In Australia, there are two types of financial advice, personal advice and general advice. There's also factual information, which is not advice. 

To provide personal or general financial advice, an adviser must act under an Australian Financial Services Licence (AFSL).

Personal Advice

Personal advice or recommendations take into account your personal needs and objectives.

For example, if a financial planner sits down with you, goes over your financial situation and told you to buy shares, that would be considered personal financial advice.

General Advice

General financial advice does not take consider your personal situation, needs or objectives.

For example, if you receive stock recommendations online, chances are, you could be receiving general advice.

Note that the person giving you the stock advice does not consider how it affects you, they only provide their opinion on the shares. General advice must always include a disclaimer that outlines the type of advice that is being given, and that you should consider consulting a professional before acting on the general advice. 

It might read something like this:

"This document contains general financial advice, issued by ABC Finance (AFSL: 123 456). It does not take into account your personal situation and goals; therefore, it may not be appropriate to your needs. You should consult a licensed professional before acting on the advice."

The Facts

Finally we have factual information. Factual information is the truth or information that is objectively ascertainable. It does not include a recommendation or statement of opinion, just common knowledge. 

Examples include:

  • The information found on this page
  • Telling uncle's brother's mate the price of BHP shares
  • Someone describing the basic features of an insurance policy
  • A bank teller explaining the fees and interest rates on a new term deposit

Are blogs financial advice?

Some blogs or advertisements might say it's only factual information being offered, but even if someone compares the features of two stocks in a blog, focusing on their key differences, that could be considered financial advice.

Make sure they are qualified, experienced and accountable by looking for their AFSL number, it should be clearly displayed.

In summary, there are two major types of financial advice and an advisor must be licenced to do either one. Your financial adviser should tell you what service they provide before giving you the advice.

Test Your Knowledge

Bob says, "Mate, given your personal situation, I think you should buy BHP Billiton shares right now. My brother's friend's mate works in finance and he said BHP Billiton shares are cheap." Did Bob provide financial advice?

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