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When Is a Statement of Advice Required? A Practical Guide for Australian Advisers
Find out if your SoAs would pass scrutiny today. No obligation.
Not every client interaction requires an SoA. Knowing when one is required, when an ROA is sufficient, and when neither applies is one of the more consequential compliance decisions an adviser makes.
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What triggers the SoA obligation?
The obligation to provide a Statement of Advice arises under section 946A of the Corporations Act 2001. It applies when a providing entity provides personal advice to a retail client. Both conditions must be met. If either is absent, no SoA is required.
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Personal advice is defined in section 766B. Advice is personal if the providing entity considers one or more of the client's objectives, financial situation or needs, or if a reasonable person might expect those factors to have been considered. If neither applies, the advice is general advice and no SoA obligation arises.
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Retail client is defined in section 761G. In broad terms, a natural person is a retail client for financial advice purposes unless the advice relates to a product acquired for business purposes and the product value exceeds $500,000. Most individual clients of financial advisers are retail clients.
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When both conditions are satisfied, an SoA must be given when the advice is provided or, if not practicable, as soon as practicable after.
The legal framework for advice documentation
The SoA obligation and its exceptions draw from several provisions of the Corporations Act 2001, supported by ASIC regulatory guidance:
CORE CORPORATIONS ACT PROVISIONS
Definition of retail client: determines who the SoA obligation applies to
Definition of personal vs general advice: the distinction that determines whether the SoA obligation arises at all
The obligation to give an SoA when providing personal advice to a retail client
Situations in which an SoA is not required: covers the Record of Advice (ROA) exemption and the time-critical advice exemption
Verbal disclosure obligations at the time of advice where no SoA is given at that point
Reg 7.8.10A
Content requirements for a Record of Advice
SoA vs ROA: when can a Record of Advice be used?
Section 946B provides that a providing entity is not required to give an SoA if certain conditions are met. When satisfied, a Record of Advice (ROA) may be given instead. All three conditions must be met.
01
A previous SoA exists
The providing entity must have previously given the client an SoA in connection with advice on the same subject matter. There must be a prior SoA on file relating to the client's situation.
02
The client's circumstances have not significantly changed
Since the previous SoA, the client's objectives, financial situation and needs (as relevant to the current advice) must not have significantly changed. If there has been a material change, a new SoA is required.
03
The further advice is not significantly different
The advice being given must be consistent with, or not significantly different from, the previous SoA. If the adviser is recommending a materially different course of action, a new SoA is required.
When in doubt, give an SoA.
The ROA exemption is a practical concession for ongoing advice relationships, not a routine shortcut. If there is any real doubt about whether circumstances or advice have significantly changed, the safer position is a new SoA.
What must a Record of advice contain?
An ROA is shorter than an SoA but is not a file note or an email. Regulation 7.8.10A prescribes what it must include:
Reference to the previous SoA
The ROA must identify the previous SoA it relates to. The two documents are read together - the ROA derives its validity from that connection.
Why no SoA is being given
A brief statement confirming the s946B conditions are met: the client's circumstances have not significantly changed and the further advice is not significantly different.
How the advice differs from the foundation SoA
Where the current advice differs from the previous SoA, the ROA must describe how. If advice is substantially the same, this can be addressed briefly - but it must be addressed.
Remuneration and benefits
Like an SoA, an ROA must disclose any remuneration, commissions or other benefits associated with the further advice.
Conflicts of interest
Any interests the providing entity or their associates have that could reasonably have influenced the further advice.
Time-critical advice and other exceptions
The time-critical advice exception
Where giving an SoA beforehand is not practicable because the client wants advice urgently, the providing entity may give the advice first and provide the SoA as soon as practicable afterwards. The exception only affects timing - the SoA still must follow. Under s946C, verbal disclosures about remuneration, conflicts and warnings must still be made at the time of the advice.
General advice does not require an SoA
Where an adviser provides general advice only, no SoA is required. However, if a reasonable person in the client's position would expect the adviser to have considered their personal circumstances, the advice may be personal advice regardless of the adviser's intent.
Wholesale clients
If the client is a wholesale client rather than a retail client, the SoA obligation does not apply. The distinction is not always straightforward, particularly for small business clients or those holding a sophisticated investor certificate.
Scaled or limited scope advice
Scaled advice limited by agreement with the client still requires an SoA if it is personal advice to a retail client. Scaling the scope does not remove the obligation - it may reduce the length and complexity of the SoA required, because mandatory elements only need to address the agreed scope.
Common advice documentation failures
Based on ASIC surveillance findings and licensee audit patterns:
Best interests not demonstrated
The s961B(2) safe harbour steps are referenced but not evidenced; the document asserts best interests without showing the work.
RoA not referencing the foundation SoA
The document does not identify the SoA it relates to, making it impossible to assess whether the exemption conditions were satisfied.
RoA missing remuneration or conflict disclosures
Advisers treating the ROA as an internal file note rather than a document documenting the provision of all required disclosures.
Incorrect general/personal advice classification
Advice classified as general to avoid the SoA obligation, where circumstances make clear a reasonable person would have expected personal circumstances to be considered.
No SoA on file for an ongoing relationship
ROAs issued in an ongoing relationship without any prior SoA for the ROA to validly build on.
s946C verbal disclosures not made
Relying on the time-critical exception but failing to make the required verbal disclosures at the time of the advice.
How RegiReview helps
Producing compliant SoAs isn't just about understanding the obligations. It's about applying them consistently, across every file, under the time pressure of a real practice - and keeping pace with a regulatory framework that continues to shift.
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RegiReview gives advisers and licensees the tools to do that.
Review SoA documents against current Corporations Act and ASIC requirements before they reach clients
Identify specific gaps - not just where a section is weak, but what's missing and how to address it
Build consistency across your practice and reduce the risk of licensee audit findings
Stay across ASIC updates and DBFO reforms without tracking them manually
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