General or personal advice can help you reach your financial goals. General advice does not consider your personal circ*mstances and is general in nature. Personal advice is more specific and is tailored to your personal situation.
The advice you receive could cover any of these financial products or areas:
- investing
- superannuation
- retirement planning
- estate planning
- risk management
- insurance
Personal and most general advice providers must hold an Australian Financial Services (AFS) licence.
The difference between general and personal advice
General advice
General advice is a recommendation or opinion about a financial product that is not tailored to your personal circ*mstances. This advice won’t consider your personal circ*mstances, such as your:
- income
- expenses
- assets
- liabilities
- goals
- risk tolerance
General advice may help you to identify and narrow down your options. But it won’t tell you how to make the best financial decision for your personal situation.
General advice is different to factual information. This information can give you useful facts about a financial product. Examples of factual information may include descriptions of:
- the basic features of a superannuation account
- the fees and interest rates on a new term deposit
Factual information is usually free and available from places like websites, banks and seminars. A licence isn’t needed to provide factual information.
Personal advice
Personal advice is a recommendation or opinion tailored to your personal circ*mstances. It is more specific than general advice and takes into account your financial situation and goals. Personal advice providers must act in your best interest.
Personal advice can include:
- Simple, single-issue advice — Help with one financial issue. For example, how much to contribute to your super, or what to do if you inherit shares.
- Comprehensive financial advice — Help to develop a financial plan to reach your financial goals. This covers things like savings, investments, insurance, superannuation and retirement planning.
- Ongoing advice — Regular monitoring and review of your financial plan and personal circ*mstances.
When general advice might be appropriate
You may want general advice if you:
- want to compare or confirm your understanding of different financial products. For example, the difference between a managed fund and an ETF
- are researching and learning about different financial topics
- don't want to spend money on tailored advice
You may be receiving general advice if you:
- were not asked questions about your financial situation, needs and objectives
- are dealing with someone who will not recommend a specific product for you. They will speak generally about it rather than tailoring it to you
When providing general advice, the advice provider must give you a warning. The provider will:
- tell you the advice you’re about to receive is general, meaning it doesn’t take into account your own objectives, financial situation or needs
- prompt you to consider if the advice is appropriate for you before acting on it
- in some cases, provide you with a Product Disclosure Statement if the advice is about a financial product
When personal advice might be appropriate
You may want personal advice if:
- Your situation is complex and you need help to work it all out
- You're going through a significant life event. For example, buying a house, getting married, transitioning to retirement, redundancy, death of a spouse, or illness.
- You inherited a large sum of money.
- You want to outsource your financial affairs.
- You need specific advice on a topic area and have specific requirements. For example, you want income protection insurance but have health issues.
- You want to ensure you're on track to meet your financial goals.
- You need help managing someone else's money. For example, you’re appointed Power of Attorney for someone, or you’re an executor for a deceased estate.
