LEARN MORE ABOUT FINANCIAL PLANNING

What is and isn't financial advice?

  • Factual information given to you is not financial advice. People giving it do not need to be licensed.
  • General financial advice is when your adviser gives you strategic advice about what your options may be, but doesn't recommend any specific investments  or financial products.
  • Personal financial advice usually involves a recommendation or opinion that is intended to influence your decisions about particular investments.

Whether you are seeking the help of a financial adviser or are looking for more information for yourself to implement your own personal financial plan, it is important to know what may or may not constitute financial advice.

what is and isn

There are different levels of financial advice, depending on the amount of information you have provided and whether there has been consideration of the appropriateness of certain financial products that may influence your decision regarding their use.

Additionally, there will be times when you simply want factual information about certain financial products and strategies or want to gain a greater understanding of financial services more generally.

Consider

Good-quality factual information is useful for people who want to better understand the financial products or strategies available to them.

Financial advice or just factual information?

If an adviser or representative provides a recommendation or statement of opinion that is generally intended to influence a person to decide about a particular financial product or class of financial products, it is seen by the regulators as financial product advice. People giving you this advice must be licensed.

Factual information, however, will generally just be that. It will contain opinions or product recommendations. Therefore, it will not constitute financial product advice, and the people providing it don't need to be licensed. By nature, factual information provided about a product should be easily attainable, and its accuracy not reasonably questioned. An AFS licence is only required by someone when they are providing you with a financial service and recommendations about particular financial products.

Scenario: Factual information versus financial advice

A client calls a superannuation fund asking about salary sacrifice arrangements. The representative describes the basic functions of this arrangement. This is factual information.

A client asks an adviser about tax rates. The adviser gives them a link to the Australian Taxation Office (ATO) website, which contains the details. This also is factual information.

But you ask your adviser which superannuation fund you should join. That is personal financial advice.

 Taking financial planning further
 General versus personal financial advice