Statement of Advice | What to Expect
If you have ever thought about getting financial advice in Australia, chances are you’ll hear the term Statement of Advice or SOA for short. A SOA is a very important and helpful part of the financial planning process.
In this blog we will discuss:
What a statement of advice is
Why it’s provided
What’s included in it
The benefits of having one
What to expect from a financial plan that’s tailored to you
What is a Statement of Advice?
A statement of advice (SOA) is a written document you will receive when a licensed financial advisor gives you personal financial advice in Australia. It’s a legal requirement, and it’s designed to help you understand:
What the adviser is recommending
Why they are making those recommendations
How it suits your financial goals and situation
Think of it like your personal financial roadmap, it outlines where you are now, where you want to go and some steps you could take to get there.
Why Do Advisors Provide an SOA?
Financial advisors are required by law (under the Corporations Act and regulated by ASIC) to give clients a statement of advice whenever they provide personalised advice. This rule helps protect you by making sure:
The advice is based on your personal goals and circumstances
Everything is transparent and documented
The advice can be reviewed and considered before making any decisions
The process is designed to be open, honest and easy to understand.
What’s Included in a Statement of Advice?
Every SOA should be tailored to you, and most of them will include the same key components. Here is some of the main areas you will typically find inside a SOA:
1. Your Current Financial Situation
This part summarises what the adviser understands about you. It includes:
Your age and stage of life
Your income and expenses
Occupation and dependents
Your savings and investments
Assets and any debts or loans
Your financial goals and reasons for seeking advice (like buying a home, saving for travel, or planning for retirement)
2. Recommended Strategies
Here, the adviser outlines the actual advice they’re giving. This might include:
Budgeting and savings
Choosing a superannuation fund
Considering insurance cover
Investing
Making contributions to super
Consolidating debts
Importantly, this section of the advice should match your situation, goals and reason for seeking advice. It’s not general advice and it should be specific to you.
3. Why the Advice Is Suitable
It’s not enough for an adviser to say - here’s what I recommend. They also have to explain why it’s appropriate. This usually covers:
How the advice meets your goals
Any assumptions used (e.g., expected investment returns or inflation)
The pros and cons of the advice
The risks and disadvantages
How the advice puts you in a better overall position
4. Product Comparisons (If Relevant)
If the adviser is recommending a certain product as part of the advice like a super fund or insurance policy, the SOA will include a comparison. It will explain things like:
The costs and fees involved
The features and benefits of each option
Any risks or differences
Alternative options to consider as part of the advice
5. Costs and Fees
The SOA will also include in several areas:
The advice costs
Costs you will pay for any products or services
The amounts the adviser or their licensee will be paid
It might include flat fees, hourly rates, or ongoing service fees, depending on the arrangement.
6. Risks and Considerations
Every financial strategy comes with some level of risk or disadvantage to consider. The SOA will explain any relevant risks like market volatility, possible tax implications, insurance restrictions, so you’re aware before making decisions.
7. Cashflow and Projections
SOA’s may include projections including:
Projected savings and investment balances over time
Superannuation growth
How your income and expenses may change due to the advice provided
What your financial position could look like if you follow the advice
The projections help you see how the advice may impact your finances in the short and long term, giving a clear picture of the road ahead.
8. Next Steps
Finally, the SOA will usually finish with a summary or action plan. It’ll outline:
What you need to do if you agree with the advice
What steps your adviser will take
Any timeframes or follow-up meetings
What Are the Benefits of a Statement of Advice?
You might be wondering, why go to all of this effort and what makes a SOA useful?
Clarity - everything is documented, you can go back and read through the recommendations at your own pace
Confidence - the advice is tailored to your life and goals, you can feel confident that the suggestions are relevant to you
Transparency - an SOA outlines all of the fees, risks and alternatives of the advice
Accountability - you will know why the advice was given, and the advisor is accountable for the advice they give, meaning they have to act in your best interests
Great for long term planning - An SOA isn’t just about now, it often includes strategies that cover years, helping you build a stronger financial future
Frequently Asked Questions (FAQs)
How much does an SOA cost?
The cost varies depending on the complexity of your situation and the advisors fee structure. Some advisors charge fixed fees tailored to each client, while others may charge a minimum fee. The advisor should clearly explain all costs before you commit to anything.
What’s the difference between a SOA and financial content I see online or on social media?
An SOA is tailored specifically to you and your circumstances. It’s based on professional qualifications, ethical standard and compliance with Australian law. Generic advice online may not be suitable for your financial situation and shouldn’t be acted on without speaking with a licensed financial adviser.
What happens if I don’t understand something in the SOA?
You should always feel comfortable asking questions. Your adviser is there to explain anything in the SOA that seems confusing or any technical wording that you may not understand. There are no wrong questions and you should be comfortable with all advice before proceeding.
How often should I review the advice in my SOA?
It’s a good idea to review it at least once a year or if your circumstances change. It’s also beneficial to consider working with an advisor on an ongoing basis as your life and financial situation may change over time. Working with an advisor on an ongoing basis helps to keep you on track.
Can I get a SOA without committing to long-term financial advice?
Yes, some people may only require once-off financial advice for specific issues such as aged care planning and that still comes in the form of a SOA. Whilst we find that most of our clients work with us on an ongoing basis we can provide once-off advice if appropriate.
After working as an advisor for a decade, Joel founded Unified Wealth.
Unified Wealth specialises in helping clients who are facing life’s big decisions.
Whether you’re contemplating your first property, growing your family or starting your investment journey we can help you focus on the simple steps to help you make your goals reality.
Our priority is making sure you have all the right information available to make the best possible decisions for you and those you love.
Our company values are:
Unity - We are most effective when we work together as a team
Trust - We are trustworthy and act in your best interests
Transparency - We are honest and communicate openly
Education - We are committed to lifelong education
At Unified Wealth our team are highly experienced and provide goal-based advice and solutions for a range of advice strategies.
The information in this website and the links has been prepared for general information purposes only and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned in this website, consult a professional financial advisor to consider whether it is suitable and appropriate for you and your personal needs and circumstances. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product, together with the Target Market Determination (TMD).