ASIC and the ‘art’ of the SOA


The Statement of Advice is a perennial source of complaints from advisers, but they're not alone: few consumers read, understand or value the document that's presented to them. 


This is a sad reality of advising retail clients, but it becomes distressing when you realise that most "advice professionals", look to Regulators, Licensees, Associations and other parties to give them better advice documents. Despite the rhetoric of accountability and professionalism, few advisers demonstrate the courage and clarity to properly focus on the client experience or the critical need for informed consent.  

Advisers offer many excuses to explain why their SoA is dull, dense and demotivating. Blame-storming is easy, but if that's your situation it may be time to accept that You are the reason you don't provide better, clearer and more engaging advice.

The Regulator and their recommendations

If they were serious, ASIC .. would liaise with advisers and licensees and create a standard SOA which all advisers have to use, which meets the legal obligations and is simple enough for clients to understand and actually want to read. While they continue to refuse to do this, clients are left worse off.
— Anonymous,, 23 March 2018

To understand the context of ASIC’s ‘workshopped’ Risk SOA, it’s necessary to understand both RG90 “Example Statement of Advice: Scaled advice for a new client” and Report 557 “Response to submissions on CP 284 Example Statement of Advice for life insurance: Update to RG 90”.

Well, if not to understand them, to at least to appreciate that ASIC has made, and continues to make, efforts to assist us to understand what ‘clear, concise and effective’ advice documents might look like.

The product may be sub-optimal in some respects but it shows the Regulator’s willingness to work constructively with industry, to provide guidance and to work to understand the practical issues with the provision of advice.

At a high level, a Statement of Advice provided by an Authorised Representative has less than ten formal elements that need to be covered including the advice and its basis. Admittedly, regulations and replacement product disclosures increase the depth of the disclosure but it’s a logical and relatively contained requirement. There are identification elements and structural requirements, but the bulk of the requirements relate to interests and influences that may affect the recommendation.

In RG 90, ASIC confirmed that the eight core SoA elements required by s947B (SoA from Licensee), 947C (SoA from Authorised Representative) and 947D (replacement product advice) are: 

a. a statement setting out the advice (see s947B(2)(a) and 947C(2)(a));

b. information about the basis on which the advice is or was given (see s947B(2)(b) and 947C(2)(b));

c. a statement setting out the name and contact details of the providing entity and, where relevant, the authorising AFS licensee (see s947B(2)(c) and 947C(2)(c)–(d));

d. information about remuneration, commissions and other benefits capable of influencing the providing entity in providing the advice (see s947B(2)(d) and 947C(2)(e));

e. information about any other interests, associations or relationships that might be expected to be or have been capable of influencing the providing entity in providing the advice (see s947B(2)(e) and 947C(2)(f));

f. where the personal advice is based on incomplete or inaccurate information, a statement setting out the warning required by s961H (see s947B(2)(f)) and 947C(2)(g)); and

g. where the personal advice recommends the replacement of one financial product with another financial product (also known as ‘switching advice’), the additional information required by s947D.


ASIC elaborate on these elements at 90.33 to address operational issues including subject matter, scope and alternatives considered.

These requirements are neither onerous nor unexpected. Even ASIC’s suggestion that the SoA should contain “an explanation of how the adviser has acted in the client’s best interests” is reasonable.

(ASIC consider this to be ‘good practice’ and few advisers would object to explaining why they believe “the[ir] advice is likely to leave the client in a better position”.)

In fact, these requirements seem eminently reasonable and easily managed, particularly since the law requires that the SoA must

a. contain “the level of detail about a matter that … a person would reasonably require for the purpose of deciding whether to act on the advice as a retail client”[i]; and

b. be “worded and presented in a clear, concise and effective manner[ii]”.

Extract from s 947C Corporations Act 2001

Extract from s 947C Corporations Act 2001

So how did we get it so wrong?

If the law requires our Advice documents to be clear, concise and effective, why are so many of them dull, dense and disengaging?

Risk aversion, rather than regulatory action, is one of the reasons why Statements of Advice have ballooned out of control.

Licensees, and advisers, unsure what amount of information is reasonably required,  err on the side of caution by providing volumes of information including external research, projections, modelling and third-party information. Rather than acknowledging that 947C(3) provides advisers with a discretion and flexibility commensurate with their understanding of their client, they aim at the lowest common denominator.

Aiming for the lowest common denominator makes sense as a risk mitigation strategy for an industrial model, but is it either appropriate or desirable for a profession that provides, or aspires to provide, personal and tailored recommendations?

Paradoxically, I believe this misalignment increases advisers' liability rather than effectively minimising it; few clients (or advisers) read the documents so they tend to be littered with errors or impossible to recall. When these documents are not read, and are unlikely to be read, can any Court accept the legitimacy of the clients’ informed consent?

The difficulty … is that although the [disclosure document] referred to a large number of risk factors, they were referred to in very general terms, in terms which suggested that what was being spoken about were essentially theoretical risk factors. ….... Saying this sort of thing to an unsophisticated potential investor is essentially meaningless.
— Evans & Ors v Brannelly & Ors [2008] QDC 269 McGill DCJ at [171].


At 23 pages, ASIC’s “Planforit Statement of Advice” is perhaps 13 pages longer than I’d like but ASIC have made efforts to reduce repetition. It’s a good start, but I think that ASIC over-value disclosure and under-appreciate the need for emotional engagement.

The SOA must contain facts but those facts, and your reasoning, have to be presented in a way that emotionally connects with, and engages, the client. Too many SOA appear to be mass-manufactured templates with little reference to the client.

In "More Than You Wanted to Know," the authors’ analysis of mandated disclosure found little evidence that disclosure leads people to make better decisions.

Consumers often don’t read the material provided to them, seldom understand the consequences and implications of the matters disclosed and, instead of being reassured, consumers experience greater anxiety – afraid of having missed problems buried in the documents provided to them.

They also concluded that mandated disclosure only really benefits the party making the disclosure.

Instead of proving a panacea for a variety of misconduct problems, mandated disclosure is at best annoying and irrelevant. In reality, disclosure is pointless regulation that distracts policy makers from identifying more effective solutions to recurring problems. Disclosure is the easy (and ineffective) answer to endemic problems. After all, disclosing inherent conflicts is not as beneficial as eliminating them.

So, for reasons of pragmatism, philosophy and convenience, disclosure is broadly acceptable to most stakeholders. It protects and empowers the retail client, provides businesses with an alternative to heavy handed regulation and facilitates informed participation in the market.

The Royal Commission may conclude that it doesn’t, or at least not as well as participants presume.


The Limitations of disclosure are acknowledged in RG90 but no solution is offered except more disclosure.

For example, At 90.47 ASIC state

some repetition has been employed throughout the example SOA, based on the knowledge that many people do not read these types of documents from cover to cover. Some people may only skim the document and/or engage with specific sections. For these people, the table of contents allows them to find the information they want and only read that information. Some repetition has been necessary to make each section make sense by itself.

It seems counter-intuitive to suggest that the solution to clients’ lack of engagement with the advice document is to make the document longer, but ASIC have no better response than that adopted by those they regulate.

Perhaps the solution is to place less emphasis on formal disclosure and, instead, focus on the quality of client’s engagement, their understanding of the recommendations and focus more intently on the adviser’s accountability. This, in my opinion, is what their focus on Professionalism seeks to do.

This shift may, in fact, be the inevitable outcome of the statutory Best Interest Duty.


What is the art of the SoA?

 In my view, the Art of the SoA is transforming a disclosure document into an article of accountability.

The art lies in promoting purpose, benefit and context over disclaimers and irrelevancies. Great advice is a considered response that never loses sight of the client’s best interests or their informed engagement.

I describe the SoA as an article of accountability because it is, or at least it should be. It should be the unequivocal written expression of your expertise, education and ethics. It is your assurance to your client that you have considered their needs, exercised your personal judgement and divined a solution that will satisfy, or exceed, their needs and expectations. It is a statement of care, concern and consideration.

Most Statements of Advice fail to achieve this standard because they are seen, neither as art nor an expression of caring, but as an industrial output and legal document that equates disclosure with understanding.

Understanding, not disclosure, is not the foundation of informed consent.

Documents bloated with disclaimers, disclosures, warnings, limitations, inclusions and exclusions appear designed to frustrate understanding and minimise an adviser’s accountability for their advice.

You can remedy this failure. You can start, as a professional, by unambiguously accepting that you are, and should be, accountable for your advice.

Disclaimers are, in my opinion, paper shields and provide no real defence to any determined assault, so don’t rely on them as your only defence.

I appreciate that sounds risky but it’s actually riskier to continue further down the disclaimer and disclosure path.

Commonwealth Financial Planning Limited v Couper [2013] NSWCA 444 observed that, notwithstanding the standard disclaimers, appropriate advice (provided in the client’s best interests) requires the adviser to “sufficiently impress” upon their clients the real risks they assume. 

Not disclose. Not disclaim. Impress

In my opinion, this is a compelling argument for more clarity and not more disclosure.

Start by eliminating from your documents anything that “a person would NOT reasonably require for the purpose of deciding whether to act” on your advice. 

Where your considered advice is "clear, concise and effective", you can follow by eliminating the supplementary material you use to legitimise your professional opinion. You have researched the products you've recommended and turned your mind to the best products for your clients' needs, does including external research with your SoA help your client decide to act? Or is it provided for other purposes?

I appreciate that some advisers may find these recommendations imprecise and impractical, but that's the nature of art. Prioritise your clients’ interests, embrace your professional calling and make good art

 If you don’t see the SoA as a creative expression, and just want a more practical suggestion, my advice to you is to cut, cut and cut your template back to only what is legally and practically required.  Remember, that an Adviser 

knows he has achieved perfection, not when there is nothing more to add, but when there is nothing else to take away.
— antoine de saint-exupery, compliance expert


[i] S 947C(3) Corporations Act

[ii] S 947B(6) and 947B(6) Corporations Act