Presentation

Chapter 8

Statement of Advice

Advice and recommendations must be presented in a Statement of Advice (SOA) using the Affinia Statement of Advice (SOA Template) or a template which has been approved by the Affinia Professional Standards team.

The SOA Template has been developed to enable you to meet all the requirements for a complaint SOA. It is important that you complete each relevant section of the SOA Template as completely and accurately as possible. Your SOAs must contain as much information as a retail client reasonably requires to decide whether to act on the advice you are providing. Information in the SOA should be presented clearly and concisely.

When and How to Provide the SOA

The SOA must be provided when the advice is provided or as soon as practical after. The client must be given the SOA before you provide the client with any further financial services connected with the advice – this means that you cannot assist the client to implement any of the advice until you have provided them with the SOA.

An SOA can be provided in person, electronically, by post, or any other way that you and the client agree it will be provided. If it is agreed that you will provide the SOA by making it available online, you must notify you client by post or email that the SOA is available online and where they can find it. As a security measure you should not include a direct hyperlink to the SOA in an email.

When and How to provide a Record of Advice (ROA)

What is a Record of Advice (ROA)?
A ROA is a document used to provide a written record of the advice you give to a client where that advice is being provided subsequent to an earlier Statement of Advice (SOA).

When can a ROA be provided?

A ROA may be provided where there have been no significant changes to your client’s circumstances, and there have been no changes to the original basis of advice in your previous SOA. Therefore it is important that before each ROA, you need to consider if there has been any “significant change” to the:

  • Client’s relevant personal or financial circumstances; or
  • Subject matter of the advice; or
  • Basis of your previous advice, at any time during the seven years, request a copy.

Please refer to the Affinia Record of Advice (ROA) guidelines for further information and direction.

Note: The Corporations Act does not specify what is “significant”. Circumstances regarding each client will vary and you will need use your professional judgement to determin whether a change is “significant”. If you require further clarification, please contact your Affinia Professional Standards team member or email to compliance@affinia.com.au

The Affinia Advice and Research Team are also able to assist and can be contacted by email at research@affinia.com.au

If a significant change has occurred, a new SOA must be completed. Below is a list of potential ROA scenarios

  • Increase or decrease to sum insured possibly due to a trigger event like a new job, promotion etc that does not have a broader lifestyle impact
  • Alterations to an existing policy i.e. indemnity to replacement, shorter/longer benefit
    period/ waiting period or recommendation to apply to remove an exclusion/loading
  • Addition of a cover that was initially recommended in the SOA but the client chose not
    to proceed with at the time or acting on/confirming an SOA outside the 45 days
  • Switching of funds within a portfolio due to performance or a rating change
  • Rebalancing of a portfolio to bring it back into line with risk profile or a change in risk profile
  • Rebalancing of portfolio to stay in line with model portfolio changes
  • Withdrawal – advice on which fund/s from which to draw from
  • Deposit – advice on which of the existing fund/s to build on
  • Buying or selling shares within a portfolio possibly on the back of performance or a rating change
  • Rebalancing a share portfolio in line with a model portfolio change
  • Advice on what investments to sell/hold/add for a withdrawal or additional funds.

This process is essential in providing a trail of information that can substantiate a Representative’s claims if ever they are challenged.

The file note must be titled ‘Record of Advice’ and include statements of the following which must be presented in a clear, concise and effective manner.

  • Date of meeting or telephone conversation
  • Confirmation that the Client’s Needs, Objectives and Circumstances have been confirmed as unchanged*
  • A clear statement that information about the client’s relevant
    circumstances is set out in a previous SOA provided to the client
  • Reference the previous SOA and identify the date of the SOA
  • The relevant needs, objectives, circumstances that the further advice is sought
  • The advice, the basis for the advice and why the advice is appropriate
  • Important issues and risks relating to this recommendation that were discussed
  • Disclosure of remuneration including dollar amount and percent
  • Disclosure of any conflicted payments or relationships (actual or potential)
  • Warnings (tax, limited scope, reliance on information provided)
  • Your name and contact details
  • Date the ROA was issued to the client
  • Record any queries by the client and your response to these queries. Note the details
    of any follow-up action arising from a meeting. If follow-up action is required:
  • - What was required
  • - What research, investigation or action was carried out
  • - What was the outcome

Note:* Reasonable levels of investigations need to be conducted and evidenced.

This means that during any meeting with a client, you should take notes of what was said by both you and the client and give the client your best estimate of how long it will take, and set a date by which to get back to the client.

  • Disclosure in relation to remuneration (including commission) or other benefits, any other interests, whether pecuniary or not and whether direct or indirect and any association with the issuers of the financial product that might be reasonably capable of influencing the advice must be given to the client at the same time or as soon as practicable after the further advice is given
  • Where possible obtain the client signature to confirm the details within your file note are correct
  • If your client choses a variation to your advice, this will need to be captured along with the client’s instructions and acknowledgment that their actions are against your advice.

Note: where your FSG has changed since the last SOA, you will need to provide your client with your current FSG.

For new Authorised Representatives (AR) to Affinia

We require clients to be reviewed at least every two years for insurance and every year for investment/superannuation. Standard SOA obligations should be referred to the SOA instructional document. ROA obligations should be referred to our ROA Guidelines.

The matrix below focuses on our advice requirements for your existing clients.

Scenarios  Advice Provided Within Two Years  Advice Provided > Two Years
 AR with existing client No new advice documents required where no new advice provided as there have been no significant changes to the client’s needs, objectives and/or circumstances AR should engage with the client to confirm current situation and offer advice/review services. The review service may be via either a ROA/SOA (based on the client’s needs, goals and objectives)
 AR with new client All new clients advice requirements need to follow the standard SOA obligations
 
AR never provided client advice
(e.g. purchased client)
AR should attempt to engage with the client and offer advice services. If the client refuses to advice services, make sure you add a comprehensive file note about the offer and client response. If the client does take up advice service offer, follow the standard SOA obligations
Implementation

Implementation

Section Five - Advice Handbook

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