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FPC002B - Ethics and Professionalism in Financial Advice - FASEA Code Of Ethics - Finance Assignment Help

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Added on: 2019-10-14 06:43:06
Order Code: 10_19_6067_152
Question Task Id: 66802
  • Subject Code :

    FPC002B

  • Country :

    Australia

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FPC002B Ethics and Professionalism in Financial Advice FASEA Code Of Ethics Finance Assignment Help
Assignment Task:

Learning Outcomes:

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 application of ethical frameworks and professional standards.

Case study
You are a Compliance Specialist employed by a licensee group — AlphaOmega Financial Group (AOFG). With the commencement of the FASEA Code of Ethics from 1 January 2020, AOFG wants to understand what it should do to support its financial advisers and practices to comply with the Standards and Values of the Code. To do this, they have asked you to work with a number of selected practices to gain an understanding of their current level of compliance with the Code and to identify areas for improvements.
The first practice you will be working with is Gardener Green Financial Services (GGFS) and you have been provided with the following brief:
• GGFS: Jim Gardener (63) established his business 20 years ago and went into partnership with Carly Green (45) five years ago to establish GGFS. Jim and Carly are the principals and owners of GGFS. GGFS employs another adviser (Chris Wilkins), a provisional relevant provider (Sam Green) who is also a paraplanner, and a client support officer (Davi Singh).
• Jim Gardener: 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 and self-funded retirees who are focused on managing the business and personal wealth they have accumulated to support themselves in retirement, as well as providing for their families in the event of the client’s death or
disability. Jim prefers to look after his existing clients while any referrals for new clients go to Carly or Chris, depending on the type of advice they need.
• Carly Green: Carly has 20 years’ experience as a financial adviser. Her clients range in age from 35 to 55 years, and are established professionals and the well-off children of Jim’s clients. Many of her clients have self-managed superannuation funds. Carly has a strong interest in improving women’s financial literacy and wellbeing. Her daughter, Sam, has been the practice’s paraplanner for several years but since completing her approved Bachelor of Financial Planning degree, she is now a provisional relevant provider.
• Chris Wilkins: Chris has 10 years’ experience as a financial adviser and is fully qualified. He has experience with a wide range of strategies and clients and has been employed by GGFS for the
past two years. Most of the clients he services came with him to GGFS. When Jim or Carly are on leave, Chris provides advice to their clients.

You will meet individually with each of the three financial advisers to review client files and consider potential Code implications.

Scenario 1
Your first meeting is with Jim Gardener. The file you have selected to review is for a couple who are typical clients for Jim. You see from the electronic file in the customer management system (CRM) that Dino Salerno is the owner of a very successful chain of Italian restaurants and has been a client of Jim’s since he started the practice. Together with his wife, Phoebe, they have large superannuation and investment portfolios, along with substantial insurances. Their last ongoing advice meeting was two months ago when their portfolios were reviewed and rebalanced in line with their risk profiles. However, there is a record of a phone message from Dino for Jim to call him back and a calendar entry that indicates Jim met with Dino in the last week — but there is no indication of what was discussed.
You ask Jim to tell you about the couple and mention the phone call and meeting with Dino. Jim pauses before replying:

Ah, yes — Dino. I know the CRM should have been updated but it’s a very difficult situation and I’m actually not sure what to do which is frankly why I haven’t made a file note yet. Davi has been on leave, so I couldn’t have done anything about it anyway. Dino’s one of my oldest clients and treats me like one of his family. Without his referrals, I wouldn’t have the business I do today. And I get along very well with Phoebe — Dino married her seven years ago after his
first wife, Maria, died.
About the phone call… I rang Dino back straight away and he asked to meet with me on his own and not to let Phoebe know. He asked me to meet him at a restaurant a long way from his
home and my office, which I thought was odd. He told me he’d been having tests for quite a while and had just been diagnosed with dementia. I asked him what stage it was at and whether Phoebe knew. He said he’d been to see his lawyer and, based on the doctor’s diagnosis, he could not assist him to execute an Enduring Power of Attorney or change his Will.
Dino said to me, ‘The business is owned by the family trust, so it’s all going to go to my kids with Maria. However, I always intended my super and life insurance to go to Phoebe. I know you kept at me for years to fix up the paperwork and probably gave up on me, but Jim, I want to fix it up now. The kids and Phoebe don’t get along at all — I can only imagine the trouble they’ll cause when I’m gone. Can you get the forms ready and I’ll sign them now? You can see for yourself I’m my usual self, and no one will ever know if we backdate them. I’ll tell Phoebe about my condition when this is sorted out. You’re my only hope.’

Question 1 
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 the issues raised by this scenario in relation to:
(i) a relevant barrier to ethical decision making which may be influencing Dino 
(ii) how Standards 1, 2 and 3 of the FASEA Code of Ethics apply to this situation 
(iii) the application of the value of Honesty to this scenario. 
(b) In view of your analysis, how should Jim respond to Dino?
Support your answers by reference to the case study facts and research.

Scenario 2
Your next meeting is with Carly Green. She has a meeting scheduled with an existing client, Simone Philips. Simone, 35, recently attended one of Carly’s ‘Financial Security for Women’ seminars and is very keen to get advice from Carly as a result of changed circumstances. Davi has entered Simone’s details into the CRM, which you note indicate she is married and a homemaker with one child.
You also note from the records that Simone is an existing client with some super and insurance products, and is the sister of one of Carly’s wealthiest clients, Max Hall. Simone has recently divorced and received a settlement which was intended to purchase a home for herself and her two young children. However, inspired by what she heard during the workshop, she has indicated she wants to continue renting and instead invest the funds, potentially some into a self-managed super fund. You ask Carly about the upcoming meeting with Simone.


I’ve been advising Max for several years. He’s a brilliant medical specialist and has a highly successful practice. He also has a very happy and stable marriage and has raised four very talented kids. Simone is his younger sister and I think has always been quite jealous of Max’s success in life. He has tried to help her but as she doesn’t want to take his advice, he asked me to see what I could do. After her marriage to a doctor broke up, Max gave her a job in his practice looking after patient appointments and records. I got her set up with a regular savings plan and sorted out her personal insurances and superannuation. I did not charge fully for the time I spent on her case as she could not afford it — my intention was to have Sam take over advising her on these when she’s completed her provisional year. I do have reservations, though, as Simone is a pretty strong personality and while Sam is technically great, she has more to learn about managing client expectations.

I’m concerned that Simone sees this money from the settlement as a shortcut to getting the life Max has. It was difficult to help her to get her budget under control and though she only has a little super, she wanted to invest it much more aggressively than her risk profile would indicate. I’m going to meet with her to understand what she wants to do. Sure, if she invested the money, it would be a significant portfolio and I would be able to add a lot of value in advising Simone on it. I could also easily justify charging her my normal rate. But my honest belief is she would be better off using the funds to buy a home for herself and her kids.

Question 2 
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 the issues raised by this scenario in relation to:
(i) the ethical dilemma facing Carly 
(ii) how Standards 4, 5 and 6 of the FASEA Code of Ethics apply to this situation 
(iii) the application of the value of Fairness to this scenario.
(b) Using one (1) relevant professional framework (such as the FPA or AFA Code), recommend how Carly should resolve this dilemma.

Scenario 3
Your last meeting is with Chris Wilkins. Chris initially advised Emilio and Rosa Sanchez eight years ago when he was with a different licensee group. Last year Emilio contacted Chris, saying they were unhappy with the service they were getting and wanted Chris to be their adviser again. The electronic records show that Chris provided them with advice to switch their superannuation and insurance to products which were on GGFS’s approved products list. The product replacement research showed that the recommended superannuation products would be significantly cheaper than their existing products, which would also be a benefit when they converted them into retirement income streams in 10 years. It also showed that the insurance benefits and premiums in the replacement products were broadly comparable with their existing products. The records show that Emilio accepted the revised insurance terms but there is no file note of Chris discussing this with Emilio.

You ask Chris to tell you more about these clients and the advice provided.

Emilio and Rosa contacted me out of the blue last year asking for an appointment. They said they were really unhappy with the turnover of advisers at my previous licensee since I left. They were paying ongoing advice fees but didn’t feel they were getting any value for those ongoing fees. I explained to them that I would be happy to meet with them and would waive my normal initial consultation fee. I did let them know I now charge fees rather than commissions so the cost of my advice would likely be much higher than previously. They still wanted to go ahead, as they were adamant they wanted me to be their adviser and felt that even if my fees were higher, they could actually trust me.

In regard to their super and insurances, Emilio had always been in excellent health and very fit, so I was surprised when his insurance offer came back with a loading. I did speak to Emilio about it and as he knew that his fund earnings plus super contributions would more than cover the premiums, he went ahead with setting up the new super fund and insurance. That was a good thing as Davi had already started the rollovers. There should be more paperwork on this file — I’ll have to check with Davi as he mentioned we may have temporarily lost some records when our IT company’s server went down.

Question 3 
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) Discuss the issues raised by this scenario in relation to:
(i) a relevant barrier to ethical decision making which may be influencing Chris 
(ii) how Standards 7 and 9 of the FASEA Code of Ethics apply to this situation 
(iii) the application of the value of Competence to this scenario. 
(b) Based on your analysis, how has Chris complied with the obligation to obtain informed consent?

Scenario 4
As part of your brief from AlphaOmega, you are also required to provide some recommendations, based on your observations, in areas where the practice could improve compliance with the FASEA Code of Ethics.

Question 4 
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 recordkeeping 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? 
(b) Explain how the GGFS financial advisers can ensure they comply with the value of Trustworthiness.

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  • Uploaded By : Mitchell Lee
  • Posted on : October 14th, 2018
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