Personal vs general financial advice

Legislation prevents financial advisers from giving specific advice when they do not have a full picture of your financial situation. General advice is the most common you will receive at a first appointment, as the adviser does not yet have enough information to make a specific recommendation.

​At a glance:
General Advice: A recommendation or opinion regarding a financial product (such as a superannuation account or investment) that does not consider your personal circumstances.
Personal Advice: A specific recommendation that considers your personal circumstances.
Statement of Advice: A document which outlines the advisers personal advice, discloses fees, and shows why the adviser is recommending the advice.

General Advice
This advice is commonly provided at a first appointment as your adviser does not yet know enough about your financial circumstances to make a specific recommendation. Instead, your adviser can provide financial facts, such as:

• Educational concepts: Explaining financial jargon, such as how superannuation, insurances, or investments work; the difference between growth strategies; and helping you understand how these products work together.
• General product comparisons: Outlining the features, risks, benefits, and more of specific products. For example, comparing index funds to actively managed investment funds, or platform super to retail super funds.
• Historical trends: Discussing market trends, insights, and performance.
• Tax and structural rules: Factual explanations of laws, such as super contribution limits, how a trust works, or the tax treatment of money in super.
• Budgeting: Explaining budgeting techniques, including possible pathways to increase savings.

For example, Margo wants advice on an investment she inherited from her grandmother. She books a first appointment. Her adviser may:

• Explain how investments operate, their benefits, costs, and risks.
• Elaborate on tax treatment of the investment by referring her to taxation laws.
• Compare market insights, such as trends in the share market.
• Outline structuring and how trusts or companies work.
• Provide factual information on the investment, based on what is known.

Personal Advice
This advice makes a specific recommendation tailored to your personal and financial circumstances. It will consider:

• Income and expenses
• Assets and liabilities
• Goals
• Risk tolerance

This advice can come in different forms.

• Simple advice: Assistance with a single financial issue. For example, how much to contribute to super.
• Comprehensive advice: A developed financial plan which considers your financial goals.
• Ongoing advice: Monitoring and review of your financial plan and circumstances.

If Margo decides she’d like to proceed with personal advice, she will book another appointment where the adviser will outline personal advice, usually alongside the provision of a Statement of Advice. These recommendations will consider your personal and financial circumstances, and may include:

• The specific tax treatment of her inherited investment and how to minimise tax payable.
• A recommendation which outlines if she should retain the investment, sell, or change strategies, and the costs, benefits, and risks associated.
• How the investment may impact her future financial plan (generational wealth, insurance, early retirement, etc).
• Anything else which is relevant to her financial goals.

​
You can learn more about general and personal advice on the Moneysmart website or by reaching out to us via [email protected].