“Do we prioritise regulatory certainty over our clients’ best interests?”
Mr B, Financial Adviser
As I recall, it was at the Yalta Conference during World War II (February 1945) that Winston Churchill famously declared “You’d have to stop the world just to stop the feeling“.
I think most historians would identify that as a prescient warning about the appeal of authoritarianism, but in our context, it can be interpreted to encompass those perennial or enduring problems that seem insurmountable; challenges that cannot be resolved without a fundamental change of reality.
Rest assured, SoA length is not in that category.
Although the Statement of Advice (SoA) may have been intended to be a helpful consumer warranty document, it has, since 2003, evolved into an unwieldy and unbearable compliance burden. We’ve reviewed over 21,000 advice files and our Reviewers frequently lament that these documents still routinely span 50-100 pages, cost thousands to produce, and fail in their primary purpose: to help clients make informed financial decisions.
The problem is that rather than facilitating informed consent and providing a “clear, concise and effective” roadmap to financial security, the SoA has become a document designed to manage perceived risks, appease ASIC and facilitate consistent, industrialised advice production. It inhibits quality and, in our view, imposes unreasonable delays that are entirely inconsistent with the licensee’s obligation to act “efficiently, honestly and fairly” and the adviser’s obligation to act in their client’s best interest.
The SoA is a waste of everybody’s time.
Financial advisers know it. Clients experience it. Even regulators acknowledge it. The Statement of Advice (SoA) is fundamentally broken.
The Three-Way Failure
1. Client Failure: Information Overload Leads to No Information
Like most self-published first novels, the average SoA is over 70 pages of dense, contradictory and convoluted statements lacking a compelling narrative and satisfying conclusion; it’s an endurance test rather than a useful document. In Report 632 ASIC highlighted that, in the real world, clients often struggle to engage with long and complex advice documents, leading to poor decision-making and worse outcomes. The traditional guardrails of compliance and disclosure exacerbate, rather than mitigate, this trend. This was why ASIC warned that, “Disclosure and warnings can be less effective than expected, or even ineffective, in influencing consumer behaviour.” (ASIC Report 632, p. 4).
Realistically, and excepting former-teachers, no client sits down with a highlighter, absorbing each page and annotating the margins. Engineers will crunch and correct the financial modeling but what most rational people would do when handed terms of use disguised as financial guidance is:
Skim the executive summary (if they can find it)
Jump straight to the recommendations
Sign where indicated
File it away, never to be seen until it’s time to complain.
Rather than serving as a tool for informed decision-making, the SoA often induces confusion, frustration, and, ultimately, disengagement. Instead of clarity, these documents create confusion. Instead of guidance, they generate anxiety. Clients are left overwhelmed by complexity when all they wanted was clarity. This is not just personal observation; ASIC recognises that “when disclosure is used to address problems it is ill-suited to solve, it can place an unrealistic expectation on consumers.” (ASIC Report 632, p. 4).
What does it matter when they’re relying on your professional judgment anyway?
The immediate consequences may be either disengagement from the process or the unthinking adoption of your recommendation.
Clients either blindly accept the advice without truly understanding it or walk away entirely, uncertain of their next step. Neither outcome benefits anyone; neither the client, the adviser, nor the industry as a whole.
2. Adviser Failure: Defensive Documentation
“The current documentation and disclosure requirements drive up the cost of providing financial advice and diminish its value in two ways: (1) Onerous preparation and presentation of consumer-facing documentation; and (2) Complex and prescriptive information gathering, analysis and research not necessarily relevant to a consumer, but mandatory, that sits behind the documents.” (FSC White Paper, p. 8 )
In our experience, most licensees and advisers, generally out of conservatism, habit or fear of legal repercussions, often default to overly cautious documentation rather than clear, client-focused advice. The only answer to this is for professional advisers to recognise, and push back, when legal input prioritises compliance optics over genuine client understanding.
SoAs have transformed from client communication tools into liability shields; but they’re paper shields whose complex disclosures, dense disclaimers and generic warnings provide no actual protection. Habitual conduct, although compliant, is largely ineffective. ASIC Report 632 highlights that “disclosure can create a false sense of security, obscuring rather than clarifying conflicts and potential consequences for consumers.” (ASIC Report 632, p. 20). Research also suggests that excessive disclosure often overwhelms clients, leading them to disregard critical information and ultimately undermining informed decision-making. In the face of this we need to false comfort we derive from expansive advice documents; increasing documentation does not necessarily lead to better consumer understanding or protection.
If you’re unconvinced, consider Australian Securities and Investments Commission v Cassimatis (No 8), which examined Storm Financial’s SoAs and noted concerns about their length. The court referenced legal advice given to Storm Financial, which observed that the SoAs were “very long” and emphasised the requirement under section 947B(6) for an SoA to be worded in a “clear, concise and effective manner”. Similarly, Evans & Ors v Brannelly & Ors [2008] QDC 269 addressed the effectiveness of disclosure to make the point that over-disclosure made the process effectively meaningless and led to client detriment.
If this doesn’t convince you that the SoA as you currently know it is a manifest failure, consider the operational implications of large, dense and largely incomprehensible advice documents:
Financial cost: $5,334 per document according to FSC White Paper on Financial Advice (2021). ASIC CP 332 confirms this cost issue, stating that “A number of sources estimate that the average cost of comprehensive personal advice in Australia is between $2,600 and $2,900. This is unaffordable for many consumers and more than they are willing to pay.” (ASIC Consultation Paper 332, p. 20)
Time cost: Hours spent on documentation rather than client service was assessed as 23.9 hours according to FSC White Paper on Financial Advice (2021)
Accessibility cost: Advice becomes unaffordable for everyday Australians
3. Regulatory Failure: Volume Over Substance
“Despite our guidance and the acknowledgement of limited or scaled advice in the note to s961B(2), our ongoing discussions with industry participants have revealed that many financial advisers and advice licensees remain uncertain about how they can provide compliant limited advice.” (ASIC CP 332, p. 12).
Lawyers might warn you about ASIC’s “dark arts” – their tendency to transform aspirational conduct into mandatory industry standards – but regulatory expectations should not override the fundamental obligation to provide meaningful, comprehensible advice. I’ll go further, compliance should support, not obstruct, client understanding. Fear of the consequences of non-compliance is a significant driver of the increasing length of SOA. By adding more, some reason, we’re minimising the risk that we’ll omit crucial information. It’s a comforting conclusion but flawed reasoning that has survived because, for most advisers, complying with norms and assumptions is easier than challenging them. In “Advising without fear” we urged advisers to be more active in reconciling legal caution and effective client communication, but our exhortation fell on deaf ears.
This is despite the fact that ASIC’s Regulatory Guide 90 (RG90) explicitly calls for advice that is “clear, concise, and effective.” What could be simpler? Except, the industry re-interpreted this to mean “more is safer” directly contradicting unequivocal regulatory intent. Lengthy SoAs do not necessarily provide better outcomes for clients and, as ASIC stated in Report 632 “Disclosure does not solve or reduce inherent complexity (e.g., underlying complexity in financial products and services).” (ASIC Report 632, p. 8).
The focus on “completeness” has caused additional problems. In CP 332 ASIC highlighted the inefficiencies in SOA preparation and Industry estimates that suggest that producing an SoA can take several days to multiple weeks, depending on complexity, compliance processes, and internal reviews. Advice should be considered advice, but where 4-6 weeks have elapsed between recommendations being made and when they are confirmed in writing, can either party be satisfied with the result; the adviser might discover that client circumstances have significantly changed or opportunities missed in the interim; the client may find that they no longer recall why the adviser made the recommendations they did. How “reasonable” is it to assume that “free, prior and informed consent” was secured on the basis of a largely forgotten consultation.
The Five-Step Solution
“The SoA is a novel no one wants to read but everyone is forced to borrow.”
1. Radical Brevity
The myth that ASIC mandates lengthy SoAs needs to die. As does the idea that a long SOA better mitigates an adviser’s liability.
An effective SoA should be 10-20 pages maximum, ideally 10 pages, and focus exclusively on what matters to the client’s decision-making process.
Instead of a single compendious SoA, produce shorter, clearer and linked advice documents.
2. Client-Centered Structure
Restructure SoAs to answer the five questions clients actually care about:
What do I know about you and your circumstances?
What is your problem or need?
What is the best solution?
Why is this right for your situation?
What are the specific risks and costs?
Everything else is secondary.
If you’re uncomfortable with this high-level approach, look to RG 90, in ASIC confirmed that the eight core SoA elements required by s947B (SoA from Licensee) 947C (SoA from Authorised Representative) and 947D (replacement product advice) are:are:
title “Statement of Advice”
a statement setting out the advice (see s947B(2)(a) and 947C(2)(a));
information about the basis on which the advice is or was given (see s947B(2)(b) and 947C(2)(b));
a statement setting out the name and contact details of the providing entity and, where relevant, the authorising AFS licensee (see s947B(2)(c) and 947C(2)(c)–(d));
information about remuneration, commissions and other benefits capable of influencing the providing entity in providing the advice (see s947B(2)(d) and 947C(2)(e));
information about any other interests, associations or relationships that might be expected to be or have been capable of influencing the providing entity in providing the advice (see s947B(2)(e) and 947C(2)(f));
where the personal advice is based on incomplete or inaccurate information, a statement setting out the warning required by s961H (see s947B(2)(f)) and 947C(2)(g)); and
where the personal advice recommends the replacement of one financial product with another financial product (also known as ‘switching advice’), the additional information required by s947D.
3. Visualisation – A picture tells a thousand words
Research consistently shows that visual information is processed 60,000 times faster than text. ASIC Report 632 suggests that “Research consistently shows that visual information is processed 60,000 times faster than text.” (ASIC Report 632, p. 20). This supports the argument for using charts, tables, and icons to improve client comprehension.
Charts for portfolio allocation
Tables for cost comparisons
Bullet points for key takeaways
Icons for important warnings
These elements dramatically improve comprehension while reducing document length.
4. Transformation
The future SoA isn’t a static PDF. ASIC’s consultation paper on digital disclosure supports:
Interactive SoAs that reveal information progressively
Video summaries for visual learners
Digital interfaces that track client engagement4.
5. Ruthless editing
Not all information belongs in the primary SoA. Consider:
Moving generic disclaimers to the Financial Services Guide or your website
Creating supplementary documents for technical details
Including information that is useful, but isn’t critical, into your working papers.
The Compliance Lever: s947B(3) of the Corporations Act
“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” – Chappell Roan (or Mark Twain)
It may be often overlooked in favour of provisions with better PR, but section 947B(3) of the Corporations Act states:
“The Statement of Advice must include the information required under subsection (2) in a clear, concise and effective manner, having regard to the nature of the advice, the subject matter of the advice and the identity of the client.”
This provision establishes the fundamental legal requirement for disclosure: the level of detail should be what a retail client would reasonably require to make a decision. Unlike ASIC’s guidance, which reflects its regulatory perspective, this statutory test takes precedence and provides a more flexible, principles-based approach.
In practice, this means:
If comparing bank fees to investment products isn’t reasonably required for a client to make their decision, then the Act doesn’t require it.
You don’t need detail tables to explain that taking money from your back account to invest means your money is no longer in your bank account.
You don’t need to explain what a concessional contribution or managed investment scheme is to a seasoned investor.
The key test remains what’s in s947B(3) — what would a retail client reasonably require to understand the recommendation and its real risks?
S947B(3) is the lever you can use to shift the burden of compliance (the Code and Standards are the fulcrum).
It seems simple, but there’s more for you to do if you want even shorter, clearer advice documents. First, your discovery and engagement processes must address your client’s background, capacity, understanding and experience with enough rigour to demonstrate that your decisions about what to include or exclude were reasonable. Second, your decision to include or exclude information from the SoA must be reasonable. Third, your working papers must contain, or at least show your consideration of, the matters you’ve excluded from, or referenced in, the SoA. Lastly, your advice documents will necessarily become more tailored; not every client will have the same background, capacity, understanding or experience so their documents will be different.
For those worried about ASIC’s likely response to your embrace of shorter, clearer advice documents, please understand that there’s little regulatory risk from complying with the law; while ASIC’s guidelines reflect their regulatory perspective, they cannot override the statutory test in s947B(3) of the Corporations Act. This section establishes the fundamental legal requirement for disclosure: the level of detail should be what a retail client would reasonably require to make a decision. This offers advisers incredible flexibility to tailor their advice, as long as the advice documents still comply with the mandated elements.
You might feel uncomfortably exposed by shorter advice documents but you need to understand: shorter, clearer SoAs are actually more compliant, not less.
A Call to Action
Advisers must reclaim their role as professionals who prioritise their clients’ interests above regulatory overreach. I’ll be even more direct, advisers’ blind adherence to legal risk management undermines the core purpose, and clear benefit, of financial advice.
The solution to these clear failings requires courage from all stakeholders:
Advisers: Challenge the “more is safer” mentality
Licensees: Support advisers who prioritise clarity over volume
Regulators: Provide clearer guidance and examples of effective, concise SoAs
The Statement of Advice should do what its name implies: clearly state the advice. Everything else is just noise. As comforting as it is to fall back on tradition, “as regulators, ASIC and the AFM agree that while disclosure is necessary, it alone is often not sufficient to drive good consumer outcomes.” (ASIC Report 632, p. 4). Don’t wait for regulatory reform, lead now.
Let’s be clear – the industry does not need to wait for regulatory reform to improve SoAs. Advisers can take immediate steps to create shorter, clearer, and more effective advice documents by:
Prioritising key client concerns over excessive disclaimers.
Deleting appendicies (in favour of website disclosure for general information or working papers for personal information)
Identifying relevant risks and relevant costs and consequences instead of universal risks and all potential costs and consequences
Focusing the SoA on your advice and strip out “nice to have” statements
Utilising visuals to simplify complex information
Expunging redundancies and removing repetition
Relegating expansive Replacement Product Tables (and analysis) to the working papers in favour of short, sharp consideration of relevant impacts
Leveraging technology for interactive and digital disclosures.
Aligning with the legal standard in s947B(3), which prioritises client comprehension over document length.
The time for action is now. Challenge the norm, simplify your SoA, and put client understanding first.
At Assured Support, we help advisers navigate regulatory challenges with practical, effective compliance solutions.
Our expert reviews and training programs empower advisers to produce SoAs that meet legal requirements without unnecessary complexity. Contact us today to refine your compliance strategy and deliver better advice, faster.
1. Why is the Statement of Advice (SoA) considered ineffective?
The SoA has become a compliance-heavy document rather than a client-focused tool. Originally intended to help consumers make informed financial decisions, it has evolved into a lengthy, costly, and complex report that overwhelms clients rather than assisting them.
2. How does an overly long SoA impact retail clients?
Clients often experience information overload, leading them to either skim the document without truly understanding it or disengage entirely. This results in poor decision-making and reduced trust in the financial advice process.
3. What are the main reasons advisers continue producing lengthy SoAs?
Fear of regulatory repercussions, legal conservatism, and industry norms encourage advisers to prioritise compliance optics over clarity. Many advisers mistakenly believe that more disclosure equals better protection, despite ASIC acknowledging that excessive disclosure can be ineffective.
4. What is the proposed solution to improve SoAs?
A streamlined approach includes:
Keeping SoAs to 10-20 pages max, focusing only on essential client information.
Using visual elements (charts, tables, bullet points) to enhance comprehension.
Leveraging interactive digital formats instead of static PDFs.
Ensuring compliance with s947B(3) of the Corporations Act, which mandates “clear, concise, and effective” advice.
5. How can advisers push back against excessive compliance burdens?
Advisers should challenge the “more is safer” mentality, advocate for concise SoAs, and leverage regulatory guidelines that prioritise client understanding over unnecessary disclosure. Licensees and regulators must also support clarity over document length.
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TL;DR: Why the SoA wastes everybody’s time
By
Sean Graham
Advice Governance, Governance & Leadership
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