What is a Financial Services Guide?

The document you should read before you read anything else

Before a financial adviser gives you any advice, they're legally required to give you a Financial Services Guide - usually called an FSG. Most people file it away unread, which is understandable given that they can run to twenty pages of fairly dense disclosure language. But the FSG contains information that's genuinely useful before you commit to working with someone, and knowing what to look for makes it worth at least skimming.

What a Financial Services Guide is

An FSG is a disclosure document that tells you who the adviser is, what services they're licensed to provide, how they charge, and what to do if something goes wrong. It must be provided before any financial service is provided to you - not after, not at the same time as the advice, but before.

The requirement to provide an FSG applies to any business or individual providing financial services in Australia - not just financial advisers, but also insurance brokers, stockbrokers, mortgage brokers and anyone else operating under an Australian Financial Services licence.

What it must contain

Who is providing the service: The name and contact details of the adviser and the AFS licensee they operate under. Sometimes these are the same entity - an adviser who holds their own licence. Often they're different - an adviser who is authorised by a larger licensee. Knowing who the licensee is matters because that's the entity ultimately responsible for the advice you receive.

What services they're authorised to provide: Not every adviser is authorised to advise on every type of financial product. An FSG should make clear what the adviser can and can't help you with. If you have a specific need - SMSF advice, or life insurance - confirm that the adviser is actually authorised in that area before you proceed.

How they charge: The FSG must disclose the types of fees the adviser charges - whether that's a flat fee, an hourly rate, a percentage of assets under management, or some combination. It may not give you exact dollar amounts at this stage - that often comes later in the advice process - but it should give you enough to understand the fee structure. If the cost of financial advice is a concern, the FSG is the first place to look.

Any relationships or associations that might influence the advice: This includes any ownership relationships between the adviser's licensee and product providers, any referral arrangements, and any other interests that could create a conflict. Since the removal of most product commissions in 2013, this section has become somewhat less fraught, but it's still worth reading.

How to make a complaint: The FSG must explain the firm's internal complaints process and refer you to the Australian Financial Complaints Authority as the external dispute resolution scheme. If you later need to make a complaint about your adviser, this section tells you where to start.

What to actually look at when you receive one

Rather than reading every word, focus on a few things that are most relevant to your decision about whether to proceed with this adviser.

Look at who the licensee is. If the adviser is authorised under a large institution - particularly one with product manufacturing arms - that's relevant context for thinking about whether their recommendations might be influenced by relationships with particular product providers. This doesn't make the advice bad, but it's something to be aware of.

Look at the fee section and make sure the structure makes sense to you. If it's unclear or vague, ask the adviser to explain it in plain terms before you go any further. You're entitled to understand exactly what you'll be paying and when.

Check the authorisations section against what you actually need. If you've come to the adviser specifically because you need help with your superannuation, confirm they're authorised to advise on superannuation products.

FSG versus Statement of Advice

These two documents are related but serve different purposes. The FSG comes first and tells you about the adviser and their business before any advice is given. The Statement of Advice comes later and sets out the actual recommendation they're making for your specific situation. Think of the FSG as the adviser's credentials and terms of engagement, and the SOA as the advice itself.

Digital FSGs

Advisers can now provide FSGs digitally rather than as a printed document, and many do. If an adviser directs you to their website to find the FSG rather than handing you a document, that's acceptable under the current rules as long as the document is accessible and you're made aware of where to find it. The content requirements are the same regardless of format.

Verifying an adviser's licence

An FSG tells you what an adviser says about their authorisations. To verify it independently, you can check the ASIC Financial Advisers Register, which lists every individual licensed to provide personal financial advice in Australia. You can search for a registered adviser near you on this directory, which draws directly from the ASIC register and is updated weekly. Each profile shows the adviser's current authorisations, qualifications, years of experience and any disciplinary history - which is a useful cross-reference against what the FSG tells you.

If an adviser's FSG claims authorisations that don't appear on the ASIC register, or if you can't find the adviser on the register at all, stop and ask questions before you proceed any further.