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Ethics and Professionalism in Financial Advice
(FPC002B)
Assignment
Assignment marks: 95 | Presentation and referencing marks: 5
(Total marks: 100 | Word limit: 4,300 words)
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Instructions to students
• This assignment covers Topics 1 to 7 and accounts for 40% of your final grade.
• There are four (4) questions worth a total of 95 marks, and 5 marks for presentation and referencing (total: 100 marks) in this assignment. You should answer all questions.
• The overall word limit for the assignment is 4,300 words. Marks will only be awarded for answers up to the word limit (plus 10%) for each question. Any material written after this will not be counted towards your mark for that question. Headings, quotes and in-text citations within the body of the answer are included in the word count. Reference lists are not included in the word count. For more information on word counts and their rationale, go to Assessment ? Assignment ? General assessment information.
• Marks will be awarded for presentation, research effort and referencing.
• Refer to the Criteria-Based Marking Guide for guidelines on what is expected for each question.
• The ‘General assessment information’ section in KapLearn contains information about format and presentation, word limits, citations and referencing, collusion, plagiarism and other policies, useful resources, submitting your assignment and accessing your results.
• Answers are to be in your own words. Reference and cite all your sources (within the text of your answer) when quoting or using material from external sources. Include a reference list at the end of your assignment. For further information on referencing, refer to the ‘Referencing Guide’ available under the Additional resources from the Kaplan Professional Library Learning Hub.
• Indicative weightings are noted beside each question. Use these weightings to assist you with your allocation of time and resources. The weightings indicate the relative importance of each question.
• State all assumptions used in providing your answer.
• Requests for special consideration or information pertaining to special consideration written in the body of the assignment will not be considered by the marker. Refer to the ‘special consideration’ section of the Assessment Policy on Kaplan’s website for more information.
Learning outcomes (LO) mapping Marks
1. Explain the role of ethical frameworks and professional standards within the financial planning profession. 25
2. Assess the impacts of cognitive, judgement and decision biases on financial advisers and their clients. 20
3. Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics. 25
4. Identify and solve ethical dilemmas encountered as a financial adviser through application of ethical frameworks and professional standards. 25
Presentation and referencing 5
Total marks 100
Assignment presentation and referencing (5 marks)
You are required to research beyond the subject notes in answering the questions for this assignment. Reference and cite all your sources when quoting or using material from external sources. Include a reference list at the end of your assignment.
You are required to:
• use appropriate presentation and format for your assignment
• demonstrate independent research and analysis
• demonstrate appropriate use of relevant references
• follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’ available from the Kaplan Professional Library ‘Learning Hub’ in KapLearn
• include in-text citation in each question and a reference list at the end of your assignment following the recommended referencing style
• adhere to the assignment word limit.
Criteria-Based Marking Guide for presentation and referencing
The Criteria-Based Marking Guide provided at the end of each question is designed to assist students to understand what is expected of them in each question and to let them know how their performance will be judged. It provides advice about the criteria used in the marking of the question and what discriminates between an excellent, satisfactory and unsatisfactory answer.
Excellent (Mark range: 4–5 marks) Satisfactory (Mark range: 2.5–3.5 marks) Unsatisfactory (Mark range: 0–2 marks)
• clear and appropriate assignment layout and structure
• adheres to assignment and question word limits
• clear evidence of independent research and analysis incorporated throughout the assignment
• appropriate use of referencing
• accurate use of Harvard referencing style
• comprehensive reference list provided at end of the assignment • adequate assignment layout and structure
• adheres to assignment and question word limits
• some evidence of independent research and analysis
• appropriate use of referencing
• use of Harvard referencing style
• reference list provided at end of the assignment • poor assignment layout and/or structure
• assignment is significantly under or over the word limit
• no demonstrated independent research or analysis
• no use of references
• referencing does not use Harvard referencing style
• no or inadequate reference list provided at end of the assignment
Instructions to students
There are four (4) questions worth a total of 95 marks. Answer all questions.
Case study
You are a senior financial adviser who has been employed by Gardener Green Financial Services Pty Ltd (GGFS) for the past four years. Jim Gardener (63) established his business 20 years ago and went into partnership with Carly Green (45) five years ago to establish GGFS, which holds an Australian financial services licence. Jim and Carly are the principals and owners of GGFS, and Carly is the responsible manager. Together with Jim, Carly and yourself, GGFS also employs Tatiana (25), who is undertaking her professional year.
Jim 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, as well as 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. Jim prefers to look after his existing clients, with any referrals for new clients going to Carly or you, depending on the type of advice they need.
Carly has 20 years’ experience as a financial adviser. Her clients range in age from 35 to 55 years, are established professionals and include the children of some of Jim’s wealthiest clients. Many of Carly’s clients have self-managed superannuation funds.
Tatiana is Carly’s daughter and was originally employed as the firm’s paraplanner. Tatiana has completed a FASEA-approved Bachelor of Financial Planning degree and intends to become a financial adviser. She is currently in the second half of her professional year (Provisional Financial Adviser).
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 GGFS. When Jim or Carly is away or on leave, you provide advice to their clients. You have agreed to act as Tatiana’s supervisor while she completes her professional year.
Scenario 1
Tatiana (Provisional Financial Adviser) is about to meet with a new client, Justin King. Justin is the son of Jim’s longstanding clients, John and Donna King. Justin is in his early 30’s, works as a landscape gardener, has future plans to establish his own landscaping business and shortly thereafter plans to purchase a property. John and Donna have insisted that Justin seeks financial advice now, as Justin has been receiving a substantial distribution from his late grandfather’s estate. Justin’s parents are keen to ensure that Justin has a financial plan in place so he doesn’t waste his money and invests wisely.
Tatiana has attended many client meetings as a paraplanner but this is her first meeting as a provisional financial adviser. She doesn’t have very much information about Justin and knows she will need to collect a lot of information at this meeting. From her experience as a paraplanner, Tatiana is aware that she needs to provide advice in Justin’s best interests and asks for your guidance on how to approach this interview.
You ask Tatiana about her current plan for the interview and she replies:
Justin’s parents have been Jim’s clients for a long time and Justin’s grandfather was also a valued client. The family is very wealthy, so I’m assuming Justin will be well-informed about investments in general and how financial planning works; I shouldn’t have to go into a lot of detail about these aspects. I’ve already sent him our FSG, so I’ll get him to acknowledge he’s received that.
I know the trust money has been invested in a balanced portfolio including fixed interest, some shares and property. Justin has a long-term investment horizon because he is only in his early 30s, so I’m assuming he’ll want more growth investments. We’ve got some ideal direct equity model portfolios generating high returns for our other clients that I can talk to Justin about. I won’t need to discuss insurance with him, considering his family is quite well off and he wouldn’t need the insurance at this stage. I believe Justin will just want some investment advice to grow his wealth.
Question 1 (25 marks | Word limit: 1,100 words)
LO1: Explain the role of ethical frameworks and professional standards within the financial planning profession.
LO2: Assess the impacts of cognitive, judgement 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 application of ethical frameworks and professional standards.
(a) Discuss Tatiana’s compliance with the values of Honesty and Trustworthiness (FASEA Code of Ethics) if she proceeds with the interview as planned. (10 marks)
(b) Analyse how Tatiana’s conduct complies with Standard 1 and Standard 5 (FASEA Code of Ethics) if she proceeds with the interview as planned. (10 marks)
(c) Identify and examine one (1) barrier to ethical decision making that may be influencing Tatiana while she is planning for the meeting with Justin. (5 marks)
Support your answers by reference to the case study facts and research.
Criteria-Based Marking Guide for Question 1(a)–(c)
Excellent (Mark range: 19–25 marks) Satisfactory (Mark range: 12.5–18.5 marks) Unsatisfactory (Mark range: 0–12 marks)
• concise and accurate discussion of the value of Honesty and Trustworthiness in addition to a comprehensive analysis of Tatiana’s compliance with the values of Honesty and Trustworthiness
• concise and accurate discussion of Standards 1 and 5 in addition to a comprehensive analysis of Tatiana’s compliance with Standards 1 and 5
• identification and comprehensive explanation of one relevant barrier with a comprehensive analysis of how the chosen barrier could have influenced Tatiana
• evidence of relevant, independent research that supports the conclusion • adequate discussion of the values of Honesty and Trustworthiness in addition to some analysis of Tatiana’s compliance with the values of Honesty and Trustworthiness
• adequate discussion of Standards 1 and 5 in addition to some analysis of Tatiana’s compliance with Standards 1 and 5
• identification and adequate explanation of one relevant barrier with some analysis of how the chosen barrier could have influenced Tatiana
• evidence of research to support the conclusion • inadequate discussion of the values of Honesty and Trustworthiness in addition to poor or no analysis of Tatiana’s compliance with the values of Honesty and Trustworthiness
• inadequate discussion of Standards 1 and 5 in addition to poor or no analysis of Tatiana’s compliance with Standards 1 and 5
• inadequate identification or explanation of one relevant barrier with poor or no analysis of how the chosen barrier could have influenced Tatiana
• little or no evidence of research to support the conclusion
Insert your answers to Question 1(a)–(c) below this line
End of answers to Question 1(a)–(c)
Scenario 2
Existing clients of Carly’s, Peter and Christy, call to arrange an appointment. Carly is on leave and has arranged for you to assist her clients while she is away. You will be meeting them for the first time. You have been told they are important clients because they often recommend family, friends and their own clients to the practice.
Peter and Christy operate a successful construction business but as you read through their file it appears they have little knowledge of investing. They have $1,000,000 to invest and want to build their wealth for retirement and help their adult children.
At the meeting you begin the fact-finding process and question the clients extensively to update their current situation, goals and objectives. Partway through the meeting, Peter takes a phone call and states they will need to leave immediately to take care of some urgent business. They say they will call into the office tomorrow to sign any paperwork required to invest the money. They want you to invest the money in the way you think is appropriate for them. Peter and Christy state this is what Carly does for them all the time, as they are not interested in how the process works, saying, ‘We are good at building houses and we pay you to be good at managing our money.’
Question 2 (25 marks | Word limit: 1,100 words)
LO1: Explain the role of ethical frameworks and professional standards within the financial planning profession.
LO2: Assess the impacts of cognitive, judgement 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 application of ethical frameworks and professional standards.
(a) Explain how ethical fading may have affected Carly’s ethical decision making. (5 marks)
(b) Following your meeting with Peter and Christy, identify and explain what ethical framework you would adopt in dealing with them. (5 marks)
(c) Examine how Carly’s conduct would be assessed under Standards 5 and 6 of the FASEA Code of Ethics. (10 marks)
(d) Discuss whether Carly’s advice to Peter and Christy meets the best interests obligations under Standard 2 of the FASEA Code of Ethics. (5 marks)
Criteria-based Marking Guide for Question 2(a)–(d)
Excellent (Mark range: 19–25 marks) Satisfactory (Mark range: 12.5–18.5 marks) Unsatisfactory (Mark range: 0–12 marks)
• clear and correct explanation of ethical fading and comprehensive analysis of how it applied to the adviser’s conduct
• clear identification and discussion of an appropriate ethical framework concisely explained and well supported by case study facts
• concise but comprehensive analysis of Standards 5 and 6 (FASEA Code of Ethics), with analysis of the adviser’s conduct in relation to each standard.
• clear and correct explanation of Standard 2 with a comprehensive discussion of whether the adviser met their obligations with the best interest duty under Standard 2 (FASEA Code of Ethics)
• evidence of relevant, independent research that supports the conclusion • a correct explanation of ethical fading with an adequate analysis of how it applied to the adviser’s conduct
• identification and adequate discussion of an appropriate ethical framework with some explanation and some support of case study facts
• adequate analysis of Standards 5 and 6 (FASEA Code of Ethics) with some analysis of the adviser’s conduct in relation to each standard
• correct explanation of Standard 2 with an adequate discussion of whether the adviser met their obligations with the best interest duty under Standard 2 (FASEA Code of Ethics)
• evidence of research that supports the conclusion • an incorrect explanation of ethical fading with poor or no analysis of how it applied to the adviser’s conduct
• insufficient discussion of an appropriate ethical framework and no explanation or support with case study facts
• insufficient analysis of Standards 5 and 6 (FASEA Code of Ethics), with no analysis of the adviser’s conduct in relation to each standard
• a poor explanation of Standard 2 and an insufficient discussion of whether the adviser meets their obligations with the best interest duty under Standard 2 (FASEA Code of Ethics)
• little or no evidence of research
Insert your answers to Question 2(a)–(d) below this line
End of answers to Question 2(a)–(d)
Scenario 3
A vital duty in your supervision of Tatiana during her professional year is to ensure she understands the importance of maintaining complete and accurate records of advice and services, and that you have monitored her compliance with this requirement.
Jim is on extended leave and his clients Zoran and Yana Ivanov call the office to request an appointment as they need would like to access some funds to go on a cruise. The appointment is booked with Tatiana and she prepares for the meeting by reading through the file. Tatiana is expecting to see comprehensive file notes reflecting the appointments that have been held over the several years during which the Ivanov’s have been clients but there is little recorded in the client file. Tatiana does not know what was discussed during client appointments, which she can see were scheduled in Jim’s diary and marked as ‘held’. Tatiana does notice that Jim and Zoran appear to have played golf together on several occasions and that Yana does not seem to have attended any meetings. There are copies of paperwork signed by Yana but, as far as Tatiana can tell, Yana has never attended the office.
Tatiana mentions to you that Jim’s files are all very similar, with documents being heavily templated and with minimal information. Furthermore, many of Jim’s clients’ portfolios are structured in a similar way — model portfolios within a wrap and/or owned by their SMSF. You feel this structure seems quite complicated given some of the client profiles. Jim’s reasoning is:
I use the same SOA template for all clients. It’s good for consistency and ensures compliance requirements are being met. I customise and highlight relevant sections and Tatiana inserts these into the standard template. Regarding investment structures, this is the most efficient and streamlined way for me to manage my clients’ portfolios and it enables me to provide better service by spending more time meeting with clients face to face.
Question 3 (25 marks | Word limit: 1,100 words)
LO1: Explain the role of ethical frameworks and professional standards within the financial planning profession.
LO3: Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.
(a) Analyse how rationalisations may have presented a barrier to Jim’s ethical decision making. (10 marks)
(b) Examine and discuss how Jim’s conduct complies with Standard 7 and Standard 9 of the FASEA Code of Ethics. (10 marks)
(c) Discuss how Jim’s conduct complies with the value of Competence. (5 marks)
Support your answers by reference to the case study facts and research.
Criteria-based Marking Guide for Question 3(a)–(c)
Excellent (Mark range: 19–25 marks) Satisfactory (Mark range: 12.5–18.5 marks) Unsatisfactory (Mark range: 0–12 marks)
• clear and correct definition of rationalisations with a comprehensive analysis of how rationalisations influence the adviser
• clear and correct discussion of Standards 7 and 9 (FASEA Code of Ethics) with a comprehensive analysis of the adviser’s conduct in relation to each standard
• clear and correct discussion of the value of Competence with a comprehensive analysis of how the adviser’s conduct is compliant with the value of Competence
• evidence of relevant, independent research that supports the conclusion • correct definition of rationalisations with an adequate analysis of how rationalisations influence the adviser
• adequate discussion of Standards 7 and 9 (FASEA Code of Ethics) with some analysis of the adviser’s conduct in relation to each standard
• adequate discussion of the value of Competence with some analysis of how the adviser’s conduct is compliant with the value of Competence
• evidence of research to support the conclusion • poor definition of rationalisations with an inadequate analysis of how rationalisations influence the adviser
• insufficient discussion of Standards 7 and 9 (FASEA Code of Ethics) with poor analysis of the adviser’s conduct in relation to each standard
• insufficient discussion of the value of Competence with inadequate analysis of compliance with the value of Competence and inadequate references to case study facts
• little or no evidence of research to support the conclusion
Insert your answers to Question 3(a)–(c) below this line
End of answers to Question 3(a)–(c)
Scenario 3 (continued)
As part of Tatiana’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 to discuss the obligations regarding conflicts of interest and the value of Diligence.
Question 4 (20 marks | Word limit: 1,000 words)
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.
(a) Discuss whether the GGFS financial advisers are currently meeting their record-keeping obligations under the Corporations Act 2001 (Cth), Standard 8 and the value of Diligence under the FASEA Code of Ethics. How could the practice improve its compliance? (12 marks)
(b) Explain how the GGFS financial advisers can ensure they comply with the value of Trustworthiness. (8 marks)
Criteria-based Marking Guide for Question 4(a)–(b)
Excellent (Mark range: 15–20 marks) Satisfactory (Mark range: 10–14.5 marks) Unsatisfactory (Mark range: 0–9.5 marks)
• clear identification and explanation of relevant sources of record-keeping obligations under the Corporations Act, FASEA Code of Ethics Standard 8 and the value of Diligence
• concise analysis of how this practice could improve its compliance with record-keeping obligations with reference to case study facts
• comprehensive identification of practices and/or processes that would demonstrate the adviser’s compliance with the value of Trustworthiness
• evidence of relevant, independent research that supports the conclusion • identification and adequate explanation of relevant sources of record keeping obligations under the Corporations Act, FASEA Code of Ethics Standard 8 and the value of Diligence
• adequate analysis of how this practice could improve its compliance with record keeping obligations with reference to case study facts
• adequate identification of practices and/or processes that would demonstrate the adviser’s compliance with the value of Trustworthiness
• evidence of research to support the conclusion • insufficient identification of relevant sources of record keeping obligations under the Corporations Act, FASEA Code of Ethics Standard 8 and the value of Diligence
• inadequate analysis of how this practice could improve its compliance with record keeping obligations with reference to case study facts
• insufficient identification of practices and/or processes that would demonstrate the adviser’s compliance with the value of Trustworthiness
• little or no evidence of research to support the conclusion
Insert your answers to Question 4(a)–(b) below this line
End of answers to Question 4(a)–(b)
Insert your reference list below this line
End of reference list
END OF ASSIGNMENT