Statement of Advice Example & SOA Template for Paraplanning
Introduction
In the ever-evolving financial services industry, providing clear, compliant, and well-structured advice is not just essential but mandatory. A Statement of Advice (SOA) serves as the cornerstone document that financial advisers use to formally present financial strategies and product recommendations to their clients. It ensures both compliance with regulatory frameworks and fosters trust by giving clients a transparent view of the advice provided.
For paraplanners and financial advisers alike, knowing how to draft a robust SOA is crucial.Many firms today are increasingly relying on outsourced paraplanning to manage the time-intensive task of preparing SOAs efficiently and compliantly.
What is a Statement of Advice (SOA)?
A Statement of Advice (SOA) is a legally required document under the Australian Securities and Investments Commission (ASIC) guidelines. It outlines the financial advice given to a client, detailing the basis of the advice, recommendations made, associated fees, and any relevant disclosures.
SOAs are typically prepared by financial advisers, often with the support of paraplanners, especially when dealing with complex financial situations such as retirement planning, wealth management, or SMSF statement of advice needs.
Why is an SOA Important in Financial Planning?
The significance of an SOA cannot be overstated. Here’s why it plays a pivotal role:
- Client Transparency: Provides a clear and structured breakdown of the financial advice being recommended.
- Compliance and Legal Protection: Ensures adherence to ASIC regulations, safeguarding both the client and adviser.
- Professionalism: Acts as a formal document showcasing the adviser’s due diligence and understanding of the client’s financial goals.
Essential Components of a Statement of Advice
A well-structured SOA typically includes the following sections:
- Cover Letter / Executive Summary:
Brief introduction summarising the purpose and key recommendations. - Scope of Advice:
Specifies the areas covered and any limitations. - Client Goals and Objectives:
Highlights the client’s financial aspirations and needs. - Client’s Financial Situation Overview:
Provides a snapshot of the client’s assets, liabilities, income, and expenses. - Basis of Advice:
Explains the rationale behind each recommendation. - Recommended Financial Strategies and Products:
Details specific investment, insurance, or superannuation products advised. - Risks and Disclosures:
Outlines potential risks and relevant disclosures, ensuring informed decision-making. - Alternative Strategies Considered:
Demonstrates thorough analysis and justification for the chosen approach. - Fees, Costs, and Remuneration Disclosure:
Provides a transparent view of all associated costs. - Implementation Plan:
Offers a clear step-by-step guide on how to proceed. - Appendices / Supporting Documents:
Includes research material, product brochures, and relevant forms.
Statement of Advice Example: Simplified Sample
To provide context, here is a simplified statement of advice: example for a hypothetical client, Jane Doe, a 35-year-old professional aiming to retire at age 60 with sufficient wealth to maintain her lifestyle.
Client’s Goals:
- Retire at 60 with $1.5 million in superannuation.
- Secure adequate life and income protection insurance.
Recommendations:
- Increase superannuation contributions to $15,000 annually.
- Consolidate super accounts to reduce fees and improve investment performance.
- Establish an SMSF for greater investment control and flexibility (SMSF statement of advice section).
- Take out a life insurance policy with a $1 million cover and income protection insurance.
Fees:
- Initial advice fee: $2,500.
- Ongoing service fee: $2,000 annually.
Risks and Disclosures:
- Market volatility affecting investments.
- SMSF regulatory responsibilities.
This sample statement of advice format provides clarity, compliance, and a client-friendly structure.
SOA Template for Paraplanning
For paraplanners who regularly prepare SOAs, having a reliable structure ensures consistency and compliance. Below is a simplified sample SOA template outline:
Sample SOA Template:
- Cover Letter / Executive Summary
- Table of Contents
- Scope of Advice
- Client Profile & Objectives
- Financial Position Overview
- Basis of Advice & Strategy Overview
- Recommendations (Investments, Superannuation, Insurance, etc.)
- Alternative Options Considered
- Fees, Costs & Remuneration Disclosure
- Risk Considerations & Disclosures
- Implementation Plan
- Appendices / Supporting Documents
This template can be customised based on client-specific scenarios and financial goals. It is especially useful for paraplanners looking to ensure every required section is consistently covered.
How to Write an Advice Sheet: Best Practices
Drafting a comprehensive SOA requires attention to detail and a clear understanding of the client’s needs. Here are some best practices to keep in mind if you’re wondering how to write an advice sheet:
- Use Plain Language:
Keep technical jargon minimal. Ensure the client can easily grasp the advice. - Maintain Compliance:
Align with ASIC regulations and maintain up-to-date knowledge of any regulatory changes. - Prioritise Client Objectives:
Always tailor recommendations to match the client’s financial goals and current situation. - Be Transparent About Fees:
Clearly disclose all upfront and ongoing fees to avoid client confusion or regulatory issues. - Provide Alternatives:
Demonstrate thorough research by listing other strategies considered and reasons they were not selected. - Stay Organised:
A well-structured SOA enhances readability and ensures all key areas are addressed.
The Role of Paraplanning in SOA Preparation
Preparing an SOA is a meticulous process that can be time-consuming for financial advisers, particularly when dealing with complex financial strategies such as SMSFs or insurance portfolios. This is where paraplanning outsourcing services become invaluable:
- Accuracy: Professional paraplanners ensure every section of the SOA aligns with compliance standards.
- Efficiency: Delegating SOA preparation allows advisers to focus more on client relationships and business growth.
- Regulatory Updates: Skilled paraplanners stay updated with ASIC requirements, ensuring every SOA meets current standards.
For paraplanners, utilising a robust sample SOA template and working in close collaboration with advisers ensures the production of high-quality advice documents.
Conclusion
A well-prepared Statement of Advice not only fulfills compliance requirements but also strengthens client confidence. Whether you are a seasoned adviser or a paraplanner, having access to a reliable statement of advice example and a structured sample SOA template is essential for delivering clear, compliant, and client-focused financial advice.
By following best practices and leveraging paraplanning expertise—whether in-house or through outsourcing SOA preparation—you can streamline the process while ensuring accuracy and regulatory adherence.
If you’re looking to enhance the quality and efficiency of your SOA preparation process, consider adopting the sample formats and guidelines outlined above.
