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If you are frustrated with how long it takes to make an SOA, you are in good company

During 2021 we conducted a survey of the use of technology in the production of Statements of Advice and the content of those SOAs.

Wednesday, June 8th 2022, 6:53AM 1 Comment

by Russell Hutchinson

First, how the SOA is made: fewer than 8% of advisers use a process that largely automates the production of an SOA leaving them with only modest customisation to achieve a quick yet personalised advice process. That is probably just as well. Most advisers pride themselves on a more personal touch. However, equally, so much SOA content is standard (at least within a well-defined customer segment) that almost no-one starts each document from scratch. Most advisers are operating between a document template in a word-processing at the basic end of the spectrum to a good system that adds in pro-forma advice from calculators, quotes, and research. This range encompasses about 84% of all the SOAs written, with the bias actually being towards the more automated end of the spectrum. Given the focus on process, that direction of travel will continue – more automation and more integration will come. Tools will improve. We are all investing a lot of time and effort in this area.

Second, the content of the SOAs: there are some surprising limitations in a large proportion of SOAs. The six areas of an SOA that a least-common (appearing in less than half of SOAs) cover some remarkably useful territory. These areas are: the method used for selecting the product provider, a privacy statement, a statement of affordability, aspects of advice deferred to a future date, explanation to the client of how to use the SOA document itself, and gaps between the recommendation and the goal. Individually, given the specific circumstances of each advice engagement there may be some very good reasons why each of those section might be left out of a specific SOA. In aggregate, over hundreds of SOAs it seems unlikely that they should be rare.

Tags: Russell Hutchinson

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Comments from our readers

On 9 June 2022 at 9:09 am JPHale said:
I concur with Russell's findings, after 22 years in this industry I'm stunned by the number of advisers who both can't articulate how they give advice and by the lack of automation for what are pretty consistent decisions and processes in the advice compilation and statement.

There is no secret to how you give advice, because the approaches are mostly the same and because it needs to be able to be understood by both client and future advisers.

There is a fundamental in the new rules, the client must understand the advice they are given. Lack of understanding about how you give advice only opens you up to the risk of client issues.

The risk advisers run of not having a standardised process in their business is they miss things out, seemingly simple and critical things as well as the more nuanced and specific to clients.

Advice brings with it decision fatigue (the number of decisions a person can effectively make in a day) and that decision fatigue compromises the advice you give.

Not to mention the time it takes for you to get from needs analysis to SOA. This area is the easiest piece to reduce the time spent per client, and for 20 plus years it has been ignored by advisers. Usually hiding behind the statement personalised advice or intellectual property.

I call bullshit on both!

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