When conducting a Compliance Review on SOA's, there is always one recurring theme that comes up time and time again - Effectively Capturing Client Goals and Objectives.

Financial Advice is a complex business, but in some respects, it is actually a very simple one. One thing I've noticed, is that what often separates great advice from poor advice, is the skill of the adviser in identifying their clients' goals and objectives.

As busy advisers it is easy to get caught in the trap of assuming too much. To ignore the implicit client needs in favour of explicit ones, and fail to differentiate between their clients' goals and their objectives. Confusing goals and objectives is such a basic failure, but also one that's simple to address.

Your client’s goals and objectives are the foundation on which personal advice is built. Unfortunately, they are too often confusing, used incorrectly, or in other cases, they’re reduced to generic and undifferentiated statements that lack detail and the reflect the planner’s recollection rather than the client’s language.

Practically, the most powerful statement of your clients’ goals and objectives are the ones that come from the clients and are recorded in as close to their own words as possible. After all, isn’t the fundamental purpose of personal advice to deliver what the client needs and wants? 

What is the difference between Goals and Objectives?

Goals and objectives are different and distinct. An easy way to differentiate between them is to recognise the Goal as the destination, desired outcome or the end game. Whereas the objectives are the means by which the client is more likely to achieve that goal.

• A goal usually provides the bigger picture, and does not usually contain a high level of detail.

• The Objectives are the steps, tactics or road map that will be followed to achieve the goal(s).

Often, the clients initial response as to why they are seeking your advice is their goal. For example: “I want to make sure that I have enough for retirement”, or “I want to be able to pay my bills if I can’t work”, or “I want to go on a holiday”. These are all very reasonable things that your client may want, although by themselves are not enough to start taking steps to accomplish any of them.

Great advisers will ask more questions to understand why the client wants your advice, and how it may be achieved. By doing this effectively, you are able to frame up the clients objective for a simple solution.

Having a deeper understanding of your clients objectives helps you to provide solution more effectively, and demonstrate the value of your advice.

Some recent examples:

"You would like to spend around $30,000 on renovating your holiday home in December 2022. You would like to know whether you should fund this expense through drawing from super, or selling some shares"

The goal is simple - to renovate your holiday home. The adviser was also able extract the measurable outcomes, being the costs of $30,000 and the relevant timeframe. But what makes this example so simple is that the adviser was able to get to the core of what the client was aiming to achieve: should they fund this expense from super or sell some shares. The adviser has framed up the objective for a simple response, which can clearly articulate the reasons and consequence of the advice.

"Consider selling one of my properties in Spring 2022 and use the proceeds to loan to my children so they can buy a new home. I would like to understand the tax implications of this before selling so that I can make an informed decision."

Again, the goal is simple - sell one of my investment properties. The adviser was able to identify why the client wanted to sell the properties, and the timeframe in doing so. The core objective here, and the real reason for seeking the advice, was to understand the tax implications of the sale. Whilst this is a good objective, there is still room for improvement. Knowing how much the client wants to gift to the children is also important. If the client had multiple properties, the adviser would need to explain to the client the tax implications of each property and the proceeds of each. Identifying the amount of the gift would form an important part of the basis of the recommendation as to which propert/ies would be sold.

"You would like to review your insurance cover to ensure that it still meets your needs and that you and your family is adequately financially protected. You would like to reduce premiums if you can."

Insurance can be a difficult one, as there can be many moving parts. The goal here is to review your insurance cover. Whilst the adviser was able to identify that the client wanted to reduce premiums, the way that the objective is written, it is a secondary preference to ensuring your family is adequately financially protected. As a result, a reduction in premiums would not be a reasonble basis for reducing levels of cover. As the adviser has used ambiguous terms such as 'meets your needs' and 'adequately financially protected', i would expect to see a full needs analysis completed, and all cover types to be addressed (life, TPD, Trauma & IP).

Product Switching Advice:

If you are making a recommendation to switch a product, you need to identiify what the clients goals and bjectives are for their super and/or investment. To do this effectively, there would be a separate objective which addresses these needs. It is quite common that this is not addressed by the adviser, and as a result, the adviser is not able provide a reasonable basis for the switch.

When considering a switch, you will need to compare the features and benefits of both the existing and the recommended product, and how that meets their stated objective. It is very common that the adviser only wants to talk about the fund that they are recommending, but the law dictates that they make reasonable efforts to understand the benefits of the client’s existing fund.

For more imformation and examples of a reasonable basis, you can refer to our Super Swicthing Policy Super Switching Policy 09.01.18 (1).pdf

Recommendations Satisying Objectives:

When reviewing an SOA, we are looking for the recommendation to satisfy the clients stated goal and objective. If the adviser only captures a generalised goal, it is often difficult to build an effective reasonable basis for the advice.

The SOA Audit aims to give you an indication of the how accurate this recommendation satisfies the client objective. Based on the words and phrases used in the objectve, the objective is then categorised into an advice area. The audit will then look to 'match' the recommendation back to the identified advice category (see table below).

The SOA Audit will not always be completely accurate or bullet proof your advice. It is a tool which helps to identify any potential issues in the SOA. See the hints and tips section below for mitigating potential issues.

Hints and Tips for an Efficient Practice:

• Faster is not more efficient: Take the time to write tailored client objectives before the SOA is produced. Making up objectives and massging them into the document after the SOA is produced will cause more re-work.

• Planning Priorities & Preferences: If your clients background and circumstances are complex, you can use the 'Planning, Priorities and Preferences' section of the Fact Find to give further context to the circumstances of the client and their priorities and preferences to be considered as part of your advice.

• Map out the advice: You could list out the objectives and draw up a mind map of your recommendations.

• Use the SOA Request Wizard: If you work with a paraplanner, you can use the SOA Request Wizard to decrease any confusion as to what should be included in the SOA.

• Use the Risk Needs Questionnaire: If you are doing insurance advice, you can use the Risk Needs Questionnaire to complete a full insurance Needs Analysis, which follows the Risk Researcher Input in Xplan. Risk Needs and Objective Supplementary Questionnaire.pdf (sharepoint.com)

• Remove the ambuguity: If you arent sure what the clients objective are, you may need to ask the client more questions to get to the core of the advice need.

• Don't solely rely on templates: Whilst creating templates can make things faster, generally the templates will be too general and only capture the client goal. Also, do not rely solely on the templated reasons and consequences in the SOA Wizard. A tailored reason/consequences is more effect than multiple templated ones.

• Use the SOA Audit to mitigate potential issues: If a potential has been identified, you can mitigate the issue in the comments section. In the example below, the technology identified words such as 'risk' and 'protection', and incorrectly categorised the objective as Insurance. The comment in the SOA Audit shows that the adviser understands the advice and has mitigated the potential issue.