Unit 5: General Advice Process

Question 1

What two factors together mean you have provided general advice on a financial product? When you:

Answer 1

1. Make a statement intended to influence a customer’s decision (or could be reasonably be regarded as intended to influence).
2. You have not considered the customer’s needs, objectives, or financial situation (and a reasonable person would not expect you to have done so)

Question 2

Why have a general advice process?

Answer 2

To help prevent inadvertently providing personal advice.

Question 3

What are the 6 steps of the general advice process?

Answer 3

1. Greet client
2. Provide FSG
3. Provide general advice warning
4. Assess their concerns and needs
5. Provide PDS
6. Refer to specialists

Question 4

When must you give a general advice warning?

Answer 4

Just before or at the same time as giving the general advice

Question 5

What 3 things must be in your general advice warning?

Answer 5

1. Advising (you have not considered personal needs / objectives / financial situation).
2. Appropriate advice (customer must consider the appropriateness of your advice in light of their own circumstances before acting on it)
3. Acquisition (if customer might acquire a product, they must receive a PDS prior)

Question 6

Example of general advice warning:

Answer 6

“This advice is general in nature only and does not take into consideration your financial situation, goals or needs. You must consider the appropriateness of the advice prior to acting on this information. Please seek advice or read the PDS/FSG of the product prior to investing in any financial product”

Question 7

You can use personal info to give general advice. What two rules must you follow to ensure you are not providing personal advice?

Answer 7

1. You do not consider the customer’s relevant financial circumstances.
2. It is unlikely that the customer would expect the advice to reflect a consideration of their relevant circumstances.

Question 8

Under the Corporations Act, who is required to have an Australian Financial Service Licence (AFSL)?

Answer 8

Any entity or person that provides a financial service

Question 9

Sometimes people need specialist, personal advice. Please explain the role of this specialist: Financial Adviser / Planner

Answer 9

Authorised by AFSL to provide personal advice on their behalf for Tier 1 financial products

Question 10

Sometimes people need specialist, personal advice. Please explain the role of this specialist: Brokers

Answer 10

Brokers provide analysis and recommendations/advice to clients in their respective area, e.g.:
* Stockbroker
* Finance/Mortgage Broker
* Insurance Broker