On the latest episode of the ifa Show, financial adviser at Complete Wealth Ben Neilson argued that if crafting an SOA was less onerous, advisers would be less vehement about the need to reduce regulations regarding the documentation.
“Our position is that if we can just do that faster, the SOAs aren’t actually that bad if we would just remove most of the crap from it and get to the heart of what it was originally designed to do,” Neilson said.
He added that while the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms will potentially change SOA regulations, advisers don’t need to wait to streamline their processes.
“If they didn’t take as long and they didn’t cost as much, would we care? So, the whole position is that SOAs suck and they’re compliance heavy and there are 100 boring pages and that most of our consumers fall asleep reading them,” he said.
“If they didn’t do all those things, if they were quick and they were sexy and they had fun modelling and they were only 10 pages and it only took you five minutes, what do we care? Because I’m not sure about you, but I don’t trust rules to govern the rest of my professional career.
“I would rather be ahead of that curve because I’m not sure how many pollies are making good financial decisions for our sector, but they haven’t done too well to begin with. So, I’m not sure what stock I put into it.”
Neilson explained that even when regulations around SOAs do change, there will still be a need for some form of documentation like an SOA to allow processes to continue to function efficiently, so there is still value in simplifying the creation of these documents.
“If they’re going to address it and remove some of the regulations, we’re still inevitably going to need some record of what we did and more importantly, what we need our people in our office to do,” he said.
“We still need some record of what we expect the people around us to do so we can help these clients. This still has to be written down. I don’t want to be sitting here debriefing after nine appointments every day going, that guy wants that thing, wants that way.
“A document is still quite easy. And whether it’s in a document or [Ben Marshan] is doing some pretty good work with the video recording, there still has to be some form of record.”
Speaking on his work to help make writing SOAs less onerous, Neilson said that working towards improving the processes of the industry can, in a way, return some control to those in it rather than being at the whim of regulators.
“If we can elevate everybody to the point where they are quite easily servicing 300 clients a year, then we can really introduce some wide-reaching implications. All of a sudden, we are actually acting like professionals. We are creating the world in which we operate, at the moment, we’re merely existing within it,” he said.
While many advisers are concerned about getting ahead of the regulations and trying to reduce the information included in their SOAs because their licensee won’t allow it, Neilson asked a simple question: “Have they asked?
“Have they got a solution where they say, ‘This is what we’re doing and this is what we want to do, and this is the time metrics on it, and this is why we think it’s safer’?” he said.
“Because every time I’ve done this, on four major licensees so far, every single one of them have said, ‘If you do that, if you replace that template with this template, we would have no problems with that’.
“So, have they asked? And then also, what have they done themselves? It’s very easy for me to say it would never work, my licensee wouldn’t say yes, but have you asked?”
I”m comfortable with producing a SOA. It’s the other 13 pieces of legislation, all the other AML/CTF, Privacy requirements, the fee consents, the AFCA standards that are the problem.
I recall asking a licensee if we could upgrade a process to simplify things for our clients and deliver paperwork in the way they wanted it. We were told yes. Then ASIC came along later and said no and banned one of our Advisers for doing it, despite having evidence that the licensee signed off and even said they were doing it themselves with their clients.
Afca rulings a reg guide example which is non compliant and now the fscp not picking mainly SoAs mean licensees have to rely on lowest risk and PI friendly. Hence Long SoAs as a risk reduction tool addressing and completing with all previous afca and fscp issues.
Lalaland to think otherwise and if anything an example on why change IS needed in legislation.
Regulators in advice can have and will amplify an error into a banning for political promotion and bias. Legislative change IS needed QUICKLY! Even when changed this is the minimum standard can then exceed how you like. But the minimum standard needs to be CLIENT focused with professional judgement allowed and low but easy to meet.
Particularly given afca will consider the whole file to look for any errors, regardless. So this piece (SoA) MUST be changed in law.
Ben Neilson talks about retaining SOA’s and somehow streamlining them will allow us to act like professionals. However no other professional is required to complete a Statement of Advice, or anything like them.
Or have to pay pi at adviser levels
All professionals are required to keep some record of their client interactions. The question is what do they need to present to clients and in what format/level of detail. It seems to me that Neilson is simply suggesting that how that is done can be systematic and therefore can be produced with much greater efficiency. the vast majority of each SOA is the same because at the end of the day money is money, investments dont; care about your feelings and the tax/super law is the same for everybody. Even the issues that relate to teh specific client are far from unique. Therefore with the right frameworks supported by the right process, advice can already be much more efficiently delivered than it generally is, regardless of the length of document the licensee and/or PI insurer demands.
Old news – and naive to think firms haven’t by now well and truly streamlined their processes and smartened their offerings/CVP. With or without SoA’s, and no matter how long these may need to be (under whatever government/regulation of the day), the core workload still persists in our profession: A diligent process around individualised Research, comparisons, quoting, and then modelling forecasts, which the clients ultimately still want (and need) to see from their adviser. These are the time-consuming areas, but invariably lead to demontrating value, and building trust in our profession. Whether that info is then captured and tranposed into a 7-page or a 70-page SOA, is frankly irrelevant. Don’t try to shortcut what we can’t compromise on.
All well and good until you involve licensee and PI cover… That’s how we got to 120pgs
Ouch (the truth hurts).
Which ASIC acknowledge but don’t know how to fix. If you did an SOA as directed in writing by ASIC there wouldn’t be a problem. You would never be able to defend yourself at AFCA or in an ASIC audit but you would definitely save time.
Why change MUST be legislated. Unlike the title, not spirit, of this article.