The ABCs of the Financial Advisers Act

The title, Financial Adviser, is always mis-used in the industry and misunderstood by the consumers.

On 10 October 2002, the Financial Advisers Act came into effect and all financial institutions are expected to comply with all its requirements from 1 April 2003, so what can consumers expect from financial advisers and their representatives? What are the likely benefits to consumers, and what are the things that they should look out for?

There are three types of Financial Advisers:

Exempted Financial Advisor
Licensed Financial Advisor
Independent Financial Advisor

Before consumers seek for financial planing advice, they should be clear about what kind of advisors they are dealing with and what are the implications. The players in Financial Advisor Market are

As you can see, while Exempted Financial Advisors and Licensed Financial Advisor are allowed to distribute insurance and investment products without offering a choice. Only an Independent Financial Advisor (IFA) is required to offer choices and provide fair and objective advice and recommendations.

The article, The ABCs of the Financial Adviers Act – Guess Who, published in SmartInvestor in 2003 has more detailed discussion about this topic.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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