What is an SOA and When do you Need One?

What is an SOA in Finance?

A Statement Of Advice (SOA) is a legally binding, written document that sets out the financial recommendations that are given to a client by a financial advisor. It covers the client’s financial situation and sets out a financial plan that includes the client’s financial goals, possible investment strategies and how the required goals can be reached using certain recommended products.

An SOA is a crucial part of the financial planning and advice process since it sets out what the advisor will do for the client. It, therefore, protects both parties and ensures the arrangement has a sound basis to move forward.

When a Statement of Advice is Needed?

An SOA is usually prepared by someone who is providing help with financial services for clients. This can include wealth or investment management companies, financial advisors, or paraplanners who provide services and support for financial advisors and other organisations.

Each SOA may have multiple purposes:

  • ensuring that the interests of the client are protected and that any advice given is in their best interests
  • providing a record of the financial advice that is given to the client, including details of the recommendations made and the reasons for those recommendations
  • helping to build a level of trust between the client and the advisor by providing accountability and transparency for all parts of the financial services industry

Statement of Advice in Financial Planning

The help and advice provided can cover a number of financial products and services that include investments, insurance, and pensions. However, for an SOA to be needed, it has to be personal advice that is given for a client’s particular needs. A statement of advice is not required when the financial advisor provides only factual information of a generic nature, such as product descriptions or market updates. Such information may help the client to make informed decisions, but those decisions are always left to the client rather than to the advisor. An SOA applies when advice is personalised for a client.

An SOA is a critical document because it:

  • outlines the financial advice the advisor has provided to the client
  • provides a detailed overview of the client’s financial plan so it is possible to track the progress made to achieving that plan
  • creates a reference point for further discussions so that future advice is consistent
  • ensures the client is able to build trust in the advisor since the advice provided is shown to be reliable and transparent
  • protects the advisor and the client by demonstrating compliance with regulatory requirements
  • demonstrates the advisor’s commitment to the financial advice that is provided

Relying on Specialist Help for SOA Completion

Financial advisors and others can prepare SOAs with respect to any advice they give. However, it is not the main focus of their job and so is often best left to others who specialise in the work.

Paraplanners such as TNW Solutions provide crucial services to financial advisors and planners. They have experience, knowledge, and expertise in specialist areas and so are able to give help and support to those individuals and organisations, enabling them to concentrate on other areas, save time and reduce the amount of work they have to do.

One particular area of specialism is the completion of SOAs. Paraplanners can supply SOAs that are accurate, comprehensive, and comply with regulatory requirements. They have access to a broad range of resources, particularly regulatory information, market updates, and economic reports, enabling advisors to have relevant and up-to-date information that allows them to provide the best advice to clients. By using TNW Solutions, you’ll ensure these vital documents are always completed correctly and you can concentrate on other aspects of your business.

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