SOA, investment strategy separate documents

SOA, investment strategy separate documents

A statement of advice should not be used as an SMSF investment strategy, regardless of the asset allocation information contained in it, according to an expert panel.

A panel of SMSF practitioners has unanimously agreed that while a statement of advice (SOA) can contain information that is relevant for a fund’s investment strategy, it should not be used dually as the investment strategy.

“To mum and dad under the law I have to provide advice in writing called the statement of advice. In that I will discuss asset allocation and specific investment recommendations. That, I understand from people, can be used as an investment strategy, however, I would never do that,” Quantum Financial director Claire Mackay told attendees at the Chartered Accountants Australia and New Zealand SMSF Conference 2019 in Sydney last week.

“I would, when they first come to me, say ‘show me your investment strategy’. Once we’ve gone through the process of preparing advice and strategy, we would then say ‘okay, I think you need to maybe amend or adjust the investment strategy’.”

Mackay said an SOA was not fit for purpose in the context of a fund’s investment strategy.

“I think that there is a lot of information that goes into a statement of advice that is not necessary for an investment strategy and is not helpful,” she said.

“The investment strategy is a legal document and if we go by the book and do all the things in an investment strategy we need to do, it doesn’t need to be the 60-page statement of advice that I do.”

Fellow panellist Tactical Super director and SMSF specialist auditor Deanne Firth said in her experience financial planners were keeping the investment strategy separate from the SOA.

SMSF Alliance practice principal and SMSF mentor David Busoli said he had seen the SOA being used in conjunction with the investment strategy, but operating as two separate documents.

“No I haven’t [seen the SOA being used as the investment strategy], however, I’ve seen a lot of situations where the investment strategy is written off the back of the statement of advice,” Busoli said.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital