Types of financial advice
Finding the right financial advice for
The type of financial advice you need will depend on your stage
of life, how much money you have to invest, and what you are trying
Here we explain your financial advice options.
General advice does not take into account your particular
circumstances, such as your objectives, financial situation and
needs. For example, if an adviser gives you information about a
product that might be suitable for you, but does not consider your
overall financial goals or actually recommend you take up the
product, it is general advice.
You can get general advice about financial products or
investments from someone who holds or works for a company that has
an Australian financial services (AFS)
Personal financial advice considers your personal situation
before making recommendations. For this kind of advice, only talk
to someone who is a licensed financial adviser. See choosing a financial
adviser for more information.
The cost of the advice will depend
on the scope and kind of advice you receive.
Types of personal advice
There are different types of personal financial advice you can
receive from an adviser:
- Simple, single-issue advice - helps with a
particular financial issue, for example, the best way to make
personal super contributions. You may be able to work out some of
these simple issues for yourself, for example, by using the super contributions
optimiser to work out the best way for you to make personal
- Comprehensive financial
advice - involves developing a
comprehensive financial plan to help you set and achieve financial
goals. It will cover things like saving, investments, insurance and
superannuation and retirement planning. This sort of plan should be
monitored and adjusted over time.
- Ongoing advice - your
adviser will regularly monitor and review your financial plan on a
to help you manage your financial affairs. The frequency of reviews
and how you pay for them should be mutually agreed when you start
working with a financial
adviser. Make sure you understand exactly what your ongoing
Different ways to get
The way you get advice may depend on your needs, practical
considerations and how comfortable you are with various advice
- Face-to-face advice -
suitable for holistic advice or more complex issues, where it is
practical to meet with an adviser.
- Phone-based advice - often used for
single-issue personal advice or general advice, in conjunction with
a follow up email or letter.
- Video chat or conferencing -
allows people in rural and remote areas, or those who have
difficulty travelling, to receive face-to-face advice on a broader
range of issues.
- Robo-advice -
computer generated advice which may be suitable for simple advice,
such as choosing appropriate investments.
Robo-advice (also known as digital financial product advice or
automated advice) is financial advice delivered by a computer,
instead of a human financial adviser. You enter certain details
into a computer program and, based on this information, it
generates financial advice.
A robo-adviser offering financial product advice needs to have
an AFS licence or be a representative of an AFS licensee.
How robo-advice works
Digital advice is still developing in Australia, but this is how
it currently works for different types of financial advice.
When you register with a digital advice website, you log in to
answer questions about your income and expenses, assets and
liabilities, goals, objectives and risk tolerance. This gives the
robo-adviser information about your financial situation and
aspirations. The computer algorithm then considers this information
before making recommendations.
The robo-adviser produces an automated Statement of Advice (SOA) which explains
the recommendations and other important information.
When a robo-adviser only gives general advice, you will not be
asked about your personal circumstances. Therefore, these won't be
considered, and you won't receive an SOA.
You must be told upfront that you are only receiving general
When you receive general advice, you'll need to decide whether
the recommendation is appropriate for you, taking into account your
goals, objectives and risk tolerance, before acting on the
information. If you decide to act on the general advice and it is
not suitable for you, you may not get the results you want from
Robo advice costs
This style of advice may have lower advice fees than traditional
financial advisers as they are not using people to assess your
You may be charged on a fee-for-service basis, and/or a
percentage fee based on assets under management if you choose to
implement the recommendations.
You may also be charged a subscription fee for ongoing services,
including regular newsletters or updates. The financial services guide (FSG) and SOA
should outline all the fees you will pay for the advice.
Things to consider before getting robo-advice
Unlike a person, a computer will not clarify your goals or
objectives, discuss any issues with you or make adjustments if your
life is not going to plan. Here's a few other things to think about
before you decide on robo-advice.
- Advice limitations - Currently, most
robo-advisers only offer a narrow range of services.
- Data input - The advice you
receive from a digital advice tool will only be as good as the
information you enter.
- Updating advice - Find out
if and how your advice will be updated if your circumstances or
financial goals change.
- Portfolio rebalancing - If
you allow the robo-adviser to automatically adjust your asset
allocation, know when and why the rebalancing will occur, and if
there will be any costs or tax implications of rebalancing your
- Questioning advice - Because
you're not dealing with a real person, you may not have a chance to
ask questions. If you don't understand the advice, it may be harder
to decide whether it's right for you.
- Fees and other costs
- Before you agree to robo-advice, it's important
to understand the upfront and ongoing costs of the advice, and when
you'll be paying fees.
- Withdrawal - Find out
whether you can withdraw from the service or any recommended
products, and if there are restrictions on withdrawals or costs
- Dispute resolution - If you are unhappy with
the service you receive, what is the dispute resolution process?
See how to
complain for more information about lodging a complaint about a
financial adviser or financial service.
There are many ways to access financial advice,
whether you want it on an ad hoc basis, whether you want to develop
an ongoing relationship with an adviser, or use robo-advice.
Consider your advice needs and what you are prepared to pay to help
work out the best option for you.
Last updated: 05 Dec 2018