon’ the language of financial advice and bring it to life.
There are other areas for improvement in the example SOA.
It should begin by outlining the client’s goals and the value of the advice being provided to the client, then disclose costs and what the adviser is being paid.
This recommendation has also been endorsed by the FPA.
As it is now, the sample SOA opens with the adviser disclosing their self-interests; the danger being that consumers may immediately form a negative perception and lose trust in their adviser and the advice given.
Is their adviser acting in self-interest from the start, not for the consumer?
ASIC also doesn’t include digital SOAs in its consultations – this a significant ommission.
Digital SOAs will be the way of the future, given the huge growth of automated financial advice.
We believe ASIC should engage with advisers and our technology firm on the concept of digital SOAs. Data shows that 89 per cent of decision-making is carried out by consumers on mobile devices.
Additionally, current word document SOAs are out of date before they are printed given they don’t accommodate digital advice delivery.
The FPA has also recommended how ASIC could encourage the digital delivery of advice using mobile technology.
We also believe improvements to a sample SOA could include a visual representation of a digital financial plan.
As the FPA has also recommended, we suggest the use of visual elements; graphics, audio and video to make a more engaging delivery of information to consumers.
Our firm has amassed great understanding of the positives and pitfalls of digital automated advice. Our mission is to help all Australians to benefit from positive, trusted and compliant financial outcomes delivered by financial advisers who are supported and enabled by best of breed digital tools.
Jacqui Henderson is the founder and chief executive of Adviser Intelligence
Jacqui is the head of a technology company and is not licensed to provide someone with an SoA. Is there literally a single person who cares about her opinion on this topic aside from ifa who collect a fee for it?
Why do we encourage those with no experience to form strong opinions on something that they don’t understand? you are doing the industry a disservice, ifa.
My view is we should at least give Jacqui a go. I spent thirteen years advising the consumer and the last seventeen in dealer group management.
What I know is the current SoA process is expensive, cumbersome and out of date.
The technology is already available to provide a video SoA, so why wouldn’t you just record the meeting, and provide a copy to the client? Every bit as admissible in a court of law and far more time efficient.
I find it weird that our industry promotes ideas of further regulation to the regulators. Even stranger is that these thoughts are espoused by non-planners ((Jacqui Henderson is not listed in moneysmart’s FAR) trying to make a business out these kinds of self-promoting articles.
Think it’d be best if the “thought leaders” follow the successful practitioner leaders and just put their heads down instead of encouraging further change- we all know the costs of change is ultimately born by the clients. Sometimes the answer is not More Regulation or Better Regulation. Perhaps let’s give it time for the current rules to mature along with the industry and prioritise this over self-promotion.