What Is the Difference Between an SoA and a Record of Advice?

Advisers and paraplanners ask this question constantly, and for good reason. The two documents have different legal foundations, different triggers and different content requirements. Using one when the other is required is a compliance failure, regardless of how polished the document looks.

Start with the legal basis

An SoA is the primary advice document. It is required under s946A of the Corporations Act whenever personal advice is given to a retail client. It is the document through which an adviser demonstrates compliance with the best interests duty and the appropriateness obligation. It can be given at any stage of the advice relationship and has no prerequisites.

An ROA is a secondary document. It can be used in place of a new SoA only where the specific conditions in s946B are all satisfied. An ROA derives its validity from a prior SoA. It cannot stand alone.

When is each one required?

An SoA is the rule. An ROA is the exception ... and the exception has conditions.

An SoA is required when:

• Personal advice is being given to a retail client for the first time.

• The three conditions for an ROA under s946B are not all satisfied.

• The advice is materially different from what was covered in the prior SoA.

• The client's circumstances have changed significantly since the prior SoA was given.

An ROA may be used only where all three of the following apply:

• A prior SoA exists and covers the relevant subject matter.

• The client's objectives, financial situation and needs have not changed significantly since that SoA.

• The further advice is not significantly different from the advice in the prior SoA.

What an SoA must include

Under ss947B and 947C, an SoA must contain:

• The advice and the basis for it, showing how the client's objectives, financial situation and needs were considered.

• The providing entity's name and contact details.

• Full disclosure of remuneration, benefits and interests that could reasonably be expected to influence the advice.

• Disclosure of conflicts of interest.

• Any required warnings - for example under s961H where the adviser does not have a complete picture of the client's situation.

The SoA must also demonstrate in substance that the best interests duty (s961B) and the appropriateness obligation (s961G) were satisfied. A compliance checklist without supporting reasoning does not achieve this.

What an ROA must include

Regulation 7.8.10A requires an ROA to include:

• A reference to the prior SoA the ROA relates to.

• A statement explaining why no new SoA is being given.

• A description of how the further advice differs from the prior advice.

• Disclosure of remuneration and benefits relating to the further advice.

• Disclosure of any relevant conflicts of interest.

The ROA is not a summary of the prior SoA. It documents only the further advice and confirms the basis for relying on the s946B exemption. It must be given to the client, not just retained on the file.

The most common mix-up

The most frequent compliance error is using an ROA as the default for existing clients without actively assessing whether all three s946B conditions are met at each advice interaction.

Over time, client circumstances change. Retirement, a change in employment, a shift in risk tolerance, a material change in assets or family situation - each of these can require a fresh SoA. An ROA cannot capture or validate advice given in materially changed circumstances, regardless of how long the advice relationship has been running.

The length of an advice relationship does not reduce the obligation to prepare a new SoA when circumstances require it.

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