What is General Advice

September 18, 2020
|In Latest News
|By Stephanie

General advice is a type of financial advice in which advisers can provide advice to clients without having taken into account their personal objectives or needs. General advice may be presented either verbally or in written form and can include electronic communication. When giving general advice it is required that a financial adviser give a warning that the advice has not considered personal circumstances and hence the client should therefore consider the appropriateness of the advice before they act on it.

General advice is extremely beneficial for those who are without a financial adviser as it is more affordable, and the advice is given much quicker as oppose to personal financial advice.

Examples of General Advice

General advice may include advice regarding an individual’s;

  • Existing superannuation fund/s
  • Accessing Superannuation under the Covid stimulus measures.
  • Ownership Structure of existing Insurance Policies to improve cash flow.
  • Understanding the Pension factor reduction measures.
  • General advice and information including;
    • Understanding how recent volatility has affected their portfolio.
    • Understanding how existing Superannuation is currently invested and the fees being charged.

Benefits of General Advice

  • Not all clients may need comprehensive advice which is costly and can take time to deliver.
  • It can help people resolve specific questions.
  • It can lead to client’s maximising the options within their current products and;
  • Leads to making educated decisions
  • It is accessible and quick to deliver however has some limitations by nature whereby personal advice may be more appropriate.

What if the adviser holds personal information about a client?

  • If an adviser does contain personal information about a client, general advice can still be given.
  • The adviser must however ensure that they do not consider the client’s relevant circumstances when preparing and giving the general advice

General Advice Versus Personal Advice

General Advice Advantages Personal Advice Advantages
Quicker and more affordable – only pay for time you meet with an adviser. Considers the client’s financial situation, objectives and needs.
It is accessible and quick to deliver however has some limitations by nature whereby personal advice may be more appropriate.

 

 Will result in the client’s best interest duty being met and will benefit the client by placing them in a better position as a result of the advice.
Leads to making educated decisions about a limited set of circumstances.

 

 Takes into account implicit and explicit factors.
It can lead to client’s maximising the options and features within their current products and policies.

 

 Relies upon the skill and diligence of the financial adviser.
Can help people resolve specific questions.

 

 Can help clients to identify and achieve goals and set a plan to follow and may result in a higher change of long term success in achieving objectives.

 
General Advice Disadvantages Personal Advice Disadvantages
Does not consider the clients financial situation, objectives and needs. Less affordable
Has limited benefits compared with personal advice, for example the client’s current product might not be the most suitable or best product available based upon their individual circumstances however this cannot be addressed. Can time consuming to produce. Some disclosure documents (Statements of Advice) can exceed 100 pages and be more than 20,000 words.
The limitations placed on the adviser when giving general advice means that the advice may not be appropriate hence a warning is given at the time the advice is provided. Personal advice may not benefit the client if the cost versus benefit of providing the advice exceed the financial saving or benefit to the client.