A record of advice (ROA) performs similar functionality to a statement of advice (SOA). Record of advice is a simple document you can provide to an existing client, confirming that the advice has been provided and implemented from the statement of advice.
When a Record of Advice used:
- When there are and advice event that results in a transaction or perhaps advice to hold.
Significant points to consider when completing Record of Advice:
1. Client Details: Name, Middle name, date of the advice recommended
2. Basis of Advice: Document the advice whether initiated by the adviser or client itself in the ROA.
3. Synopsis of Advice: Collect the details of the advice that was provided to the client. The reason for the advice provided by the adviser should also be documented. Record the recommendation provided with reference to current or new product for the client to invest in.
4. Costs and Risks: Record if any significant consequences occur in the investments options or replacement with other listed securities.
- The charges and costs incurred are to be recorded (% & $ Value)
- Loss of benefits incurred in ($ value) due to replacement or acquisition of other securities.
5. Warning: An Appropriate warning should be recorded
- When the advice is provided verbally, and information provided to client is limited and not sufficient.
- When advice provided for the non approved products
- Limited information is given by the client to the adviser.
6. Disclosure of Fees and remuneration structure: Ensure that the fees structure has to be disclosed in terms of (fees & commissions) % and $ in writing.
7. Consent: Financial adviser must confirm on the Record of Advice that the client has agreed upon the implementation of the advice. It is explicit that the client wants to proceed with amendments to the advice which must be clearly noted on the ROA.
8. Miscellaneous: Annual reviews and regular contact to the client asking them if their personal financial situation has changed so that a new SOA can be generated.
9. Enclosed Tangible Materials: Attach copies of any information sent to the client relating to the recommendations, for ex- Client letters, research & development reports, assumptions, predictions/projections and any other generic information relevant to the recommendations.
Include any notes where the adviser provides further information or outcome of the discussion held with the client.