Speaking recently at the Financial Planning Association Congress in Melbourne, Advice Intelligence head of partnerships Fraser Jack discussed the need for the advice industry to move beyond the traditional SOA.
He noted that when the Corporations Act was introduced, “there was a lot of uncertainty. We didn’t know how it was all going to turn out. So we took this piece of legislation, and got lawyers to help us decide what to do.”
Jack said that advisers “took this long legal document written by lawyers, for lawyers and combined it with the most incredible piece of tech we had at the time: Windows 98 and Microsoft Word. And then we tried to take that document and make it work for consumers.”
While advisers were working with the most sophisticated technology available at the time, though, there have been few changes to the SOA since.
“Even today,” he said, “we call this thing a compliance document, and it’s something that consumers don’t quite understand. Now, nearly two decades on, not a lot has changed from that scenario. When I think about the evolution of the SOA, we’ve gone from the paper document to a PDF document and we’ve added a digital signature here and there. You can now search it and do a few different things, but ultimately it’s still a long legal document.”
Discussing how that could change, Jack suggested “there should be a lot of visual aspects: pictures, video, colour. It might even include sound as well. In the future, we can include more immersive technologies to deliver an enriched client experience.”
In order to do this, though, Jack said advisers need to collectively consider three key points. The first was asking the question of whether a statement needs to be a document.
“Is a document the only way we can make a statement?” he asked. “Can we be held accountable to the statement without it being a paper document? If you embrace that idea, we can start looking into how to move into the future.”
The second point, he said, was “the idea around the understanding advice versus just disclosing information. How can we make sure clients actually understand what we’re saying versus us just disclosing it to them?”
Finally, Jack referred to the compound interest curve and compared it to the level of technological adoption by clients over time.
“If anyone should understand the value of compound interest,” Jack said, “it’s us, right? Let’s look at technology: our clients aren’t using paper maps in their cars and they aren’t reading bank statements. They’re looking up their balance on an app. Consumers have taken off in their tech adoption and we’ve stayed the same.”
For the industry to catch up, Jack said it needs to start with how it provides information to clients.
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