How Detailed Does an SoA Need to Be?

One of the most common questions advisers ask about SoAs is whether theirs are long enough. It is rarely the right question. ASIC's standard is not about length - it is about completeness. And a long SoA that lacks genuine analysis can fail compliance just as easily as a short one that skips mandatory content.

This article explains what the law actually requires in terms of SoA detail, how ASIC interprets the clear, concise and effective standard, and what the right level of detail looks like for different types of advice engagements.

The Legal Standard: Clear, Concise and Effective

Sections 947B(6) and 947C(6) of the Corporations Act require that everything in an SoA be worded and presented in a clear, concise and effective manner. This is the only standard the Act sets on form and presentation - but it is a substantive one.

ASIC's guidance in RG 175 is explicit that this standard does not mean shorter is always better. It means the document must genuinely serve the client's understanding. An SoA that achieves that in eight pages is better than one that buries the key information in forty pages of boilerplate.

The three elements of the standard each carry weight:

• Clear: the client can understand it. Technical language, legal citations and jargon not explained in plain terms fail this limb

• Concise: it does not include material that does not serve the advice being given. Product information irrelevant to the recommendation, excessive disclaimers and generic boilerplate all undermine conciseness

• Effective: it achieves its purpose - the client understands the advice, the basis for it, the risks involved and the disclosures that must be made. An SoA that is clear and short but leaves the client unable to understand what they are being recommended to do is not effective

Completeness Relative to Scope

ASIC acknowledges that the style, content, layout and length of an SoA will vary depending on the scope and complexity of the advice. A comprehensive financial plan covering superannuation, insurance, investments and estate planning will necessarily be longer than a single-issue scaled advice SoA addressing a specific contribution query.

The test is not length - it is completeness relative to the advice given. For any SoA, the question is: does this document address every required element for the scope of advice being given, in enough detail for a reviewer to understand the advice and how it was reached?

Scaled Advice: Where Less Is Genuinely Enough

ASIC explicitly supports scaled advice - advice that is limited in scope to a specific issue or product, rather than addressing the client's full financial situation. An SoA for scaled advice can and should be shorter than one for comprehensive advice.

For scaled advice to be defensible, three things must be in place:

• The scope must be clearly defined in the SoA: what is being advised on and - crucially - what is not being addressed

• The limited scope must be genuinely appropriate for the client's situation - an adviser cannot artificially narrow scope to avoid addressing matters that are clearly relevant

• Where incomplete information means the advice might not be appropriate, the s961H warning must be included

When an SoA Is Too Long

Counter-intuitively, an SoA can fail the clear, concise and effective standard by being too long. ASIC's guidance specifically flags the problem of SoAs that:

• Include extensive product information not relevant to the specific recommendation being made

• Reproduce large volumes of generic disclaimer or risk language that obscures the actual advice

• Include background information about the advice process, regulatory environment or general investment principles that adds length without adding clarity for the client

• Repeat the same information multiple times in different sections

An SoA that is difficult to read because it is padded with irrelevant material fails the effective limb of the standard - even if every mandatory element is technically present.

When an SoA Is Too Short

The opposite problem is more common. SoAs that are short because they omit substance - not because the advice is genuinely narrow in scope - consistently fail on compliance review. The most common areas where short SoAs fall short:

• Basis for advice too thin to show how the recommendation was reached

• Client circumstances summarised so briefly they could apply to any client

• Risk disclosure limited to a single generic sentence

• Remuneration disclosure present but not specific to the advice given

The Practical Test

A useful way to assess whether an SoA is at the right level of detail is to ask: if a reviewer picked up this document with no other context, could they answer all of the following questions from what is in the SoA alone?

• Who is this client and what are they trying to achieve?

• What exactly is the adviser recommending?

• Why is this recommendation in this client's best interests?

• What are the material risks of the recommended approach for this client specifically?

• What is the adviser being paid and by whom?

• Are there any conflicts of interest that could have affected this advice?

If the answer to any of these is no, the SoA needs more detail - regardless of how many pages it already is. If the answer to all of them is yes and there is still content that does not contribute to answering them, that content probably should not be there.

Is your SoA the right length for the right reasons?

RegiReview reviews SoA documents against the clear, concise and effective standard - identifying where content is missing, where it is inadequate, and where it is padding that undermines the document's clarity.

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