Getting your head around financial planning jargon

  • There are a number of key documents that are part of the financial planning process.
  • Don't skip over or skim any documents your adviser provides.
  • The financial services guide is extremely important.

Expect to receive several documents to read, consider and ultimately sign during the advice process. Financial advisers often refer to these documents by their acronyms, and they can sound complex, but it's your adviser's job to make sure you understand them. Take your time and read each one.

understanding financial planning terminology

Financial services guide (FSG)

Every financial adviser will have their own financial services guide (FSG), with the purpose of ensuring that all clients are given the information they need to understand their adviser and how they operate. Do not trust any adviser who does not give you their FSG freely-it's a really bad sign if you have to ask for it yourself.


The FSG provides you (the client) with the opportunity to learn about the adviser, including:

  • their qualifications and experience
  • the types of services and advice offered
  • how they charge for their services
  • the complaint resolution mechanisms in place.

To prove that you have been provided with an FSG, an adviser may ask you to sign a written acknowledgement or statement that you have received a copy.

Statement of advice (SOA)

The Australian Securities and Investments Commission (ASIC) is the Australian government body that regulates the financial services industry. ASIC defines an SOA as:

"A document that sets out the advice given to a consumer by their licensed financial planner or adviser. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive."

As the strategies and recommendations contained in the SOA are based on the information gathered from you, it is important that the information is accurate. You must review the particulars in the financial plan carefully and refer any errors or omissions immediately to the adviser.

Record of advice (ROA)

An ROA is similar to, but typically shorter than, an SOA and may be given to you at times when an adviser wants to confirm that their previous advice remains appropriate and no further action is required at the present time.

Product disclosure statement (PDS)

If the SOA includes any recommendations to acquire a financial product (other than shares in a company) or an offer to issue or arrange the issue of financial products to you, the adviser should provide you with a PDS, which contains product information about potential investments.

For example, your superannuation fund has a PDS that describes everything about how it works, what it does, and who runs it. Similarly, managed funds your adviser might recommend will have a PDS. Don't trust an adviser who won't share these PDSs.

Annual fee disclosure statement (FDS)

If you opt for ongoing advice, you will receive an annual FDS.

An FDS only needs to disclose in writing:

  • the fees charged and paid in the previous year
  • the fees you will be required to pay during the upcoming year
  • information about the services you received in the previous year
  • the services you were entitled to receive in the previous year
  • the services you are entitled to receive in the coming year.


If you are getting services that you do not require, speak to your adviser about the possibility of receiving a lower level of service, or whether you want ongoing service at all.

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