On a new episode of the ifa Show podcast, founder and CEO of WOW Women’s Group Tracey Sofra slammed the SOA process as “horrendous”.
“I feel like the client’s in the corner and everyone’s huddled up worrying about all the stuff. If I could just say this, when I present a plan to a client, they don’t really care about the SOA. They just care about what I’ve got to say.
“And all of this stuff that is meant to help the client and all of this stuff that is meant to put them in a better position… guess what? They’re confused and actually not understanding all the stuff that is required in the SOA.”
Ms Sofra said she believes the truth is that while SOAs are meant to assist clients, they are not helping them nor the adviser.
“It’s not better. It’s not good. And the client just doesn’t understand it,” she explained.
“And we spend hours trying to explain page by page, every single component of the SOA to the client. And they’re actually not better off. And it’s a complete waste of time.”
Ms Sofra suggested the SOA could instead be a “10-page document” clearly outlining to the client their current financial situation and where they would ideally like to be by a certain period of time.
It comes after the Financial Services Council (FSC) listed simplifying documentation requirements for the advice process as a top policy priority ahead of the federal election in May.
In its report released last week, the FSC stated that SOAs are “driving up the cost” of financial advice and backed calls for the it to be replaced with a letter of advice.
Listen to the full ifa Show with Ms Sofra here.
Sadly ASIC don’t seem to be concerned with the quality or affordability of advice – just box-ticking, collecting fines & scalps.
SOAs are written for the compliance team, that’s all. We utilize PowerPoint presentations, which has visuals and is engaging when explaining what’s in the SOA. Much better outcomes for client understanding. We then send email the PowerPoint after the meeting too.
I’ve recently started using Roar’s ‘Dynamic docs’ to navigate this problem.
Really allows me to centre the advice around my clients’ goals in an engaging manner.
A good SoA will educate and inform whilst building a stronger relationship by providing a reference document of meaningful discussions between the adviser and client. A typical SoA seeks to protect a licensee and adviser where the relationship is formed to flog a product and unnecessary ongoing services. A simple solution is for a client to also take responsibility to understand their financial position, be accountable for their choices and not rely on litigation to protect against loss.
Tracey Sofra this industry is like being stuck in Groundhog Day and has been for far too many years! One day something might change when the muppets who have made and overseen the current mess of rules and regulations have moved on and their replacements understand and care enough to actually do something to fix it so we can then start moving forward again…
Don’t think i have had a client read an soa in over a decade.
no one “reads” the SoA. it’s created for the benefit of the licensee. as long as the dealer group model remains long, SoA’s which apparently are of no benefit to the client will remain.
A decade ? I’m going to suggest at least twenty years. Documents written by lawyers, for lawyers. Any consideration for the client is tossed to one side as two parties with no earthly care for a client, want to argue about what colour the number seven smells like. And we get stuck in the middle. Again.
[quote=Anonymous]That might be true, but when are going to review advice provided by simply looking at it and asking the question, ‘is this advice any good?’. When we use this as a base, and sideline everything else, I believe we’ll be taking this industry forward.[/quote]
Unfortunately ASIC’s definition of good advice is “compliant advice”. They have never understood what advice is, what advisers do or what clients want. And my belief is they never will.
And these requirements (incl FDSes, Opt-Ins, etc) are why we’re a complete joke to the international stage when it comes to advice
Sounds like nothing has changed since I left the industry 2 years ago! Clients are better off talking to friends at a BBQ!
Which is of course what they do – although this costs them significantly more in mistakes than my fee will ever be.
Chasing up annual fee renewals (under Hayne2) from time poor working families is an even bigger waste of time. Hence they have totally lost access to good advice
Why dont they get access to it if they need it? Maybe they just don’t value it
No – they can’t afford it. What’s not to understand here ?
No they are not! SoA’s are essential for clients, lawyers and regulators when they want to lodge a complaint against the adviser 🙂
Good luck to all who think a less comprehensive SoA’s is a waste of time and will better protect them against complaints.
That might be true, but when are going to review advice provided by simply looking at it and asking the question, ‘is this advice any good?’. When we use this as a base, and sideline everything else, I believe we’ll be taking this industry forward.
Ummm….I think that’s the point. The client is paying for a lengthy document that is actually for the adviser to cover themselves. That’s not client centric. It’s a response to (over)regulation.
More specifically, it’s a response to biased misuse of power by ASIC and AFCA. Much of what gets included in SoAs isn’t actually required by law. But it is needed to protect against ASIC and AFCA. The issue is not necessarily over regulation, it’s bad regulation.
And this is the whole issue, clients, lawyers, regulators and advisers believe an SOA is necessary to ‘protect them’.
An SOA will not protect the client from bad advice and it will not protect the adviser if they give bad advice. The middlemen, ie lawyers and regulators could find fault with nearly every SOA regardless of whether the underlying advice is good or bad.
Fix the system, not the mechanism.