FPC002B: Ethics and Professionalism in Financial Advice - Arbour Financial Services Pty Ltd Case Study - Finance Assignment Help

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Case study:
You are a senior financial adviser who has been employed by Arbour Financial Services Pty Ltd (AFS) for the past four years. Geoff Arbour (64) established his business 20 years ago and went into partnership with Caroline Green (49) five years ago to establish AFS, which holds an Australian financial services licence (AFSL). Geoff and Caroline are the principals and owners of AFS, and Caroline is the responsible manager. Together with Geoff, Caroline and yourself, AFS employs a trainee adviser (provisional relevant provider), Jamie (23).

Geoff has 35 years’ experience as a financial adviser. His clients range in age from 55 to 75 years and are mostly small- to medium-sized business owners and self-funded retirees focused on managing business and personal wealth they have accumulated to support themselves in retirement and provide for their families in the event of their death or disability. Geoff prefers to look after his existing clients and any referrals for new clients go to Caroline or you.

Caroline has 20 years’ experience as a financial adviser. Her clients range in age from 35 to 55 years and are established professionals and the children of Geoff’s clients. Many of her clients have self-managed superannuation funds. She has a strong interest in improving women’s financial literacy and wellbeing.

Jamie has completed an approved Bachelor of Financial Planning degree as she intends to become a financial adviser. Jamie is in the second quarter of her professional year and you are her supervisor. Jamie is Caroline’s daughter.

You have 10 years’ experience as a financial adviser and are fully qualified. You have experience with a wide range of strategies and clients. Half of the clients you service came with you to AFS from your previous role. When Geoff or Caroline is away or on leave, you provide advice to their clients.

Scenario 1:
Jamie, the provisional relevant provider, is about to meet with a new client, Nathan Nicholson. Nathan is the grandson of Geoff’s longstanding clients, Barbara and Joe Nicholson. Jamie knows Nathan personally as they played on the same university volleyball team. Nathan is 21 and about to receive a substantial sum from a trust set up by his grandparents when he was born.

Nathan is their only grandchild and he has just been made aware of the trust — not even his parents know about the trust. Barbara and Joe have insisted that Nathan receive financial advice before he receives the funds to ensure he has a good plan in place to manage them wisely for his future.

Jamie attended many client meetings as a paraplanner, but this is her first meeting in her new capacity. She understands that she will need to collect a lot of information from Nathan at this meeting. Jamie is aware that she is required to provide advice that will be in Nathan’s best interests and asks for your advice on how to approach this interview.

You ask Jamie about her current plan for the interview and she replies:

Well, as Nathan’s grandparents have been Geoff’s clients for a long time and they’re very wealthy, I’m assuming Nathan will be pretty well-informed about investments in general and how financial planning works. Also, he is studying business and commerce and I believe he is quite a good student so I shouldn’t have to go into a lot of detail about these aspects. I’ve already sent Nathan my FSG, so I’ll get him to acknowledge he has received it.
 
I know that the trust money has been invested in a balanced portfolio including fixed interest, shares and property. Nathan has a long-term investment horizon because he’s only in his 20s, so maybe he’ll want higher growth investments — we’ve got some really great direct equity model portfolios that are generating high returns for our other clients that I can talk to him about. However, his grandparents may not be happy for him to change the investment mix — we may need to check with them about that. I doubt whether he’ll need any insurance — he’s coming into a lot of money and anyway, his family would look after him.

Question 1
1. Explain the role of ethical frameworks and professional standards within the financial planning profession.

2. Assess the impacts of cognitive, judgement and decision biases on financial advisers and their clients.

3. Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.

4. Identify and solve ethical dilemmas encountered as a financial adviser through the application of ethical frameworks and professional standards.

a. Discuss how unconscious bias may have influenced Jamie’s ethical decision making in relation to her proposed meeting with Nathan.

b.i. Analyse Jamie’s compliance with Standard 1 and Standard 2 of the FASEA Code of Ethics.
ii. Analyse Jamie’s compliance with the value of Fairness of the FASEA Code of Ethics.

c. With reference to your responses to Question 1(a) and (b) and the financial planning process, discuss what advice would you give Jamie on how to effectively conduct the initial fact-finding meeting with Nathan?
 

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