A financial adviser's obligations to you

  • Did the adviser identify my circumstances?
  • Is the advice tailored to my specific needs?
  • Am I in a better financial position after the advice?

Understanding an adviser's obligations to you means you have a yardstick to assess whether they have done their job properly, and to manage your own expectations.

a financial advisers obligations to you

Best interests duty

The Corporations Act places an obligation or duty on financial advisers to make reasonable attempts to act in your, the client's, best interests. This is commonly known as the "best interests duty". In practical terms it means their job is watching out for you and doing what's good for you, even if that means it costs them money.

Better position

Any recommendations an adviser makes should reasonably be expected to put you in a better position if you follow the advice-even if the advice is to do nothing.

If you believe that you have paid for a service you have not received or the advice you received was substandard and put you in a worse position, you can make a complaint about the adviser.

For more information on complaints and dispute resolution, see the What can I do I'm unhappy with my financial adviser? section of this guide.

The following table shows some of the actions and outcomes to help you determine if the advice process is focused on your best interests.

Outcome Adviser action(s)
Identify your circumstances An adviser should attempt to identify your objectives, financial situation and needs, based on the information you provide and ask questions to obtain a better picture of your overall situation.
Work out the type of advice you require It could be a single issue or a number of issues and may include areas for which you need financial advice but are not necessarily looking for. If the adviser is recommending advice that doesn't match your needs or situation, then consider seeking the services of another adviser.
Determine relevant information This involves determining what information gathered about your objectives and financial situation is relevant for the type of advice that you need. If the advice is different from what you asked for, the adviser should clearly explain their reasons.
Look for inaccurate or incomplete information Advisers should make "reasonable inquiries" to obtain complete and accurate information in order to be able to provide you with the best possible advice.
Confirm their expertise Assess whether the adviser has the necessary expertise required to provide the advice that you need or have requested. If not, they should inform you and may refer you to someone who can.
Conduct research of products and any comparisons If the advice involves financial products, the adviser should investigate and assess alternative products that will help achieve your goals. While they don't have to research every product, they need to research the ones they are recommending and to put you in a better position compared with your pre-advice situation.

 Do financial advisers need to be licensed?
 What can I do if I'm unhappy with my financial adviser?