Though common in outlining financial recommendations, there are limits on who can provide a statement of advice (SoA).
About statements of advice and who can provide them
To provide a brief outline explaining what is a statement of advice, a statement of advice (SoA) is a written document that outlines the financial recommendations provided by a financial advisor to their client. It provides a comprehensive overview of the client’s financial plan, including their financial goals, investment strategies, and the recommended products and services to help achieve those goals.
Explaining when a statement of advice is required, a SoA is a legally binding document that demonstrates the advisor’s compliance with regulatory requirements and protects both the client and the advisor.
By providing clients with a SoA, parties like financial advisors can help their clients to better understand their financial situation and make informed decisions about their investments and other financial decisions.
About statements of advice and who can provide them
To provide a brief outline explaining what is a statement of advice, a statement of advice (SoA) is a written document that outlines the financial recommendations provided by a financial advisor to their client. It provides a comprehensive overview of the client’s financial plan, including their financial goals, investment strategies, and the recommended products and services to help achieve those goals.
Explaining when a statement of advice is required, a SoA is a legally binding document that demonstrates the advisor’s compliance with regulatory requirements and protects both the client and the advisor.
By providing clients with a SoA, parties like financial advisors can help their clients to better understand their financial situation and make informed decisions about their investments and other financial decisions.
Reasons there are limitations on who can provide a statement of advice
There may be limitations on who can provide a Statement of Advice (SoA) due to the potential risks involved in providing financial advice to clients. Providing financial advice requires a high degree of knowledge, skill, and expertise, and can have significant consequences for clients if the advice is not appropriate or accurate.
The limitations on who can provide a statement of advice in Australia are designed to ensure that clients receive high-quality financial advice from qualified and ethical professionals and to protect consumers from potential harm.
Legal requirements affecting who can provide a statement of advice
In Australia, there are regulations and requirements for financial advisors and professionals who provide Statement of Advice (SoA) services. The Australian Securities and Investments Commission (ASIC) sets out regulatory requirements for financial advisors and professionals, including educational qualifications, ongoing professional development, and compliance with industry regulations and standards of conduct.
To provide financial advice in Australia, financial advisors and professionals must hold an Australian Financial Services (AFS) license. The AFS license is issued by ASIC and requires applicants to demonstrate that they meet the necessary educational and professional standards to provide financial advice.
Additionally, financial advisors and professionals in Australia must adhere to the Corporations Act 2001, which sets out obligations related to consumer protection, disclosure of fees and commissions, and ethical conduct. The act also includes provisions related to conflicts of interest and disclosure of any potential conflicts to clients.
There are also limitations on who can provide SoA services in Australia, with only licensed financial advisors and professionals being authorised to provide financial advice. This helps to ensure that clients receive advice from qualified and experienced professionals who are knowledgeable about financial planning and can provide accurate and appropriate advice.
Examples of who can provide a statement of advice
Financial advisors
Financial advisors are professionals who provide clients with advice on financial planning, investment strategies, and risk management. Financial advisors are one of the most common parties who can provide a statement of advice.
They often work with clients on a one-on-one basis to help them achieve their financial goals. In providing a SoA, financial advisors will typically gather information about a client’s financial situation, assess their needs and goals, and provide recommendations on investment options and strategies.
Wealth management firms
Wealth management firms provide a range of financial planning services, including investment management, estate planning, and retirement planning. They may also provide clients with a SoA as part of their services.
Wealth management firms typically have a team of professionals who work together to provide clients with a comprehensive financial plan that meets their individual needs and goals.
Investment management companies
Investment management companies are responsible for managing client’s investments on their behalf. They may also provide clients with a SoA that outlines their investment strategy and objectives. Investment management companies typically have a team of professionals who work together to manage clients’ investments and provide them with regular updates and reports.
Paraplanners
Paraplanners are professionals who work alongside people or businesses like those listed to assist with statement of advice preparation or outsourcing statements of advice. They are responsible for conducting research, gathering data, and analysing information to assist in the creation of a comprehensive SoA. Paraplanners may also assist with administrative tasks and other aspects of financial planning, like:
Advice on choosing from who can provide a statement of advice
Having a high-quality and professional Statement of Advice (SoA) is essential for effective financial planning. That’s because a SoA can help clients to better understand their financial situation and make informed decisions about their investments and other financial decisions.
At One Degree Paraplanning, we are committed to providing high-quality and professional SoA services to financial advisors and professionals.
Our experienced team of paraplanners can assist with all aspects of SoA preparation, from data gathering and analysis to report writing and compliance. Contact us today to learn more about our statement of advice services and how we can support you or your financial planning practice.
