General advice missing pieces
The provisions concerning general advice raise more questions about where the line is drawn between personal and general advice, according to King & Wood Mallesons special counsel Michael Mathieson.
CP 183 is fundamentally a re-issue of CP 164, which was released in July 2011, but a change in the law is preferable when it comes to clarifying the point at which financial advice is deemed general or personal, he said.
According to the Australian Securities and Investments Commission (ASIC), an adviser can provide factual information to a client even if they have information about the client's relevant circumstances.
"The question is, if you have information about the client's relevant circumstances and you do something with that, does it convert the advice from being non-advice into advice, or 'not' general advice into personal advice?" Mathieson said.
The regulator will consider general advice as personal advice if the adviser clarifies this with the client at the time advice is provided and they did not in fact consider the client's objectives and financial situation.
CP 183 also provides an example of tailoring the mailing list to a particular market segment.
"For example, information on life insurance will be targeted at clients in a certain age group," Mathieson said.
"Now the sensible outcome is that this doesn't require a statement of advice or any other requirements of personal advice, but I'm not sure that it's true to say that in that case you haven't considered the client's objectives and financial situation in targeting your information to that segment itself."
AUTHOR
Staff Writer
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
