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Subject Code : FPC002B
Country : Australia
Assignment Task -                 
 

Case study

You are a senior financial adviser who has been employed by Steel City Wealth Planners (SCWP) for the past four years. Giovanni Peroni (63) established his business 20 years ago and went into partnership with Elizabeth Perry (45) five years ago to establish SCWP, which holds an Australian financial services license. Giovanni and Elizabeth are the principals and owners of SCWP, and Elizabeth is the responsible manager. Together with Giovanni, Elizabeth, and you, SCWP also employs Tatiana (25), who is undertaking her professional year. 

Giovanni 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 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. Giovanni prefers to look after his existing clients and any referrals for new clients go to Elizabeth or you, depending on the type of advice they need.

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

Tatiana is Elizabeth’s daughter and was originally employed as the firm’s paraplanner. Tatiana has completed an approved Bachelor of Financial Planning degree and intends to become a financial adviser. She is currently in the second half of her professional year.

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 SCWP. When Giovanni or Elizabeth 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 is about to meet with a new client couple — Justin and Chloe Shore. Justin is the son of Giovanni’s longstanding clients, Stephen and Donna Shore. Justin and Chloe are in their early 30’s and have a 9-month-old son. Justin works as a landscape gardener and Chloe has just returned to her position as a pathologist working two days per week. Stephen and Donna have insisted that Justin and Chloe receive financial advice now that they have started a family. They also want to ensure that the young couple has a financial plan in place, especially now that Justin is receiving a distribution from his late grandfather’s estate.

Tatiana has attended many client meetings as a paraplanner, but this is her first unsupervised meeting in her new capacity as a provisional relevant provider. She doesn’t have very much information about Justin and Chloe and knows she will need to collect a lot of information at this meeting. She is aware that she is required to provide advice that will be in both Justin and Chloe’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 Giovanni’s clients for a long time and Justin’s grandfather was also a client. The family is very wealthy so I’m assuming Justin will be well-informed about investments in general and how financial planning works, so I shouldn’t have to go into a lot of detail about these aspects. I’ve already sent them our FSG, so I’ll get them to acknowledge they’ve received that.

I won’t need to discuss insurance with them as their family is so well off, they won’t need it. I think they will just want some investment advice, so they can grow their wealth. 

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.

Examine the issues raised by Tatiana’s current plan for her meeting with Justin and Chloe:

(a) Identify and examine one (1) barrier to ethical decision making which may be influencing Tatiana in her plan for the meeting. 

(b) Discuss Tatiana’s compliance with Standard 1, Standard 2, and Standard 9 of the FASEA Code of Ethics, if she proceeds with the interview as planned. 

(c) Discuss Tatiana’s compliance with the value of Competence of the FASEA Code of Ethics, if she proceeds with the interview as planned. 

 

Scenario 2

Existing clients of Elizabeth’s, Peter, and Christy call to arrange an appointment. Elizabeth 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 that 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 appear to have little knowledge of investments and have minimal formal education. They have $1,000,000 to invest and want to build their wealth for themselves and to 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 then states that 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 Elizabeth 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 

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) Briefly identify and describe a potential ethical issue that arises from Peter and Christy’s lack of interest in their financial affairs.

(b) Discuss what you must do to demonstrate that you have obtained informed consent to develop, recommend and implement advice that is in Peter and Christy’s best interest. 

(c) Following your meeting with Peter and Christy, identify and explain what ethical framework you would adopt in dealing with them. 

 

 

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.

Giovanni 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 Giovanni’s diary and marked as ‘held’. Tatiana does notice that Giovanni 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. 

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.

 

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  • Posted on : January 20th, 2019

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