FPC002B Ethics and Professionalism in Financial Advice

Analysis task presentation and referencing (5 marks)

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 an appropriate presentation and format for your analysis task
• demonstrate independent research and analysis
• demonstrate appropriate use of relevant references
• follow the Harvard referencing style as recommended in Kaplan Australia: Harvard Referencing Guide available from the ‘Build Your Skills’ hub in KapLearn
• include a reference list at the end of your analysis task that follows the recommended referencing style
• adhere to the analysis task word limit.

Question 1      (20 marks | Word limit: 300 words)

Define the following two (2) barriers to ethical decision making, and include brief examples of how these barriers or biases could adversely affect a financial adviser’s decision making when providing financial advice:

(a)       partisanship (10 marks)

(b)       slippery slope. (10 marks)

Questions 2, 3 and 4 are based on the case study below.

You (financial adviser) have been asked to participate in an ethical review panel considering the actions of a previous financial adviser (Matthew Howard) within your licensee group. Your role as part of this panel is to review the file of one of his clients (Sarah Sparks) and answer the relevant questions.

Sarah (age 58) met with Matthew as she wanted to access $60,000 from her superannuation (valued at $400,000) to pay out some debts and go on a holiday. Sarah was renting, and as a result of her divorce a few years earlier she had minimal assets and explained to Matthew she was in a difficult place in her life. After talking to her superannuation fund (and friends), Sarah told Matthew she had found a way to access her superannuation funds. She had recently ceased employment, and while she was considering returning to work down the track, she just needed a break for a while and to get away. Her friends had told her she was old enough to retire and therefore could access some of her superannuation. Sarah explained that some of her friends had recently done the same thing and had returned to their previous employers as contractors (full-time hours). Sarah thought this would work well for her because she could meet a condition of release, withdraw the funds to pay off debts, have a holiday, and then maybe return to work and earn some money to top up her superannuation, before she retired permanently.

Sarah had been Matthew’s client for approximately 10 years. She was his client when he worked for a previous Australian financial services licensee and continued her advice relationship with him when he moved to his existing licensee five years ago. Matthew had developed a close relationship with Sarah, as he had also been through a divorce two years earlier and knew how difficult it was to rebuild a wealth portfolio after a divorce.

Matthew was concerned about whether Sarah met the requirements to be classified as having retired, and raised this with her. Matthew suggested that Sarah could instead commence a transition to retirement income stream, withdraw the maximum 10% (or $40,000), close the income stream, roll it over to another provider, start it again and withdraw the extra $20,000.

Matthew assisted Sarah with the superannuation income streams arrangements and also provided financial advice on what to do with the superannuation proceeds and other contribution strategies when Sarah returned to the workforce.

Question 2      (20 marks | Word limit: 300 words)

Discuss whether the financial adviser’s conduct and dealings with the client (Sarah) were ethical. Support your argument with reference to an ethical theory or framework and the case study facts.

Question 3      (10 marks | Word limit: 150 words)

Define ‘unconscious bias’ and discuss how it may have influenced the financial adviser’s (Matthew’s) ethical decision making and how this blind spot could be avoided.

Question 4      (20 marks | Word limit: 300 words)

Evaluate and explain, with reference to the case study facts and the relevant legislation, if the financial adviser (Matthew) acted in the best interests of the client (Sarah), and how he could or should have avoided a potential breach.

Question 5      (25 marks | Word limit: 450 words)

(a)       Briefly explain the difference between a profession and a professional, and whether (providing examples) all participants must be professional to be regarded as a profession. (10 marks)

(b)       Discuss whether financial planning should be regarded as a profession and the potential barriers to this recognition. (15 marks)