What is personal financial advice?

And why can’t I ask for personal advice on r/ausfinance?

What is ‘financial product advice’?

Financial product advice can be summarised as “A recommendation or opinion intended to influence a person in making a decision about a financial product, taking into account their objectives, financial situation, or needs.”

ASIC Regulatory Guide 36 defines financial advice as:

A recommendation or a statement of opinion, or a report of either of those things, constitutes financial product advice if:
(a) it is, (or could reasonably be regarded as being), intended to influence a person in making a decision about a particular financial product (s766B); and
(b) it is not exempted from being a financial service

Common examples of financial products include:

  1. Superannuation funds
  2. Investment products such as shares, ETFs, and managed funds
  3. Personal insurance products such as life insurance or income protection

According to ASIC Regulatory Guide 175 (RG 175.26) Personal Advice is financial product advice given or directed to a person (including by electronic means) in circumstances where:
(a) the person giving or directing the advice has considered one or more of the client’s objectives, financial situation and needs; or
(b) a reasonable person might expect the person giving or directing the advice to have considered one or more of these matters (s766B(3)).

Common examples of objectives, financial situation and needs are:

  1. Age, gender, family and relationship status
  2. Amount to invest
  3. Timeframes to invest or withdraw
  4. Retirement goals
  5. Wealth accumulation goals
  6. Current assets owned
  7. Current superannuation fund(s)

Why is this a problem for r/ausfinance?

To provide financial product advice you must have an Australian Financial Services Licence. The Corporations Act (2001) s912A and 912B sets out the many obligations on AFS licencees when providing financial advice. This includes the provision of Statements of Advice and other disclosure documents, Best Interests Duty, appropriate training and qualifications, and so on.

Clearly none of this is happening on r/ausfinance.

The main issue with seeking financial advice on an online forum is that the advice can be compromised or inappropriate due to missing or incorrect information. A genuine request for personal advice, answered with good intentions, could lead to bad outcomes due to some missing piece of information.

The prohibition on personal advice is designed to protect both members and the sub itself.

How can I seek help and answers, without asking for personal advice?

The simplest way to approach this is to strip your post of any personal information. You can ask for factual information and general advice about financial products, without providing any personal details.

If your post won’t help or make sense without providing personal information about your objectives, situation or needs, then it should be clear that r/ausfinance is not an appropriate place for your query and you should be seeking proper financial advice.

Ok fine, what about all those posts asking for advice about property?

The Corporations Act (2001) definition of a financial product excludes property.

This is why it is (paradoxically) perfectly fine to ask for personal advice about property, given this is not considered a financial product and is therefore not captured by the regulations above.

Notable exclusions to financial product advice are:

  1. Property.
  2. Bank products such as savings and transactions account
  3. General Insurance
  4. Loan products

More Questions? Message the Mods