Although it’s common knowledge that financial advisers who provide general advice to retail clients must provide a general advice warning, the warning must be effective. If you believe a simple warning at the bottom of a website is sufficient, think again!
What should a general advice warning look like?
The legalese says general advice warnings must cover 3 points, i.e.:
- The client’s objectives, financial situation or needs have not been taken into account;
- The client should consider the appropriateness of the advice having regard to those factors before acting on it; and
- If the information relates to a specific product, the client should consider the PDS before making any decision about whether to acquire it.
On this basis, a comprehensive (and compliant) warning would look like this:
“This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. (If relevant: Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement).”
But you don’t need to write the warning in the language of the law like the example above – that’s just a typical lawyer’s response!
You can use your own words to make the warning more customer friendly. The important thing is that the effect of the 3 required elements are conveyed.
