Advice and compliance notes
The compliance points that come up when a client asks about a wholesale-only venture fund: general versus personal advice, information memoranda, the best interests duty, DDO and conflicts.
TL;DR
- Personal advice depends on what you considered. If you took account of your client's objectives, financial situation or needs, or a reasonable person would expect you to have, it's personal advice.1
- Wholesale-only funds use an information memorandum. A PDS is only required for retail clients, and without one the design and distribution obligations generally don't apply.1,2
- The best interests duty applies to personal advice to retail clients. Whether your advice is retail advice is a separate question from whether the fund can accept your client.1
- Document the illiquidity. Ten-year lock-ups, capital calls and total loss are the facts a file most needs to show were weighed.
- Tall Order sends its information memorandum only to verified wholesale investors. These guides are general information.
Is talking to a client about a venture fund general or personal advice?
It's personal advice if you considered one or more of your client's objectives, financial situation and needs, or if a reasonable person might expect you to have. Otherwise it's general advice.1 The test is in section 766B of the Corporations Act, and ASIC's guidance on where the line sits is in Regulatory Guide 244.3
Once you've talked through a client's portfolio and then mentioned a particular fund, it's hard to argue the comment was general. General advice to a retail client needs a warning that it doesn't take their circumstances into account.1
General or personal advice, and which duties follow
-
1
Did you consider any of your client's objectives, financial situation or needs?
YesPersonal advice
Go to question 3.
No -
2
Would a reasonable person expect you to have considered them?
YesPersonal advice
Go to question 3.
No -
General advice
A retail client must be warned that it doesn't take their circumstances into account.
-
3
Is your client a retail client for this advice? Being wholesale for the fund interest doesn't settle this.
YesPart 7.7A duties apply
- Act in the client's best interests
- Give advice that is appropriate
- Put their interests first where there's a conflict
- Generally, a Statement of Advice
No -
Agree the classification with your licensee
Treating it as retail advice keeps the full protections in place for your client.
Why is a wholesale fund offered by information memorandum instead of a PDS?
The Act requires a Product Disclosure Statement only when a financial product is issued to a retail client.1 A fund offered only to people who meet a wholesale test (see The wholesale investor test) can use an information memorandum (IM) instead.
An IM has no prescribed content, so two IMs can look very different. It is still covered by the ban on misleading or deceptive conduct in relation to financial products.1 Check the fees, risks and conflicts sections closely. How to vet a venture fund has the questions to ask.
Do the design and distribution obligations apply?
Generally not, for a fund offered only to wholesale clients. The obligation to make a target market determination is triggered when the issuer has to prepare a PDS or prospectus for the product.1 ASIC's Regulatory Guide 274 describes the obligations in the same terms.2 A wholesale-only offer needs neither, so there is usually no target market determination to check your client against, and nobody else has formally said who the product is for.
What duties apply when you recommend an illiquid alternative?
If you give personal advice to a client as a retail client, you must act in their best interests, give advice that is appropriate to them, and put their interests ahead of your own where there's a conflict. You'll also generally need to give a Statement of Advice.1 ASIC's expectations are in Regulatory Guide 175.4
These duties sit in Part 7.7A of the Act.1 A client can be a wholesale investor for the purposes of buying a fund interest and still be a retail client for your wider advice, which usually covers super and other retail products. Settle the classification with your licensee before you give the advice. Treating it as retail advice keeps the full protections in place.
The best interests duty includes a "safe harbour" list of steps. One of them is a reasonable investigation into the products that might meet your client's relevant objectives and needs.1 For a venture fund, that means looking at alternatives (other managers, other structures, or not investing at all) and recording why this one.
Changes are announced but not law. In August 2026 the Assistant Treasurer, Daniel Mulino, said the government would keep the best interests duty but remove the broadest (catch-all) step from the safe harbour, and would streamline Statements of Advice.5 No bill had passed when this page was updated; it reflects the Act as compiled on 19 September 2026.1
What should a file note on a venture investment show?
- The money is locked up for ten years or more, with no regular way to sell early.
- Capital calls arrive over several years, and your client has to be able to meet each one. After your client commits covers the mechanics.
- Many companies in a venture portfolio fail, and a fund can return less than was put in.
- How big the commitment is relative to your client's total wealth and liquid assets. How much to allocate has the sizing considerations.
- Which entity invests, and whether your client can use any tax offset. See Which entity should invest?
- How your client's wholesale status was established, and a copy of the evidence.
A 10% offset doesn't make an unsuitable investment suitable, so a client keen on the tax benefits is the one most worth slowing down.
Recommending a wholesale venture fund, and what ends up on file
- 01
Classify the advice
General or personal, and whether your client is retail for your wider advice.
On fileLicensee's view of the classification - 02
Confirm wholesale status
Without it, the fund generally can't accept your client.
On fileQualified accountant's certificate, or other evidence - 03
Read the IM
Fees, risks and conflicts. There is usually no target market determination to check against.
On fileThe information memorandum you relied on - 04
Investigate alternatives
Other managers, other structures, or not investing. Check any payment against the conflicted remuneration rules.
On fileWhy this fund, and any conflicts - 05
Advise and record
Lock-up, capital calls, risk of loss, size against total wealth, and the investing entity.
On fileStatement of Advice, where required, and the file note
How should advisers handle conflicts and fees on venture funds?
Licensees and representatives who advise retail clients must not accept conflicted remuneration, meaning benefits that could reasonably be expected to influence the products they recommend or the advice they give.1 If a fund manager offers to pay you, your licensee or a platform anything connected with your client's investment, check it against those rules before you go further.
The conflicts priority rule also applies to your own interests and your associates'. If you, your firm or a related party has an interest in the fund or its manager, it belongs in the advice and the file.1
What can Tall Order send your client, and what can't it?
Tall Order Fund III is offered only to wholesale investors. We send the information memorandum and subscription documents only once an investor's wholesale status has been verified, usually through a qualified accountant's certificate.
Before that, we can give you and your client general information: these guides, the fund's published terms on our investors page, and answers to factual questions about how the fund works. We can't give your client personal advice about whether the fund suits them or how much of their portfolio it should be.
Not legal advice
This page is general information for financial advisers and accountants, written by a fund manager. It is not legal, compliance or financial product advice, and it isn't a substitute for the Act, ASIC's guidance or your licensee's policies. Confirm how these rules apply to your practice and your client with your licensee or a lawyer.
Frequently asked questions
It is if you considered any of the client's objectives, financial situation or needs, or a reasonable person might expect you to have. Once you've reviewed a client's portfolio, a comment about a particular fund is usually hard to treat as general advice.
The Corporations Act requires a PDS only when a financial product is issued to a retail client. A wholesale-only fund can use an information memorandum, which is still covered by the ban on misleading or deceptive conduct.
Generally not. The obligation to make a target market determination arises where a PDS or prospectus is required, and a wholesale-only offer needs neither. Confirm the position for a specific product with your licensee.
It applies to personal advice given to a retail client. A client can be wholesale for buying a fund interest and still be a retail client for your wider advice, so settle the classification with your licensee first.
The government announced in August 2026 that it would remove the catch-all step from the best interests safe harbour and streamline Statements of Advice. As at October 2026 these are announcements, not law.
The lock-up period, the capital call schedule and the client's ability to meet it, the risk of loss, the size of the commitment relative to their wealth, the investing entity, the alternatives you considered, and how wholesale status was established.
Advisers who advise retail clients can't accept conflicted remuneration, meaning benefits that could reasonably be expected to influence their advice. Check any payment or benefit against those rules with your licensee.
Only once your client's wholesale status has been verified, usually with a qualified accountant's certificate. Before that, Tall Order can share general information but not personal advice.
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Talk to us about Fund III
Tall Order is a Melbourne seed fund. Fund III is a registered ESVCLP for wholesale investors. Justine Lum, our Head of IR, works with advisers and their clients.
Sources
- Federal Register of Legislation, Corporations Act 2001: sections 766B, 946A, 949A, 961 to 961J, 963A and 963E, 994B, 1012B and 1041H (Compilation No. 149, 19 September 2026). ↩
- ASIC, Regulatory Guide 274: Product design and distribution obligations (RG 274.20 on which products are covered). ↩
- ASIC, Regulatory Guide 244: Giving information, general advice and scaled advice. ↩
- ASIC, Regulatory Guide 175: AFS licensing: Financial product advisers, conduct and disclosure. ↩
- SMS Magazine, Delayed advice reforms to go ahead (24 August 2026): Assistant Treasurer Daniel Mulino's announced changes to the best interests duty safe harbour, Statements of Advice and a new class of adviser. ↩