Is Paraplanning Dead? A Paraplanner’s
Take on August 2022’s Quality of Advice Review
August 2022’s Quality of Advice Review and its proposed SOA (Statement of Advice) scrapping has stopped many a financial advisor and paraplanner mid-sip. Are Statements of Advice really a thing of the past? What about paraplanners? And when the heck do Advisors need to update your processes? Here’s everything you need to know.
Here’s the truth: the average Aussie’s been priced out of financial advice. In fact, since 2018, costs have increased by 40% to $3500 a year. So with the latest Quality of Advice Review proposing the removal of SOAs from financial advice – the question remains – is the entire paraplanning industry getting the boot too?
Are the September 2022 Quality of Advice Review rumours true? Is paraplanning – gulp – dead?
Our phones have been busier than pool-side happy hour on a Summer’s day since the news broke. Financial advisors in a flurry, paraplanners wiping sweat from their brows.
It begs the question. If the proposed updates are enforced, is the paraplanner-financial advisor dynamic over?
Here’s our TLDR: These updates actually make paraplanners even more valuable, create greater job security and have the potential to foster long-standing, collaborative relationships with advisors.
Here’s the lowdown.
Why the hysterics?
In late August 2022, The Treasury Department of the Australian Government shared their latest Quality of Advice Review, with a focus on increasing the affordability and accessibility of high-quality financial advice to everyday Australians.
Here it was proposed that SOAs be scrapped.
Why? Long story short, the review deems SOAs as “time-consuming and therefore add to the cost of providing advice…. There is also no reason to think a statement of advice or financial services guide provides any real consumer benefit.” (Page 16).
Um, ouch.
In the same breath, the proposed updates come as no surprise. Especially since back in March 2022 when Michelle Levy was appointed as the Quality of Advice Chairwoman, she said:
“I believe there are many ways we can improve the regulation of financial advice, making it easier for Australians to receive quality advice when they need it and in a form they want.”
So with affordability front of mind, SOAs are one of the first expenses on the chopping block.
Remember: this report is a *proposal* only, and the changes may NEVER officially roll out.
But if they do, here’s what’s being proposed.
What’s *actually* proposed?
According to Proposal 9 in the 2022 Quality of Advice Review, advisers of retail clients would need to keep a written record of advice upon request.
The idea?
This written record would replace Statements of Advice.
All in hopes to decrease financial advice costs. This in turn makes financial advice a more accessible option for everyday Australians.
But there are some juicy limitations (and opportunities!) that come with these updates.
Are paraplanners done for? Here’s what we think:
With many clients questioning what our role will *actually* be moving forward (and if we’ll even have one), it’s time to spill the soda. What do these new proposed changes mean for us paraplanners? And what’s it mean for the financial advising industry as a whole?
Here’s our hot take on the situation and predictions for the future.
Opportunity: Clients still want (and need) documints
Financial advice is only as refreshing as its delivery. #saidit
And us paraplanners have a knack for creating easy to follow docs.
Likewise, financial advisers will still want to provide *some form* of document to explain more complex advice. Because what’s the point in creating advice if the client can’t grasp what it *actually* says?
It’s of our belief that crisp documents created by paraplanners will remain an important element of the client relationship and the perceived value of deliverables.
Opportunity: Freedom to create short, down-to-earth and affordable docs
With less red tape, or master ‘recipe’ for reports, endless opportunities swing wiiiide open for paraplanners.
It’s finally time to take action on what Advisers and ASIC have been talking about for years… short, easy to understand documents. You know, the type clients *actually* understand?
Fresh tip: Since we set up shop at Fresh Paraplanning, we rolled out really pretty, down-to-earth and succinct SOAs. Though, like for all paraplanners, the current legislation does limit how far we can *actually* take this.
Should the legislation go ahead? We’re already dreaming up new types of documents that bring even more simplicity to the table.
So in line with the review, we too believe that:
“Consumers do not want lengthy documents, they do not want templated text and they do not want documents filled with information designed to demonstrate the adviser has complied with [the law].”
Actually, our documents are particularly neat. Non-boring. Clearer than a freshly poured soda water. So we’ve already implemented what the Financial Services Council (FSC) is cheering for:
“The consultation paper outlines a sensible road map for delivering affordable and accessible financial advice by focusing on outcomes for consumers, not out-dated compliance documents and red tape…”
Is there room for creating SOAs even *more* succinctly with the proposed updates? Absolutely!
Opportunity: No regulations mean docs can be bespoke
Compliance is (and always will be) front of mind in the financial advising and paraplanning space. But we’ll be the first to put our hands up and say that throwing out the rule book does come with its benefits.
Why? Without strict include-this-but-not-that structures, documents will become more bespoke to each advisor or advice firm.
Think: advisors designing their advice documents their way, in collaboration with paraplanners.
What do YOU as an organisation want to tell your client about?
Maybe it’s:
- Flow charts – visual representations of advisor’s recommendations
- Projections – charts to explain the impact of recommendations on goals such as whether the client will meet their retirement income goal [New inclusion in the doc]
- Investments – drill down on the outcomes of the investments selected
Given the nature of the industry, this often differs between clients. Which also offers the opportunity to create tailored templates and standard operating procedures that showcase advisor’s signature, original approach.
Opportunity: A rise in strategic support from paraplanners
Spoiler alert: us paraplanners do more than create Statements of Advice.
I know. Shock, right? And to be frank: many advisors don’t use us to our full advantage.
These proposed updates mean paraplanners will make sure the file has the required backing for the advice. Even if this is outside of the way things have always been done. Big win!
Opportunity: Advisers and paraplanners will be able to service more clients
With less SOA traffic, both advisors and paraplanners will have space in our schedules to bring on a higher volume of clients. Meaning? More business growth. More happy clients. And more opportunity to help everyday Australians make wise financial decisions.
In summary: Don’t panic (or celebrate) *yet*
While the Australian Governments’ Quality of Advice Statement does do outline potential updates… it’s important (even refreshing) to note that this paper isn’t legislated. Or even close.
As we said, this is a consultation paper only. It’s not yet final. And it may not (ever) be legislated. So there’s no need to make changes in your processes *yet.* The final recommendations will likely roll out on the 16th of December. So, keep an eye out.
In the meantime, if you need a versatile, supportive and simplified outsourced paraplanning firm in your corner, hit us up here. Our processes are already ahead of legislative changes. Or email our Chief Happiness Mixer, Owner and Senior Paraplanner, Kristy at [email protected]
