Regulations for Financial Advisory Services

Is "portfolio allocation advice" regarded as financial advice under the Financial Advisers Act (FAA)?

  • No. Regardless, you may want to provide a disclaimer indicating that you are not providing financial advice.

    According to MAS (Guidelines),

    last revised 10 July 2019

    Portfolio allocation advice

    4.3 Portfolio allocation advice refers to advice on the allocation of an investor’s funds among asset types2 (for example, 10% in shares, 40% in bonds and 50% in tangible assets), or advice on allocation of funds among assets in different geographic markets (for example, 40% in assets from the US and 60% in assets from China).

    4.4 MAS does not consider portfolio allocation advice, which does not involve recommendations on a specific investment product or class of investment products, to be financial advice. Notwithstanding this, persons providing portfolio allocation advice should:

    (a) ensure that the advice does not extend to a clearly identifiable investment product or a class of investment products. A class of investment product refers to the subset of an asset type, for example, shares of pharmaceutical companies or bond funds; and

    (b) inform the recipient of advice that the provision of such advice is not regulated under the FAA and that the recipient may wish to approach a financial adviser before relying on the advice provided to make any decision to buy, sell or hold any investment product.

    2 Examples of asset types are shares, debentures, collective investment schemes, options, futures contracts, insurance policies, deposits and tangible assets (such as property).