In this guide
We all make personal financial decisions every day, whether it’s about household spending, the mortgage we select, or how much we can afford to contribute to our super.
Yet basic financial literacy in Australia has been in decline. Surveys suggest around 45% of adults are financially illiterate.
Vanguard’s How Australia Retires 2025 report found many people struggle to understand basic concepts like interest, inflation and the importance of diversification in managing risk.
So, with many Australians feeling financially squeezed, it’s surprising more of us don’t seek help from an expert like a professional financial adviser.
The AMP 2024 Financial Wellness Report found just 34% of Australians feel financially secure, with 29% of respondents saying they feel moderately or severely financially stressed. Among the financially stressed group, only 13% had sought assistance from a financial adviser, with 35% not seeking any advice or support at all when making important financial decisions.
Understanding the different types of financial advice
If you haven’t had any contact with a financial adviser before, then the process of finding one to speak to can seem a little daunting.
So it’s reassuring to know there are strict rules covering the documents and information your adviser must provide and that they must be working in your best interests.
Financial advice is divided into two main categories:
1. General advice
This type of financial advice is quite broad in nature. It doesn’t take into account your personal objectives, personal financial situation or needs.
The adviser can tell you about the features of a financial product (such as investments, super or insurance), but not about whether it’s suitable for your personal circumstances.
If an adviser is giving general advice, they don’t need to provide you with a Statement of Advice (SOA) and there is normally no fee payable.
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2. Personal advice
If you want financial advice that considers your personal goals, needs and financial circumstances, you can choose either:
- Limited or single-issue advice: Covers a particular issue and doesn’t take into account your full financial situation.
- Scaled advice: Covers your overall financial situation and can be scaled up or down depending on your particular requirements and situation.
When an adviser provides personal advice, they must give you an SOA, Financial Services Guide (FSG) and PDS.
Documents you must receive
In Australia, giving financial advice is highly regulated. It’s largely governed by the Corporations Act 2001 (which requires anyone providing financial product advice to retail clients to comply with certain conduct and disclosure obligations) and is regulated by the Australian Securities and Investments Commission (ASIC).
These obligations are designed to ensure you receive good quality advice and can make informed decisions about that advice. If you receive personal advice, your adviser must give you:
1. Statement of Advice (SOA)
An SOA is a written record of the financial advice you receive. Every SOA is different, but it should contain information about:
- Your risk profile
- The financial advice you’re receiving and the basis for making the recommendations
- Any risks involved with the recommended investment products and strategies
- How the recommended products align with your personal risk profile
- Pros and cons of following the recommendations, including any benefits you may lose if you switch products
- How the recommended products will make money and how they will help you achieve your financial goals
- Reasons for choosing one product over another, or for suggesting you switch providers or super fund
- Any entry, ongoing and exit fees or loss of access (such as insurance cover or product discounts) if you switch products
- Name, contact details and AFS licence number of the providing entity
- Information about the remuneration, commission and other benefits your adviser will receive that might influence the advice
- Details of any interests or relationships that might influence the advice.
An SOA must clearly disclose if the product recommendations in it are based only on products from the AFS licensee’s approved product list (APL). The adviser can only recommend this type of product to you if a reasonable person would be satisfied that it was in your interests.
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The adviser must provide you with an SOA at the same time or as soon as possible after they provide personal advice.
If you’re an existing client, your adviser may provide you with a Record of Advice (ROA), which is a simple record confirming the advice provided. This is shorter and less formal than an SOA and usually simply confirms changes or implementation of advice.
2. Financial Services Guide (FSG)
Your financial adviser must also give you a financial services guide to disclose the financial services you’re receiving.
An FSG can be provided to you either as a physical document or as disclosure information on the service provider’s website.
You must receive the FSG with enough time to consider the information in it before you decide whether or not to use the financial services of the adviser and AFS licensee.
The FSG must include:
- Who will provide the financial service
- Name, contact details and AFS licence number of the providing entity and authorised representative
- Financial services the entity is authorised to provide
- How the adviser will be paid for their advice
- Remuneration, commission and other benefits the adviser and AFS licensee will receive (including client fees and any form of commission from product issuers and licensees)
- Any relationships that might influence the advice being provided
- Dispute resolution procedures the AFS licensee has in place.
3. Product Disclosure Statement (PDS)
Another key disclosure document you must receive before you invest in any financial product recommended by your adviser is a PDS. These documents are designed to provide you with details about the financial product you’re buying.
ASIC sets rules for what information must be included in a PDS. The document is prepared by the issuer or seller of a financial product (such as the insurer or fund manager) and must contain sufficient information so you can make an informed decision about whether to purchase it.
A PDS must include information on the product’s:
- Key features, characteristics and benefits
- Fees
- Risks
- Commissions payable
- Complaints handling procedure.
These disclosures should make it easier for you to compare similar financial products and to understand the different options available to you (such as different ways you can pay fees).
Conduct obligations for your financial adviser
As well as giving you the required documents, your adviser must follow several conduct obligations set by ASIC. Advisers are required to:
1. Act in your best interests
When a financial adviser gives personal advice, they must comply with their best interests duty and other related obligations. When providing personal advice, your adviser must prioritise your interests over their own.
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These best interest duties are designed to ensure you receive financial advice meeting your objectives, financial situation and needs.
Under these rules, if you follow your adviser’s advice, it’s likely to leave you in a better position. It doesn’t mean, however, that the advice will not result in you losing money (if markets fall, for example).
2. Provide you with appropriate personal advice
Generally, ASIC considers appropriate personal advice has been provided if your adviser has complied with their best interests duty to you and the advice is fit for its purpose.
3. Warn you if their advice is based on incomplete or inaccurate information
An adviser cannot provide appropriate financial advice if they don’t understand or know all your financial circumstances and goals.
4. Prioritise your interests
Your adviser must prioritise your interests if there is a conflict between your interests and the interests of the adviser, AFS licensee or any other related parties.
5. Make reasonable inquiries
Your adviser must work with you to obtain complete and accurate information about all your financial circumstances, as this information is used to create your personalised advice statement.
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Using simple, clear language
ASIC requires financial advice to be clear, concise and effective.
This means when you receive your SOA, it should be in easy-to-understand language. The tables and graphs in the SOA must be clearly explained, so you can understand them before making a decision.
In addition, the language throughout the SOA must be accurate and consistent and must include a clear statement on how your adviser’s commission will be calculated.
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