When you receive personal financial advice in Australia, you are protected by a law known as the 'best interests duty'. This duty requires financial planners to act in the best interests of their clients when providing personal advice. It's a cornerstone of consumer protection in the financial advice industry.

The best interests duty is a statutory obligation for individuals who provide personal advice to act in the best interests of their clients.

What Does the Best Interests Duty Mean for You?

The best interests duty means that your financial planner must:

• Put your interests first: If there is a conflict between your interests and the interests of the planner, their licensee, or another party, the planner must give priority to your interests.

• Provide appropriate advice: The advice you receive must be appropriate for your relevant circumstances, including your objectives, financial situation, and needs.

• Act with the care, skill, and diligence of a prudent adviser: Your planner must exercise a high level of professionalism in all their dealings with you.

The 'Safe Harbour' Steps

To demonstrate that they have met the best interests duty, a financial planner can show that they have taken a series of steps, often referred to as the 'safe harbour' provisions. These steps include:

1. Identifying your objectives, financial situation, and needs.

2. Identifying the subject matter of the advice you are seeking.

3. Making reasonable inquiries to obtain complete and accurate information about your circumstances.

4. Assessing whether they have the expertise to provide the advice you need.

5. Conducting a reasonable investigation into the financial products that might be suitable for you.

6. Basing all judgments on your relevant circumstances.

7. Taking any other step that would be reasonable in the circumstances to act in your best interests.

The best interests duty provides you with a high level of protection when you seek financial advice. It ensures that the advice you receive is focused on your needs and goals, and that your planner is acting with your best interests at heart.

General Advice Warning:

The information provided in these articles are of a general nature only and do not take into account your individual objectives, financial situation, or needs. You should consider whether the information is appropriate for you, having regard to your personal circumstances. Before making any financial decisions, we recommend consulting a licensed financial adviser to assess your specific needs and circumstances.