FPC002B - Ethics and Professionalism in Financial Advice - Frank Case Study - Finance and Accounting Assignment Help

Assignment Task:

Analysis of task presentation and referencing:

You are required to research beyond the subject notes in answering the questions in this analysis task. Reference and cite all your sources when quoting or using material from external sources. Include a reference list at the end of your analysis task.

You are required to:

• use appropriate presentation and format for your analysis task
• make appropriate use of relevant references to demonstrate your research and analysis
• follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’ available from the Library ‘Learning Hub’ in KapLearn
• include an in-text citation in each question and a reference list at the end of your analysis task following the recommended referencing style
• adhere to the analysis task word limit.

Learning Outcomes:
 
LO1: Explain the role of ethical frameworks and professional standards within the financial planning profession.
LO2: Assess the impacts of cognitive, judgment and decision biases on financial advisers and their clients.

Frank Case Study:

Frank is a very experienced financial adviser who is authorised to give personal advice on a wide range of strategies and products. He has known Tony and Laura Varga for many years as they live in the same suburb and their children (who are now adults) went to school together. Frank and Tony have also been involved in the same football club for almost 20 years.
Frank has provided advice on superannuation and insurance to both Tony and Laura over the years. Although Laura was always more interested in planning for their future, Tony had expressed the view that ‘super was a waste of time’. Despite that, Tony has referred some associates to Frank on occasions. Tony and Laura have always appeared to enjoy a lifestyle beyond their declared income, with Laura previously receiving a new Lexus car for her 40th birthday. Frank has queried Laura as to how they afford their lavish lifestyle. Laura says she also had these thoughts over time when reviewing the household budget and bank statements, but she is hesitant to get involved in Tony’s business.
Frank had not talked to either of them for some months and was surprised to hear from Laura that they had separated and that Tony had disappeared overseas with his new, younger partner and that Laura was left struggling financially. 
As proceedings to split their assets and complete a property settlement had commenced, Frank agreed to act solely for Laura in helping her to sort out her financial situation and plan for her future. Frank emailed Tony to confirm that he would no longer be acting as his adviser and ensured that he would not be in receipt of any service fees in respect of Tony’s insurance and investments. Frank believed this was the best way to avoid a conflict of interest.
During the following weeks, Frank’s office continued to receive notifications concerning investment accounts held in Tony’s name. Tony had always said these were for ‘a rainy day’ and Frank suspected that Laura was not aware of these accounts.
At a past football club party, Tony had let slip that he had no interest in building up joint assets with Laura as he had plenty of other assets including ‘overseas interests’ that he could fall back on. Moreover, there had long been rumours that some of Tony’s investment activities may not be legal. 
Laura hoped that the proceeds of the property settlement would be sufficient to buy an apartment for her and her daughter to live in, provide some funds for investment and pay her daughter’s remaining university fees. It was clear to Frank that Laura was unlikely to be left with sufficient capital to meet these goals.
Frank believes that Laura is being treated unfairly and wants to tell Laura about Tony’s concealed assets.

Question 1:

Unethical decisions are more likely to occur when the person making the decision either fails to see the decision as involving any ethical issues or believes that any ethical issues they have identified can be overcome.

Discuss and provide a brief example of how a financial adviser’s ethical decision making in dealings with a retail client could be adversely affected by:

(a) teleological ethics
(b) confirmation bias

Question 2:

(a) Frank is wondering what to do about disclosing to Laura information about Tony’s ‘rainy day accounts’ and other assets. Briefly explain what action would Frank take if he were acting in accordance with the deontological ethical framework?

(b) Frank decided to remain as Laura’s adviser rather than remaining as Tony’s adviser or disengaging from both clients. How might the virtue ethics framework have influenced Frank in making this decision?

Support your answers to the questions by reference to the above case study facts and research.

Question 3:

Following your analysis in Question 2, provide your judgment and rationale as to whether Frank has acted ethically in relation to all of his dealings with Tony. In your response, nominate a relevant ethical framework through which to analyse Frank’s actions.

Question 4:

According to Bazerman and Tenbrunsel (2011), there are five key blind spots that lead to unethical behaviour.
 
(a) Discuss, with reference to the case study facts and research, how motivated blindness may have influenced adviser Frank’s ethical decision making, and how this blind spot could be avoided.

(b) Discuss, with reference to the case study facts and blind-spot ethical decision making, how the ‘slippery slope’ may have influenced Laura’s ethical decision making and how this blind spot could be avoided.

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