When it comes to business, there are a lot of acronyms and abbreviations that can be confusing. One such term is SOA, which stands for statement of advice. In this blog post, we will discuss what an SOA is and the role they play for financial advisors and other businesses.
What is a Statement of Advice (SOA)?
A Statement of Advice (SOA) is a document prepared by an advisor or financial planner that outlines the advice they are providing to their client. It includes information about the client’s current financial situation, as well as potential strategies and solutions that could be implemented to achieve the desired goals. The SOA also provides a detailed explanation of why certain strategies and investments have been chosen.
The purpose of an SOA is to ensure that financial advice is given in the best interest of the client and that all relevant information has been considered before making a recommendation. It also serves as a legal document that can be used to prove that advice has been provided if there are any disputes.
For example, if a client accuses an advisor of providing inappropriate advice, the advisor can refer to the SOA to back up their recommendation. Moreover, an SOA allows both parties involved in a transaction (e.g. the advisors and clients) to review and agree upon any recommendations that have been made before taking action.
In summary, a Statement of Advice (SOA) is a document that outlines the advice given to a client by an advisor. It is used to ensure that the advice is in compliance with relevant regulations and that the client is aware of any risks associated with the recommended action.
The Problem with SOAs for Advisors
Despite the obvious benefits of SOAs, many advisors find them to be a burden. This is because they require an advisor to spend time researching the markets, gathering data, and researching the client’s needs before writing a comprehensive document. This can be time-consuming and costly, which is why some advisors shy away from preparing SOAs for their clients.
Sadly, the documents themselves are long and arduous to write and can be difficult to understand for the client. Even if a well-written SOA is produced, advisors must explain the contents of the document in simple terms so that their clients understand what they are agreeing to. Because of this complexity, many advisors prefer to provide only verbal advice instead of a formal SOA.
Outsourcing to Paraplanners
In recent times, many advisors have begun to outsource their SOA writing duties to paraplanners. Paraplanners are specialised professionals who are experts in creating comprehensive, yet concise, SOAs for financial advising clients. By outsourcing the preparation of an SOA to a paraplanner, advisors can spend more time focused on providing advice tailored to their client’s needs. For example, companies like https://www.tnwsolutions.com.au/ lead the way.
What Should an SOA Include?
An SOA should include information about the nature of the advice provided and any other relevant details, such as fees or risks associated with the financial strategies. An SOA must be clear, concise, and easy to understand so that clients can make informed decisions about their finances. In some cases, an SOA may also include advice about other services or products that could be beneficial to the client.
If you’re a financial advisor, consider creating a custom SOA for each of your clients. Make sure it covers the full scope of their financial needs and meets all legal requirements so that your clients can make the best decision for their future. Rather than adding to your workload, outsource to specialists!