A Statement Of Advice Should Be A "Statement"

A Statement Of Advice Should Be A "Statement"

When it comes to providing advice in writing to a client there is undoubtedly unnecessary complexity.  In fact the proverbial “Statement Of Advice” has become anything but a “statement”.  It generally takes the form of a tome…

A “tome is a scholarly work…usually large, heavy and laborious in its detail.

A “statement” is a declarative position.

So let’s get some sanity back into best practice advice processes.  I will put it out there – just my own humble opinion of course – but generally speaking the format of written advice being created for consumers today by financial advisers is anything but helpful.

It is a barrier to consumer engagement.

It is not actually designed for the consumer at all.  It is designed to protect everyone but the consumer.

The process has been captured by the fringe-dwellers.

Outrageous claim?  I don’t think so.

Let’s begin by going back to what it is supposed to be.

Whether the written advice is called a “record of client advice”, a “financial plan”, “statement of recommendations” or whatever someone wants to label it, the objectives of it should be pretty straightforward:

  1. Provide clear and concise direction to the recipient
  2. Be effective as a form of communicating the advice
  3. Provide sufficient rationale to justify the suitability of the advice

So how the hell has this concept of providing professional advice in writing to a consumer turned into 45-80 page monstrosities of disclaimers, pie charts, product fact sheets and research house spiels?

More importantly; how does anyone expect the average time-poor consumer to find this “engaging” or helpful?

You can’t blame the regulators or politicians for that (at least not in this country).  Actually the powers-that-be here made it pretty clear what their expectations were:

“Communicating ‘effectively’ for the purposes of the Code requires an (adviser) to take reasonable steps to ensure the client understands the communication.”


“The extent of any explanation required under this Code Standard is determined by what a retail client would reasonably require in the circumstances to make an informed decision, including: 

(a) sufficient information to enable the client to make an informed decision as to the suitability of the financial adviser service provided by the AFA, and 

(b) a concise description of the principal benefits and principal risks relevant to any financial advice provided as part of the AFA’s financial adviser services, having regard to the characteristics of those services.”

Better yet, the regulators left it to industry to best determine what form and shape that written advice could take.  The regulatory objective was pretty straightforward:  Make it useful; make it concise; and put it in writing.  Stand behind your advice…but deliver good advice.

Big tick to the regulators.

Consumers in the main haven’t asked for a tome when engaging with an adviser.  Sure, the occasional engineer client might ask for a lot of research and technical data, but most consumers don’t.  And if a particular client wants loads of technical detail by all means give it to them….but we should not be force-feeding every consumer with the same depth of data if it merely creates disengagement or confusion.

Most advisers don’t seem to want to produce 40+ page reports either as far as I can tell.

So a quick recap to this point:  Regulators don’t want a tome produced.  Most consumers don’t want a tome delivered.  Most advisers don’t want to be producing a tome.

So who does want this?

The people not actually involved in the creation, delivery, monitoring or implementation of financial advice.

The fringe-dwellers.  The non-advisers, and non-consumers, and non-regulators are the ones who created this mindset. Fundamentally it comes down to this: the more complex they can make the process the more we think we need them.  The more valuable they must be therefore because of the increasing complexity in our professional lives.

It is time to push back on the nonsense in my view, and get back to delivering what the paying customers want: Concise and effective advice that helps them make good decisions which lead to a better financial future.

If we – the advisory community – actually really cared about creating valuable advice which consumers could use and then wanted to engage with we’d set ourselves some really tough objectives.  Producing 40 pages of re-printed rubbish is not tough: distilling that into 4 pages of meaningful and personally relevant advice is though.

Related: The Next Strategic Evolution For Advisory Firms

A great Statement of advice should be probably no more than 4 pages if you think about it.

  • One page actually saying what the recommendations are.
  • Another page saying what the risks or limitations or conflicts are.  You can fit that on one page if you strip out the legal guff and be blunt.
  • Another page saying why this is the right course of action in your professional opinion.
  • Perhaps a final page outlining the action plan, or next steps, once the advice is followed.

That’s it.

What else did the consumer want?

Actually; what else did the professional adviser want to produce for that matter?  And what else did the regulator want to see?

Let’s cut the crap out of clients lives and get some sanity back into the process of being professional.  Make the Statement Of Advice a “statement” again.  I daresay more consumers will be able to follow it, and more will want to follow it, and more consumers engaging with good professional advice because they can understand it was what the entire process was about to begin with.

Tony Vidler
Twitter Email

Tony Vidler is the expert in professional services on creating strong personal branding and target marketing positioning. Tony has been in financial services since 1990, ... Click for full bio

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

Written by: Jeremie Capron

China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.

For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.

You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.

Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.

As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.

Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.

To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.

Related: Smooth Tomorrow's Market Volatility With a Smart Approach to Robotics & AI

Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.

Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.

Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.

Want all the details? Download the ROBO Global Investment Report - Summer Brings Best ROBO Earnings in Six Years or visit us here.

ROBO Global
Robotics and AI
Twitter Email

ROBO Global LLC is the creator of the ROBO Global® Robotics and Automation Index series, which provides comprehensive, transparent and diversified benchmarks representing the ... Click for full bio