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Evolution of Advice Documents: Effects on Australian Financial Advisors

Evolution of Advice Documents: Effects on Australian Financial Advisors

We have observed that some licensees are beginning to implement changes to their advice documents. This appears to be in anticipation of Michelle Levy’s recommendation to abolish Statements of Advice, and instead, introduce “Fit-For-Purpose” documents.

Several licensees are choosing to remove redundant information that constitutes a significant portion (25%-30%) of an advice document. In some cases, this includes alternative product comparisons, alternative strategies, cash flow and overall position modelling and general information that is available in PDSs.

While some Australian financial advisors may perceive this as a positive development, these same licensees still necessitate them to complete and save all this information on file, in case the client requests it. As a result, the process of providing advice will remain mostly unchanged for these businesses. On the positive side however, drafting these documents and presenting them to clients should be an easier task for Australian financial advisors within these licensees.

This aligns with the views of many experts on paraplanning and advice preparation, as previously discussed in our earlier article “The future opportunities of paraplanning from the Quality of Advice Review”, Paraplanners will still be required to conduct research, model different scenarios, draft the advice documentation and ensure that the information is accurate to protect the adviser during regular audits.

In addition, many Australian financial advisors may not be comfortable removing this information, as they see it as highly beneficial for the client, and consider this to be their value-add. They can substantiate the advantages and ensure that recommendations are in the client’s best interest. For those who are comfortable not incorporating this information in their advice document, we recommend having the appropriate systems in place to ensure that advice preparation is always supported by the research.

Paraplanners will remain of high value for advisers, ensuring recommendations are indeed in the client’s best interest and that their recommendation benefits are backed by appropriate research and due diligence.

About the Author
Chris Miller
Chris Miller, a seasoned Senior Paraplanner, brings over a decade of expertise to VBP, serving as the Technical Lead for Paraplanning since early 2023. Renowned in the Australian financial planning sector for his technical prowess and compliance proficiency, Chris is committed to delivering top-notch support. His role involves overseeing VBP’s paraplanning division and extending expertise to external clients, optimising operations, and staying at the forefront of industry trends. An invaluable asset for VBP and Australian financial businesses seeking unparalleled paraplanning solutions.

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