If you’ve recently become licensed or authorised, you are no doubt staring down the barrel of writing your first Statement of Advice (SOA). This can be a daunting task – so daunting in fact that I have seen many licensed accountants avoid the task. In some cases, that avoidance has been going on for years!
What you need to know
One of the most important things you need to know is when you need to provide an SOA. In summary, you need to provide a statement of advice when you give personal advice to a client. A couple of key points to remember here:
- You can still give verbal advice, provided you confirm that advice in a Statement of Advice
- Once you have provided an initial Statement of Advice, say for contributions advice, you are able to provide a Record of Advice (ROA) when you provide future advice on contributions, provided the client’s circumstances haven’t materially changed
- You don’t have to prepare the advice document yourself. You can use support staff, or outsourced services to have the documents prepared
What you need to do
If the production of SOAs is going to work for you and your business, you’ll need a process that is both efficient and effective so that you can keep your costs under control.
And just like other work that I’m sure you do now, the person having the conversations with the client doesn’t have to be the one preparing the advice documents.
If you have a process for providing and documenting business advice to clients that works well now, use that as a base. Then build in additional steps to ensure your licensing requirements are met. The diagram below is one I often use with accountants as a starting point. We then use it to work out who in that practice is involved in each step, and what order things will happen.
A Suggested Advice Process
I cannot recommend highly enough using a software solution to generate the documents. Other options can work well for more complex advice (word documents, out-sourced solutions), but for simple advice, I haven’t seen anything work as well as an in-house software solution.
My top tip with SOAs is to master the art of scoping the advice and identifying the client’s goals and objectives. While this sounds simple enough, this is the area accountants are struggling with the most. Scoping is about being really clear on what it is you’ve been asked to do and not do. As part of that scoping exercise, you should identify any risks of not addressing the things you’ve been asked not to do (eg: insurance for someone who is looking to borrow to invest).
Goals are about identifying what the client wants to achieve, ideally in their own words. Don’t put your recommendation in the goal and objective. For example,
- The goal for my client is to have a SMSF
- The goal for my client is to have a superannuation fund that can cater for direct property investments
My other top tip - Just do it! The sooner you write a few SOAs, the less daunting it will be. Ideally try to write three or four in a short space of time.