FPC002B - Geoff - Caroline - Jamie Case Study - Financial Management Assignment Help

Assignment Task : 

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.

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 
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.
LO3: Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.
LO4: 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) Analyze Jamie’s compliance with Standard 1 and Standard 2 of the FASEA Code of Ethics.
(ii) Analyze 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? 

Scenario 2
You joined Jamie to meet with Nathan for the first interview. You were pleased to see that Jamie took on board your feedback and suggestions and incorporated these into her approach.                                                                                                                                                                                                                                                    Jamie obtained a lot of new information during the meeting. Nathan is in his second year of a business degree, studying full-time while supporting himself with Youth Allowance payments and casual work as a waiter. While his grandparents are wealthy, his parents are not. They were nearly bankrupted during the global financial crisis due to the collapse of their business and have been careful to keep the details from Nathan’s grandparents. While Nathan doesn’t have a lot of knowledge about financial matters or investments, he is keen to become more educated. His parents’ experience has made him very conscious of financial security and he wants to prudently invest his grandparents’ gift.
Nathan asks Jamie if receiving the funds will affect his current entitlement to Youth Allowance. When Jamie confirms that it will, Nathan asks if he would be better off giving the funds to his parents to invest so he can keep his Youth Allowance benefits.
Apart from purchasing a small second-hand car, Nathan is happy to invest most of the funds for the next five years and reinvest the earnings (unless he loses his Youth Allowance benefits and needs income). The risk profiling questionnaire he completed indicates that he has a balanced risk profile overall. However, his answers to some of the questions relating to his perception of risk and how he would react to market volatility and poor investment performance are more indicative of a moderately conservative profile.
Jamie isn’t sure whether she should consider an investment portfolio for Nathan with an asset allocation suitable for a balanced risk profile (based on the results of the full questionnaire) or moderately conservative profile (based on Nathan’s answers to these particular questions).
Nathan has only a very small superannuation account with a hospitality industry fund, with minimum insurance. He doesn’t have a will or enduring power of attorney. Nathan doesn’t understand why Jamie is asking him about these aspects.
Nathan says he hasn’t discussed his grandparents’ gift with his parents as it seems his grandparents wanted it kept secret, but he admits he feels a bit uneasy about maintaining the secrecy.

Question 2 
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.
LO3: Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.
LO4: Identify and solve ethical dilemmas encountered as a financial adviser through the application of ethical frameworks and professional standards.

Scenario 3
As part of Jamie’s professional year program, you meet regularly to discuss her professional responsibilities under the FASEA Code of Ethics.
You are preparing for your next meeting in which you will discuss the obligations regarding conflicts of interest and the value of Competence. You explain to Jamie that clients sometimes ask for referrals to other professional advisers. You name several accountancy firms in the local area whose services clients have used in the past and about which you have consistently heard positive feedback. These accountancy firms occasionally refer clients who require financial advice to AFS as well. The arrangements are not exclusive and none of the firms receives any benefit from such referrals.

Question 3 
LO3: Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.
LO4: Identify and solve ethical dilemmas encountered as a financial adviser through application of ethical frameworks and professional standards.

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