Lengthy, wordy SoAs may be a thing of the past, with ASIC’s stance of technological neutrality.
Today's consumer has become accustomed to a highly engaging user experience, with social media mediums, text messages, and YouTube being integral to the daily life of most Australians.
With a focus on the client experience, digital advice, and a need to reshape financial advice into a delivery format that is better suited to today’s digital-savvy consumers, there is an exciting push toward developing SoAs in video format.
90% of information transmitted to our brains is visual. Generally speaking, people retain 80% of what they see, versus 20% of what they read, and statistically, the most predominant learning style in humans is visual, encompassing around 60% of the population, with only 20% favouring auditory learning.
Our verbal tone, visual cues, and body language make up a huge part of the way we communicate. On the contrary, written documents rely on a writer’s articulation, precision, and punctuation of words, all of which pertain to the writing of an SoA.
Engaging with a video format as an alternative, however, is intrinsically rich with content, and has the means to help clients interpret what advisers are conveying to them through observation of tone & body language. Thus, the video SoA format can help clients better understand their advice.
The current interpretation and application of The Corporations Act has resulted in the industry maintaining the accepted status quo of delivering financial advice via paper. Yet, further examination of The Corporations Act, and specifically ASIC’s guides RG244 and RG221, finds these to be technologically neutral, not once stating advice is to be written word or paper-based.
Despite previous concerns around digital and video SoAs meeting compliance obligations, Leah Sciacca, a senior executive of ASIC, shared at the recent FPA Congress that the regulator encourages the industry “to explore technology and innovation.”
“RG221 talks about the use of technology and disclosure and it sets out those same principles in terms of it has to be easy to understand, inform the client it needs to be recorded, and that consumers can opt-out of receiving digital disclosure.”
Sciacca added, “In short, if you comply with everything else you need to comply with, then the Corporations Act is technology neutral”.
This helps pave the way towards delivering advice that is more in line with consumer expectations, doing so through digital, video, and even app-based formats. Regulatory support is encouraging advice businesses to move towards digital to make advice more efficient and deliver advice in a way where clients could access their advice as a more interactive financial plan over a secure portal or smartphone app.