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When you’re presented with a Statement of Advice (SOA), it helps to know what to look for. Here’s our guide on what to expect from an SOA so you can be sure you’re getting advice and products to suit your needs.
After meeting with a financial planner and discussing your goals and circumstances, they’ll give you a Statement of Advice (SOA). In a nutshell, it’s a summary of the strategy and products they’re recommending for you, plus any costs associated with carrying out these recommendations. It should be a clear and straightforward guide to the actions you’ll be taking to move forward with your financial plan.
Here are some tips on what to look for when you’re going over your SOA with your planner:
Your financial position
The first thing to check for is an accurate picture of your financial position – assets, debt, income and expenses. The strategy, actions and products recommended in your SOA should refer to these correctly and make sense in the context of your current financial situation, including your risk profile if you’re looking at insurance products, superannuation or other types of investments.
An SOA is not the same as a financial plan. A financial plan is a much more detailed guide to achieving your financial goals. These are goals that will enable you to live the life you want by providing for things like holidays, renovations, school fees, repaying your home loan, and your retirement. Your plan will be based on a strategy that could include insurance, investments and estate planning. And that strategy will also take into account the potential risks involved in reaching your financial goals.
So while your SOA isn’t going to provide details of your financial plan to the letter, it should refer to the goals, plan and recommendations you’ve already discussed with your planner. Make sure the summary addresses each of your goals and how they’re to be achieved through the actions outlined in the SOA.
Depending on your goals and the strategy your planner puts forward, a number of product recommendations – such as insurance, superannuation and investment choices – could be included in your SOA. For each of these products, it’s important to consider a few things:
Is it clear that these products match your strategy and goals?
Are they replacing existing products? What are the pros and cons and financial benefits of making the change?
Do the products suit your risk profile?
Your SOA should include a breakdown of all the costs you’ll need to pay for products and other services involved in carrying out your financial plan. These costs might include:
What your planner charges for preparing and carrying out your financial plan.
Upfront costs and ongoing transaction fees for products and services.
Insurance premiums and how they’ll be paid – through your super or direct.
Any fees you’ll be paying for ongoing advice or services from your planner.
Take your time
Although your SOA might follow a template in how content is presented, it shouldn’t be taking a cookie cutter approach to looking after you and your finances. Your SOA and the strategy and actions outlined should always be appropriate to your particular financial goals and situation.
Give yourself time to read through your SOA and any Product Disclosure Statements your planner provides. If you have questions or concerns, make a list and contact your planner to discuss these before agreeing to recommendations made in the SOA.
Whatever your lifestyle goals might be, a CERTIFIED FINANCIAL PLANNER® professional can offer valuable advice on preparing for a secure financial future. Find a local CFP professional today using Match My Planner.
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