Do you know what goes into an SOA?

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The debate around the length of statements of advice is missing the whole point on the purpose of the document, according to legal consultant for the Fold, Sonia Cruz.

Cruz reviews SOAs and says that auditors aren’t fans of long documents – it means more for them to read – and have always been of the view that SOAs should be concise. But she says the main issue is that advisers aren’t always aware of what needs to go into the document.

“If they’re working on a template, they may just include all the bits and pieces that they’re not sure about and it becomes this huge cumbersome document. I’ve seen things like educational material and certain research material that’s really not required in a statement of advice.”

This could come down to whether advisers have been given sufficient training, says Cruz. She says there is a lot of repetition and generic content. Advisers also include too much legal jargon, warnings, and disclosures that aren’t required to be in the document. Insufficient customisation is also a critical area that adds to the unnecessary length of the SOA.

She says the introduction of incorporation by reference meant that advisers could have information attached as separate documents to refer to if needed. “There was a push to try and condense SOAs but it just seems like advisers haven’t adopted that approach and I’m not sure why, to be honest.” Cruz says they will be releasing a white paper to help clear up the understanding of what needs to be including in an SOA and what is optional.

“A lot of the time clients are very time poor and that’s why they go to see an adviser. They’d want a short concise document that explains ‘this is the advice I’m giving you, this in the implications, and this is how much it’s going to cost. Clients aren’t going to read 60 pages.”

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