What is a Statement of Advice?

The document that defines what your adviser is recommending

If you receive personal financial advice in Australia, your adviser is legally required to give you a Statement of Advice - commonly called an SOA. It's not optional, and it's not just paperwork. Understanding what it is and what to look for in one is one of the most useful things you can do before signing anything or moving any money.

What a Statement of Advice actually is

An SOA is a written document that sets out the personal financial advice your adviser is giving you, the basis for that advice, and any interests or associations that might have influenced it. It's a legal requirement under the Corporations Act, and it must be provided before you act on any personal financial recommendation.

The key word is personal. If an adviser gives you general information about how superannuation works, they don't need to produce an SOA. The moment they make a recommendation specific to your circumstances - "based on your situation, I think you should consolidate your super into this fund" - an SOA is required.

What it must contain

The law sets out minimum requirements for what an SOA must include. At a minimum it should cover:

The advice itself - what the adviser is recommending you do, in enough detail that you understand exactly what action they're proposing.

The basis for the advice - why they're making that recommendation given your specific circumstances, goals and risk tolerance. This is the section that tells you whether the advice is genuinely tailored to you or whether it looks like something templated.

The adviser's interests and associations - any conflicts of interest, commissions, benefits or relationships with product providers that could have influenced the recommendation. Since the Future of Financial Advice reforms in 2013, advisers can no longer receive commissions on most products, but there are still situations where conflicts can arise and they must be disclosed.

Fees and charges - what the advice will cost you, both the adviser's fee and any ongoing product fees that apply to what they're recommending.

Your personal information - the information about your situation that the adviser relied on in making the recommendation. If this section doesn't reflect your actual circumstances, that's a problem.

How long should it be

There's no prescribed length, and SOAs vary enormously. A straightforward recommendation might run to 20 or 30 pages. A comprehensive financial plan covering superannuation, insurance, investments and retirement strategy can run to well over 100 pages.

Length isn't a reliable indicator of quality. Some very long SOAs are padded with boilerplate disclaimers and generic product information that tells you very little about why the specific recommendation is right for you. Some shorter SOAs are clearer and more genuinely personalised. What matters is whether the document clearly explains the recommendation and its basis in terms of your actual situation.

What to look for when you read one

Most people receive an SOA and either sign it without reading it or feel overwhelmed by the length and legal language. Neither is ideal. Here are the things worth paying attention to:

Does the advice section actually reflect what you discussed? The recommendation should follow logically from your goals and circumstances as described earlier in the document. If the advice section feels disconnected from the personal information section, ask questions.

Are the fees clearly stated? Both the adviser's fee and any ongoing product fees - management expense ratios, platform fees, insurance premiums - should be disclosed in dollar terms where possible, not just as percentages.

Are there alternatives considered? A good SOA will often acknowledge that alternatives were considered and explain why the recommended approach was preferred. If the document reads as though there was only ever one possible answer, that's worth questioning.

Does the conflict of interest disclosure section say anything meaningful? A statement that says "we may receive benefits from product providers" without any specifics is less useful than one that names the products and the amounts involved.

You don't have to act on it immediately

You're entitled to take time to read the SOA and ask questions before you do anything. A good adviser will expect this and encourage it. If an adviser is pressuring you to sign or implement the advice quickly, without giving you adequate time to consider the document, that's a red flag.

You can also get a second opinion. If you're uncertain about a recommendation, there's nothing stopping you from taking the SOA to another adviser and asking for their view. This is more common than people think, particularly for large or complex decisions.

Record of Advice

Once you have an ongoing relationship with an adviser, not every subsequent interaction requires a full SOA. For minor updates or changes that don't involve new personal advice, your adviser can provide a shorter document called a Record of Advice. This is a lighter-touch document that records what was discussed and any action taken, but doesn't need to meet the full requirements of an SOA.

Verifying your adviser

Before you receive an SOA from any adviser, it's worth verifying that they're properly licensed. All financial advisers in Australia must be registered on the ASIC Financial Advisers Register. You can search for a registered adviser near you on this directory and check their qualifications, experience and authorisations before your first meeting.

If something in an SOA concerns you and you're not getting satisfactory answers from your adviser, you can make a complaint through the Australian Financial Complaints Authority (AFCA) at afca.org.au, or contact ASIC directly on 1300 300 630.