Balance complexity with compliance, templates with personalisation, financial literacy with reasonable basis and best interest and time constraints with quality and efficiency.

Here are a few simple tips which can assist in the improvement in the quality of SoAs.

1. Define your audience – the SoA is for the client, however it also needs to take into consideration the other audiences the SoA is being constructed for and reviewed by including the Adviser, the Licensee and ultimately ASIC (compliance). When writing a SOA you need to wear multiple hats to ensure that the SoA delivers the contents required to satisfy each audience. The consideration of each will put a different overlay on the SOA.
2. Make it logical to navigate– the SoA should convey info that the client needs to know in order to make an informed and logical decision. Present strategies in sequential order as they need to be implemented and explain each individual step clearly. 
3. Keep language instructional – The purpose of the SoA is to provide recommendation, therefore language should be instructional with clear steps backed up by explanation of the reasons why the action needs to be taken.
4. Aim for conversational tone – A SoA formally documents recommendations but does not have to be too formal in tone. A conversational approach helps to promote flow and ease readability.
5. Avoid Technical Speak – With over 100 financial planning acronyms commonly used in the industry, it’s easy to appear as though we are speaking another language making it more complex than it needs to be. It is a paraplanner’s job to know these acronyms and then translate this into language that is easy for a client to understand.
6. Keep in mind the client’s financial literacy – all content should be pitched at a client’s existing knowledge level. There is no point getting into the ins and outs of complex strategies within a SOA if the clients do not have the financial literacy to understand it. Similarly, if an Adviser has spent hours previously with your clients discussing the foundations of investing, asset classes, insurance, super and other fundamentals then the language of the SOA should take this into consideration. Where possible try to incorporate by reference the previous discussions.
7. Focus on relevance – Stick to the scope of the advice. Address all elements required but don’t cover items not scoped or it will over complicate the advice.
8. Try graphical representation of Complex Material – A picture paints a thousand words. The use of accurate pictures, diagrams, flowcharts followed by descriptive text can be more enticing to read and easier to understand.
9. Focus on the Purpose – aim for simple and succinct, rather than a lengthy discussion paper. The most important part is that it is logical and conversational. It makes sense, it is pitched at a level that takes into account your previously held discussions.
10. Seek feedback – although often feared, the comments and feedback from compliance can constructively improve the layout and content of a SoA. Ultimately though, we should be seeking feedback from the clients on how they rate the readability and overall presentation of the SoA so if the Adviser is willing, try encouraging them to seek this feedback as it will help you as the paraplanner to create better documents and the Adviser to provide advice to clients in a better way.

Mastering the skills to effectively write a SOA is something which many paraplanners will tell you can only be developed through time and experience. Tools such as financial planning software, templates and standard text libraries will help with the process but really it comes down to a paraplanner’s writing skills and their ability to communicate effectively.

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It’s like asking “how long is a piece of string?” without ever having seen the piece of string and unfortunately can show a lack of understanding by the adviser on the behind the scenes advice process. Similarly, a simple answer of “about 4 hours” by a paraplanner in an interview can show a lack of understanding of the various factors that go into the preparation and completion of a Statement of Advice.

To answer this question, we asked the members of Paraplanning Network Australia for their insights into “the key factors that impact the time it takes to generate Statements of Advice,”  Some of these insights follow:

1. It’s all about the integrity and completeness of data – a fully completed fact find is a good place to start, but often additional information is required when it comes to research and developing recommendations for a SOA. Having a checklist to ensure you have all necessary information, obtaining an Authority to Access Information and asking clients for current investment, loan, insurance and super statements from the outset can all help to speed up the paraplanning process. 

It’s also important to consider who is responsible for obtaining any required information and consider what their workload is. How long will the task sit in their “to do” pile and add to SoA turn-around time?

2. Am I making myself clear? – Noreen Les, Senior Paraplanner at Circle Paraplanning Services  says “One of the main factors for me is the quality of advice notes and documents provided by the adviser, i.e. the level of detail they provide and the personalisation, specific to client goals and why the advice is being provided to address those goals.”

To build a strong reasonable basis and create a more personalised Statement of Advice, the adviser can assist the paraplanner greatly by providing clear and concise instructions outlining discussions with the client; their specific goals and objectives.

3. Relationship is the key – it’s important that the paraplanner understands the adviser’s preferences for style and tone of advice.

“This includes how to interpret what an adviser is saying and writing/developing these into legible recommendations in a compliant SoA… if you don’t have a good understanding with the planner, there can be a lot of time spent making changes and updates to the SoA, even doubling the time spent sometimes.” – Lindsay Ross, paraplanner and owner at Wealth Leaders Pty Ltd.

Customising standard text can be a worthwhile exercise to reduce the time spent re-writing text that the paraplanner has written.

4. Templates, templates, templates! We all know the benefits of having templates in place, however if these haven’t been reviewed for some time then these can often become more of a hindrance than help to a paraplanner, with considerable time wasted editing and re-formatting a document.

“The more complex the plan the greater the need to stray from standard text and the need to develop own wording. This can take extra time if the adviser does not concur with the style that this has been written by the paraplanner,” says Quinton Sosnowski, Technical Specialist at Managed Financial Strategy.

5. It’s complicated! – The more complex the strategy, the more time spent by the paraplanner on researching the technical aspects, legislation, ramifications and compliance requirements and analysing the cost benefit of particular strategies. In situations where multiple scenarios are considered, this then further increases the preparation work for a SOA undertaken by the paraplanner.

To assist your paraplanner with this process, ensure that you are utilising the resources available to you, are you sharing these with the paraplanner? Does the paraplanner have access to the support services of a technical team to assist in the strategy development, or have similar strategies been recommended in the past, especially where you have been comfortable with the way the strategy was presented and explained in the SoA? Assisting the paraplanner in these ways can cut down the time it takes to develop complex advice documents.

6. Have you ever considered modelling? – Projections are an integral part of the paraplanning process. If a paraplanner is not confident with the calculator or software then errors are easily made and time is easily wasted. The key to a paraplanner being able to complete modelling efficiently is mostly in the accuracy and level of data provided and how confident they are using the calculator or tool.

One tip to make the process simpler is to provide a list of default strategy, investment return and general assumptions to be used for all projections. This helps to build consistency in your projections, reduce errors and more easier identify where data has been incorrectly input.

7. How about the software? – A paraplanners lack of experience or familiarity with financial planning software can double the generation time of a SoA.  “Financial Planning software is really a paraplanners domain. They’re going to use it more than any other employee,” says Dave Perry – Director at Accurate Admin Solutions Pty Ltd.

“I think one of the biggest factors in determining the time it takes to prepare advice is how good the templates are and your ability to “feed” data into them. If they are not particularly well designed and linked to the data sections within the paraplanning tools, you spend a great deal of time editing SOA’s,” says Noreen Les.

It’s vital that your paraplanner keeps up to date with upgrades and changes to the financial planning software and that they are provided an opportunity to attend additional training to up-skill and speed up the time it takes to use the tools, modelling and template wizards.

At the end of the day, there is no one size fits all when it comes to the time it takes in preparing Statements of Advice but there are many factor that impact on timely preparation. Identifying the part in the advice process where the time lag occurs, fostering better communication with your paraplanner and reviewing your templates and standard text could all help to streamline the process, reduce turnaround time and assist in building a better quality Statement of Advice.

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Promises promises!
A website can make pretty much anything look good. We’ve all been there – buying or booking something via a website only to find out later that the item in question is not exactly as it was portrayed on the website.  If it’s of insignificant value it’s easy to look beyond the disappointment however it’s often another matter if the money spent begins to mount up.

I was reminded of this when recently booking some accommodation the owners of which, according to the website, paid very close attention to the finer details of the small house I was renting for just a few nights.  It was with substantial surprise then that I found the house to be far less detailed than the website led me to believe. The refrigerator was filthy; the heater in the bathroom was circa 1970 and didn’t work; the ‘polished floorboards’ were actually linoleum and – you get my drift.

The so-called ‘buyer’s remorse’ emerged for me but only partially. After all, I hadn’t handed over my life savings to the landlord.  However, this example gets to the very nub of expectations and delivery. My expectations had been set at a reasonably high level due only to the information on the website – it was all there in writing.

So too is it all there in writing on financial advisers websites and it is also there in writing in Statements of Advice and related documents. In the late 1990s I marked many Diploma of Financial Planning (DFP) 8 assignments; DFP 8 was where students were required to develop a comprehensive financial plan based on a complex case study. It struck me how often I would mark assignments that contained written statements and claims with words to the effect of:

“By implementing your financial plan you will be sure to enjoy a worry free retirement.”

and

“We will ensure that your portfolio is comprised of the best performing investments…”

and

“Our projections illustrate that when you retire in fifteen years you will have accumulated $X of retirement capital.”

Can you see the expectations being created in the clients’ minds? 

“…worry free retirement”

“…best performing investments”

“…will have accumulated…” 

To be frank, some such comments were not too far removed from some of the infamous claims made by the so-called ‘snake oil salesmen’ of the 19th century who claimed certain medicines were cure-alls for everything from indigestion to tuberculosis.

The point is the planners in question were making promises – setting expectations in the clients’ minds – over which the planners had very limited control or no control at all. No financial adviser can guarantee such outcomes for clients.

Note that the assignment marking was in the late 1990s so now consider just some of the financial events that have unfolded since then.  The 1998 South East Asian Currency Crisis; the 2000 dotcom bubble; the Iraq War which commenced in 2003 the lead up to which saw large sharemarket declines and of course, the Global Financial Crisis the effects of which just keep rolling on.  What about the assurances given in those assignments? What about the promises financial advisers all over the world continue to make to their clients?

A Statement of Advice (financial plan) is just that – it’s a statement that an adviser is making. Used carefully it can help to set very realistic expectations for clients.  Used to ‘sell’ advice that the client might want to hear it can be very dangerous for both the client and the adviser.

Dangerous for the client because such undisciplined statements can embed unrealistic expectations in their thinking.  It heightens the potential for the client to experience ‘buyer’s remorse’ and for the adviser, it heightens the potential that they might end up in dispute with what could by then be a former client. Ultimately it could see the adviser being cross-examined in court.

A quick look around the Internet at sites of financial advice firms reveals that the practice of making questionable claims, about what can actually be delivered, continues to this day.

While it might be tempting to paint a rosy picture to potential clients via your website and/or SoA, the professional, disciplined, approach is to only make statements which will realistically set your clients’ expectations and which you are confident you can defend if required to. 

While your calculations might be mathematically correct, for example, that might not count for much if a former client expected you to deliver a worry free retirement or expected to have a portfolio comprised only of the best performing investments – because you wrote that in their SoA.  Such a client’s legal adviser might be very interested to view copies of SoAs and the like.

Consider the following as alternate statements for the above claims:

“ By implementing your financial plan you have taken another step toward enhancing your financial position in retirement.”

and

“We cannot promise you that your portfolio will always be comprised of the best performing investments; indeed we believe that such an outcome is impossible to achieve. Rather, in managing your portfolio, our aim will be to review the investments regularly, mindful of changes in the Australian and world economies and investment markets, and to then make suitable recommendations for change as the need arises.” 

and

“The projections are an exercise in mathematics and to conduct them, as a means of having an insight into potential financial outcomes for you, we have used the assumptions which follow. However, please note that we cannot guarantee the forecast outcomes because they are dependent on future events such as interest rates, inflation, economic growth, actual investment returns and a host of other economic events and circumstances which are beyond our control.”

The point about statements like the above is that they are aimed at not setting clients’ expectations above what is realistically possible.  No financial adviser can guarantee very much – they cannot guarantee where a portfolio will be in one year from now let alone twenty years and beyond. And no adviser can guarantee to have only the very best performing investments in just one portfolio, at all times, let alone promising the same to each and every client who engages the firm. 

There is no guarantee that such words would protect an adviser in a litigation scenario after all, negligence is neglect and that isn’t confined to words. However, words such as these are more likely to keep your clients’ expectations grounded. None of us are ‘investment gurus’ – we’re planners who try to design and navigate a more secure path forward for clients in full knowledge that the future is uncertain.

The simple, professional, approach is to only promise what you can guarantee and if you cannot guarantee an outcome don’t promise it.

The only promise you should make is to yourself and that is to promise not to give false hope to people who are going to trust you with their financial security.

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