Nature of Financial Advisory services

What constitutes "financial advice" under the Financial Advisers Act (FAA)?

The provision of factual information without any opinion is not generally considered to be financial advice. Nonetheless, it may still be best to ensure that you provide a disclaimer. Do refer to the illustrations in the relevant MAS Guidelines or consult a lawyer if still unsure.

According to MAS (Guidelines),

last revised on 10 July 2019

3.2 ... One consideration is whether it involves provision of factual information, or if it involves an expression of opinion. Generally, MAS considers a particular communication, whether oral, online or in print, to be financial advice if it expresses an opinion on the merits of buying, selling or holding a particular investment product or a class of investment products.

3.3 The provision of factual information, i.e. information which is objective, verifiable, and whose accuracy cannot be reasonably questioned, is generally not considered financial advice. This includes information that is general in nature and commonly known to most investors. However, the provision of factual information may be considered financial advice if the information is presented with the intention of inducing a person to buy, sell or hold a particular investment product or a class of investment products. An example of factual information presented in such a manner would be a comparison of the historical returns of two investment products without any mention of their relative risk profiles. This could induce a person to buy the product with the higher historical return.

3.4 Notwithstanding the preceding paragraph, persons providing factual information concerning investment products are encouraged to include disclaimers to the effect that the information is meant purely for informational purposes and should not be relied upon as financial advice. This provides clarity to those receiving factual information that the provision of such information is not regulated under the FAA. However, the use of a disclaimer does not, of itself, determine whether the activity amounts to providing financial advice.

3.5 Even if a person expresses an opinion on investment products, in determining whether such communication amounts to financial advice, the context and surrounding circumstances in which it is communicated should be considered. Generally, an opinion that is provided in a situation where the recipient is not reasonably expected to rely on it in making an investment decision, is less likely to be considered financial advice.

FinReg business tip

Giving financial advice is regulated by the MAS. A license is required to provide official financial advice. Individuals authorised to provide financial advice will also be issued a unique representative number, which may be requested for verification.