Ethics in Financial Advice | Solutions

Ethics in Financial Advice
2/18/2020
Student’s Name

Ethics in financial advice 1
Contents
Question 1 (a)..................................................................................................................................2
Question 1 (b) (i).............................................................................................................................2
Question 1 (b) (ii)............................................................................................................................3
Question 1 (C)..................................................................................................................................4
Question 2 (a) (i)..............................................................................................................................5
Question 2 (a) (ii).............................................................................................................................5
Question 2 (a) (iii)...........................................................................................................................6
Question 2 (a) (iv)............................................................................................................................6
Question 2 (b)..................................................................................................................................7
Question 2 (c)..................................................................................................................................8
Question 3 (a)..................................................................................................................................9
Question 3 (b)................................................................................................................................10
Question 3 (c)................................................................................................................................11
Question 4 (a)................................................................................................................................12
Question 4 (b)................................................................................................................................13
Reference.......................................................................................................................................15

Ethics in financial advice 2
Question 1 (a)
Unconscious biases can be understood as social stereotypes that a person creates an about certain
group of individuals due to own conscious awareness (Navarro, 2020). People make these biases
based on their cultural norms, life experiences, and the environment they are surrounded by
(onepath.com.au, 2019). Here in the given case, Jamie has briefed her plan regarding the
proposed meeting with Nathan. By this plan, it is reflected that she has assumed many things by
her such as Nathan would be a well-informed investment in general. Further, she believed that
Nathan is a good student and therefore she is not required to go into more detail regarding the
facts of the case. She also assumed that Nathan’s grandparents may not be happy about changes
in the investment mix. These assumptions are likely to prevent her from taking an appropriate
and ethical decision regarding the investment of Nathan. She has created a social stereotype
about Nathan where she considers him as a good student having enough knowledge about
investment. These biases are likely to influence the perception and behavior of Jamie.
She may think that whatever advice she is giving, she is acting ethical and unbiased but the same
is not true. Her perception would prevent her from making proper investigations into facts and in
this manner, she would give advice that may not be in the best interest of Nathan, for instance,
she may skip sharing some basic details about investment believing that Nathan is already aware
of the same. However, the real situation may be different which can bring adverse consequences
to Nathan even when Jamie does not have any wrongful intention in the whole matter.

Ethics in financial advice 3
Question 1 (b) (i)
FASEA Code of Ethics acts as a guide to financial planning professionals that helps them to
make an ethical and professional judgment. Total 12 standards are there which focus on different
aspects (Charteredaccountantsanz.com, 2020). Standard 1 demands every adviser to work
according to the applicable law in addition to this code and must try to avoid their intent.
Similarly, standard 2 states that a financial planner must act with integrity and his/her advice
must be in the best interest of the client (riskinfo.com.au, 2019). Here Jamie was aware of her
responsibility of working in the best interest of Nathan, yet she has not paid enough attention to
his situation. She seems to fulfill her obligation under standard 1 as she is not avoiding
compliance of any law deliberately but does not seems to comply with standard 2 where she
would fail to provide the advice in the best interest of Nathan. According to standard 2 integrity
refers to frankness and openness in all dealings so that the best advice may give. Further, it also
states that the adviser must identify all the gaps in the information and conduct a reasonable
investigation of the case.
As given in the case study, Jamie understands that she would have to collect a lot of information
and therefore she needs to make everything clear to Nathan despite the current understanding or
knowledge of Nathan. She would not make enough inquiry in the matter and this manner will
suggest those recommendations, which would not fulfill Nathan’s purpose. Here it is clear that
Jamie is not likely to comply with the standard 2.
Question 1 (b) (ii)
FASEA Code of Ethics also outlines some of the values that further describe the element that
should be there in the behavior of financial advisers. One such value is fairness that demands