A Statement of Advice (SoA) is a document prepared by a financial adviser or planner that outlines personalised recommendations and strategies for a client based on their individual financial situation, goals, and objectives. The purpose of a Statement of Advice is to provide clear and transparent guidance to the client regarding their financial planning needs.
The key components typically in a Statement of Advice include:
- Client Information: This section provides details about the client, including their personal information, financial situation, investment experience, and risk tolerance.
- Objectives and Goals: The SoA outlines the client’s financial objectives and goals, such as retirement planning, wealth accumulation, debt reduction, education funding, or estate planning.
- Financial Situation Analysis: The adviser assesses the client’s current financial situation, including income, expenses, assets, liabilities, investment holdings, and insurance coverage.
- Risk Profile: The SoA evaluates the client’s risk tolerance and capacity to withstand fluctuations in investment markets. This helps determine suitable investment strategies and asset allocations.
- Recommendations: Based on the client’s objectives, goals, and financial situation, the adviser provides specific recommendations. This may include investment products, superannuation strategies, insurance policies, estate planning measures, and tax strategies.
- Rationale: The SoA includes an explanation of the reasoning behind each recommendation. This helps the client understand why certain strategies are being proposed and how they align with their goals and circumstances.
- Costs and Fees: The document outlines any costs, fees, commissions, or charges associated with implementing the recommendations. This ensures transparency regarding the financial implications of the advice provided.
- Risks and Disclaimers: A Statement of Advice typically includes disclosures about the risks associated with investment products and financial strategies. It also includes disclaimers to clarify that the advice provided is based on the information available at the time of preparation and may not be suitable in the future.
- Implementation: The SoA may include guidance on how the client can implement the recommended strategies, including steps to take, deadlines, and any required documentation or paperwork.
- Review Process: The document outlines the process for reviewing and monitoring the client’s financial plan over time. This may include regular reviews, updates to the SoA as circumstances change, and ongoing support from the adviser.
In summary, a Statement of Advice is a comprehensive document that serves as a roadmap for a client’s financial journey. It provides tailored recommendations and strategies to help clients achieve their financial goals and objectives, while also ensuring transparency, accountability, and compliance with regulatory requirements.
