General advice an outlet for exam avoiders

With the final Financial Adviser Standards and Ethics Authority (FASEA) exam starting this week, risk advisers could still turn to general advice if they do not want to continue the education requirements, according to Australian Advisory.

Australian Advisory principal, Mark Dorling, said risk advisers needed to be aware there were other options if they did not pass the exam or did not want to do it.

“We’re having a lot of conversations [with advisers] who still didn’t know what they wanted to do, that’s a bit alarming for me,” Dorling said.

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“If you’re an old risk writer you don’t need to go through all the education standards and up-skilling you can do general advice.”

Studying and operating a business at the same time while not only doing the exam but also the tertiary requirements could be a big ask for a lot of advisers, which meant this could be an attractive option for those that did not want to study.

“An adviser studying is not making money for the business,” Dorling said.

“If you’ve passed the FASEA exam and you want to go through, a full advice adviser can still do general advice for clients that don’t require the hand-holding.

“Or, if you’re a general advice adviser and you have a client that you know needs more then you can refer that to a full advice adviser.”

Dorling said the restrictions to general advice were outlined in the Australian Securities and Investments Commission (ASIC) regulatory guide 244.

“There’s three major things we can’t do with a client under general advice: we can’t offer a personal opinion, we can’t give a recommendation, and we can’t take personal circumstances into account,” Dorling said.

“We can only give statement of facts, which is like something in the adviser guide or a product disclosure statement from product providers.

“We can’t look at assets, liabilities, dreams, aspirations and things that; we don’t have SOAs [statements of advice], the client just tells us what level of cover they want.”

Dorling said the advantage of general advice meant not committing the time to doing a full SOA for clients who only needed their options explained to them so they could make their own decision.

“You could be spending 10 to 20 hours doing an SOA, doing it properly, and present it to the client and they say they don’t want that much cover,” Dorling said.

“They knew what they wanted anyway, so they’ve gone through 10 to 20 hours research for something the client knew they wanted in the first place.

“General advice is simply giving the client enough information to make their own informed decision.”

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I still believe General Advice needs to be gotten rid of. Why is it called advice if you can't give an opinion or a recommendation? I can't believe any experienced risk adviser would be happy just sitting there explaining all the ins and outs of insurance to people and then when it comes time to decide on sums insured they just say "sorry can't help you, you need to decide that".

Mark Dorling makes it sound like clients walk in knowing exactly what they want. I've had clients come in like that and by the end of the meeting what we've agreed they really need is completely different. Just think of all the decisions the client is making in this process....any occ or own occ, super vs non-super, retail policy versus super funds group policy, trauma standard or plus, the list goes on.

An experienced and ethical risk adviser will struggle to sit through a meeting where clients are clearly making the wrong decisions and then having to go ahead and implement those decisions with no means of offering even an opinion.

- Agree General Advice must be changed to Product information. It is NOT Advice.
- Agree no Real Risk Adviser wants to do this, but if you are 60 years old with 25, 30 or 40 years of Risk Advice experience why the hell would you want to waste $200k + in opportunity time cost doing stupid, irrelevant uni courses that offer almost zero actual benefit to anyone but the Uni’s getting paid and your close to retirement anyhow.
This is an obvious work around for stupid, moronic, inflexible and unethical over Regulation.
As a well experienced, well educated & FARSEA fully approved Real Adviser I applaud these older Riskies giving the bird to Govt, ASIC & FARSEA.
The problem is it will open the door to the banks & Industry Super for them flogging more crap products.
A Govt, ASIC & FARSEA induced disaster.

'Product information' would not work.
The Solicitor for the Commonwealth isn't going to put that wording (which could apply to any 'product', including your laundry powder) in the Corporations Act.
"General financial information" might work.
Agree that the word 'advice' has to go from anything except personal advice.

I agree that General advice should be called no advice.

And General advice should operate along side Personal advice, and used only when it is appropriate.

Advisers that don't do Personal advice, must and should refer those clients that require personal advice to a personal adviser and not deal with under general advice.

Money Coaches, General Risk Advisers, bloody Ms Humes preference of Robo Advice and approval of TikTok & Finfluencers.
Seriously Frydenberg, ODwyer, Hume, LNP, ASIC, FARSEA, Choice, etc it’s not possible to have stuffed up Real Financial Advice any further.
What a perfect example of total & utter Govt cluster f##k.

I think it would be wise if Mr Dorling ceased doing these types of interviews. They only serve to draw more attention to his obviously non-compliant business practices.

What a horrible take from Mark.

It is nothing short of unethical to switch to 'general advice' because you cant be bothered meeting the education standards. Frankly, as poorly as the education standards have been implemented, one good thing they will do is weed out people this lazy.

Making this switch you're either continuing to give you clients unlicensed personal advice but calling it 'general', or you are doing them a genuine disservice but not giving them the advice we know they do need.

Yes and no SD, I agree promoting this is not a good thing to do.

I agree General ADVICE term needs to go as it is anything but.

However if I was 60 years old with a view to working for another 3-4 to round out my retirement nest egg I would certainly consider this option. It's easy to throw rocks at people when you are not in their situation. One of the skill sets of a good planner is empathy and compassion for anothers' situation. I feel genuinely sorry for these guys, very experienced, have the capacity to teach a lot and yet are told they are redundant and worthless by a keystone cop regulator egged on by philosophical zealots and self interest groups that have no interest in fairness and equity .

Very high and mighty SD.
If you have any concept of Economics 101 ? Please explain the value to older riskies spending $200k + opportunity time cost & course costs to study mostly useless theoretical Uni courses when they are so close to retirement and their 25, 30 or 40 years of real world Advice experience has been given zero recognition ?
Sure for younger Advisers, it makes sense.
For already well educated advisers it makes sense.
But some perspective of reality from your high hoarse is warranted.

FASEA Standard 1 - You must act in accordance with all applicable laws, including the code, and try not to AVOID or CIRCUMVENT their intent.
Haven't even passed the stupid blood exam...................oh Sorry Standard 12

Wow! What a poorly thought out idea from Mr Dorling! If a client is walking in to see their "adviser", they expect advice, not general product information (which is what general advice really is).

How could this "adviser" maintain their business in such a way when the very job title itself is subject to regulation. Surely this would mean they could no longer call themselves "XYZ Financial Advice" for example? Yet, because some in our industry couldn't be bothered doing the necessary exam/study, here we are - looking for loopholes. It's this type of behaviour that tarnishes our industry. I will admit that I don't love the over-regulations we are subject to, but I just knuckle down and get on with it because my clients matter to me.

Whilst I appreciate the plight of risk advisers this 'general advice' twist is rubbish. Does the client decide on the product - betcha thats not the case as the adviser would not be giving quotes from every provider in the market. Also there is a duty of care to clients - what about waiting periods, super or not through super, occupation status etc etc. I agree with SD above it is totally unethical and wrong

Me thinks Mark might just have painted a great big target on himself. Won't shed any tears when ASIC do take them down as you can bet your life the main stream media won't distinguish between a "general advice provider" who relies on poor legislation and consumer confusion - and a real financial planner!

I agree with Marks comments about General advice only available to those clients that don't need hand holding.

General advice is and should be used along side Personal advice, where the adviser will make the necessary assessment of the client, and deals with them under the appropriate model.

For risk writers, I think this is important to have both models available to them, in order to be able to manage their clients and business efficiently

Hi Jason, in my opinion your scenario of having both options available to the Adviser can't be possible under the FASEA code of ethics. If you have the option of providing personal advice under your AR then you are a relevant provider and are bound by the code. You can't just turn off that obligation because you've made the decision that the particular client doesn't require personal advice. If you started down the general advice path with them and could see that they were clearly making the wrong decisions then you would still be bound by the code to tell them that and provide them with a recommendation.

As it stands now the legislation allows risk insurance to be written under general advice rules...I just don't agree with it and if you ask any of these clients whether they received advice, they would all say yes, my Adviser recommended x, y, z policies. They don't understand the difference and frankly shouldn't need to. If you go to see someone called a Financial Adviser then you should expect to receive advice that takes into account your circumstances.

Either remove General Advice altogether or force people that operate solely in this way to change their titles to something else e.g. product salesperson. We need to make it clear to the general public who is a qualified adviser providing personal advice and who is not.

I agree with you there in regards to the dealings with clients.

I think it would be appropriate to treat a client under general advice, for as long as you're aware that they don't need any further assistance. for those clients that do, they must and should be dealt with under Personal advice

The only unethical thing here is that you are making a judgement call on another individual when you don't understand what they are talking about. As a professional, you should not be quick to comment as your clients will suffer as a result of that.

Our Industry has been devastated, 30,000 down to 16,000 Advisers with more losses expected. World-wide businesses have had to 'pivot' to other business models and Financial Advisers are no different. General Advice (albeit the name needs to be changed) is, like it or not, a legal option for which there is no reason to rule out. There is nothing wrong with exploring new options to stay in business in whatever a 'new normal' may look like. I suggest everyone rallying against General Advice needs to have a good long hard look at ASIC RG244 and the related legislation in the Corporations Act. Then perhaps we may see some informed commentary on these pages. Failures in GA in the past have occurred because the rules were not followed. Follow the rules and you follow the law. Rather than criticise the article, I would like to see your informed critique of the Legislation. Anything else just exposes you as being bigoted and ill-informed?

Yet mysteriously after the General Advice process you end up with Life, TPD, IP and Trauma and polices that are indexed or CPI linked or g'teed renewable etc etc and shoot me down, stone the crows, mysteriously you end up in a certain product...mysteriously whilst all done on the basis no advice is given..what's that saying about the ducks and quacking. but on the other hand, I guess Accountants have been doing it successfully for years around SMSF advice so why not.

General advice for life insurance is the biggest cop out!
This kind of advice needs to be stamped out ASIC should be stopping this sham asap!

This "sham" has become well entrenched in mortgage broking. There are insurance companies that actively target mortgage brokers to sell insurance via "general advice". They claim that as long as the mortgage broker gives a general advice warning, then they are not bound by the licensing, Best Interest Duty, or disclosure provisions of personal advice. The mortgage broker is free to sell the insurance product and receive commission for it, just like the old tied agent days.

However mortgage brokers still have to do a detailed fact find of the client's situation as part of their mortgage broking process. That fact find is similar to the one used by financial advisers and is actually more detailed in some areas, such as living expenses and credit history. Clients could quite easily believe that their personal circumstances have been taken into account in the insurance recommendation, because those personal circumstances have been gathered and analysed to a high degree by the broker.

Furthermore, because the insurance is being recommended in conjunction with a loan application, clients could quite easily perceive that purchasing the insurance is a necessary requirement to get their loan. (Compulsory add on insurance products for loans have been banned).

The model proposed by Australian Advisory is far less legally contentious than the general advice insurance sales model used by mortgage brokers. Given that ASIC has allowed the mortgage broking arrangement for many years, it's hard to see them taking any action against Australian Advisory and their ilk.

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