Legal Definition of Financial Advice

Financial advice is a professional service provided by individuals or organizations aimed at helping clients make informed decisions about their financial matters. The legal definition varies by jurisdiction, but it generally encompasses any recommendation or guidance regarding investments, insurance, estate planning, and other financial products or services. Financial advice can be offered in various forms, including written reports, verbal consultations, or online resources. To be classified as financial advice, the guidance must be personalized to the client’s specific situation and goals, rather than being general information available to the public. Regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States, have established standards for what constitutes financial advice to protect consumers from fraud and ensure ethical practices among financial advisors. This includes fiduciary duties, which require advisors to act in their clients' best interests, disclose any potential conflicts of interest, and adhere to legal regulations regarding the provision of financial services.