This week, the Financial Planning Association (FPA) released a 10-page example of a statement of advice, written in plain English and tested with consumers.

‘ASIC strongly supports the FPA’s efforts in doing this work. The FPA’s example is a major step forward in the ongoing challenge to shorten and refine documents to make them more user-friendly’, ASIC’s Deputy Chairman, Mr Jeremy Cooper, said.

‘This is a very positive step in getting planners to understand the old adage that ‘less is more.’ A short and simple document that talks to clients in their language is much smarter than technical jargon and legal mumbo-jumbo.

‘ASIC often sees statements of advice that are 40 or 50 pages long and some much longer. Some advisers think that a long document is required by law - they couldn’t be more wrong. The law says that statements of advice have to be clear, concise and effective.

‘Long statements of advice are a headache for everybody; they are neither necessary nor useful’, Mr Cooper said.

Background

Where a financial planner gives advice, they are generally required to give the client a written statement of advice. This summarises the advice, explains why the advice is appropriate for the client’s needs and discloses major advantages and disadvantages.

ASIC published a short example statement of advice in August 2005 (refer to Regulatory Guide 90 Example Statement of Advice (SOA) for a limited financial advice scenario for a new client (RG 90) and ASIC Media Release 05-258 ASIC example Statement of Advice: less is more).