Australian Financial Services Licensing (AFSL) Forum

#3104 Reply

Clare McAdam
Member
A risk profiling questionnaire aims to uncover your client’s attitude to investing, understanding of financial markets and how they may react during certain investment markets and economic conditions.
Whether a risk profiling questionnaire is required when providing financial product advice depends upon whether that advice is general or personal advice.
When providing clients with personal financial advice, that is financial product advice directed to a person, considering the clients objectives, financial situations and needs.  It is required that a complete risk profile is taken of the client. As s945 A of the Corporations Act states that it is required for a provider of personal financial advice to:
  • Make reasonable inquiries about the client’s relative personal circumstances
  • Reasonably consider and investigate the subject matter of the advice
  • Ensure the advice is appropriate to the client
However if you are providing your clients with general advice, that is all other financial product advice, you are not required to complete a risk profile on your client, as this information is broad in nature and does not relate to clients specifically.  However under section 949A, providing entities , must give a prescribed ‘general advice warning’ when providing general advice to a retail client.
Regulatory Guide 175 provides more information regarding this.
If you seek further information, please don’t hesitate to contact our team.
Author: David Court
Co-contributor: Clare McAdam
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