FNSASIC302: Client Solutions, Financial Advice & Statement of Advice

This FNS40815 Certificate IV in Finance & Mortgage Broking assignment focuses on FNSASIC302, specifically developing, presenting, and negotiating client solutions. It addresses the importance of using dollar amounts over percentages in client explanations, key features of active investment and estate planning, and discussion points for initial financial planner consultations. The assignment also explains the meaning of 'clear, concise, and effective' in the context of a Statement of Advice (SOA), how to resolve conflicts in financial aims, the 'suitability rule,' disclaimers in an SOA, and the significance of 'risk disclosure' and 'no guarantee of performance.' Finally, it emphasizes the importance of clients carefully reading an SOA to understand policies, plans, and transactions.

F NS40 8 15 C e r t ifi ca t e IV i n F IN AN CE & MO R TG AGE B R O K ING
FN S A S IC 302 D e v e l o p, pr e se nt and n e go ti ate c l i e nt so l u ti ons
Assessment 3

Why should adviser explanations to clients use dollar amounts, rather than just percentages and generic
phrases?
Act i v it y 1 Answe r
The use of dollar amounts is advisable over using percentages and generic phrases while explaining to
clients because it facilitates clear understanding of how much it is easier to achieve the target returns
and what are the risks involved in the proposal associated with the market volatility. Also, dollar
amounts depicts both profitability, losses and risks associated with the loan or investment in clear terms.

Explain the key features of an active style of investment.
A c tiv i ty 2 A ns w er
The characteristics of active style of investment are:
 A strategy involves buying and selling of securities by investors in active manner.
 The investor here are risk taker and often aims to earn higher by beating the market.
 The investor here do not hold investment for long rather they monitor their security's performance
on regular basis, thus, aims to achieve short term profit.

Explain the key features of a financial planning specialist role, Estate Planning.
Activity 3 Answer
The characteristics of financial planners while performing their specialist role in estate planning are:
 Financial planners must determine the appropriate funding of estate planning. If yes, it must be
ensured that the right person owned the insurance (Ihegaranya, 2018).
 They perform the role of handling finance related matters such as retirement income solutions,
superannuation and asset turnover.
 They also manage long term investment, debt and insurance products forming part of the
individual's estate.

What type of things might be discussed when a client has an initial consultation with a Financial
Planner?
Activity 4 Answer
Things to be discussed are:
 The habits pertaining to spending and savings must be known to the financial planner and also
they must know about the sufficiency of client's earnings in order to allow for better cash
management and savings that could be done.
 Financial planner must tell their client about the necessity of emergency savings for funding
retirement, future events and any other contingent event depending upon the risk taking and financial
position of the client.

The phrase ‘clear, concise and effective’ is not defined in the Corporations Act. Explain what this
phrase means in the context of a Statement of Advice.
Activity 5 Answer
With reference to SOA, the meaning of phrase concise, clear & effective means that the words
communicated to the client should indicate their natural meaning (KIA, 2019). “Clear” means free from
uncertainty, confusion and obscurity, concise means the communication must be comprehensive and
brief, and to be effective means it must demonstrate the anticipated outcomes.

One of the aims of a Statement of Advice is to resolve any conflicts which may arise out of the client’s
financial aims and objectives. Provide an example of how this may be achieved.
Activity 6 Answer
To avoid and resolve conflicts taking place due to client's financial objectives the statement of Advice is
generally referred to as it aids in outlining required advices that is needed to be given by the licensed
financial adviser to their clients.

Explain the ‘suitability rule’ in the context of personal financial advice.
Activity 7 Answer
Suitability rule states that the advice extended through SOA must be well fitted to the circumstances of
the client and thus aids in addressing that shortage of client sophistication in order to ensure higher
safeguards. The client's personal circumstances must be taken into consideration reasonably and advice
should be provided accordingly.

Explain some of the disclaimers that may be present in a statement of advice.
Activity 8 Answer
Disclaimers in a SOA should be as follows:
 Class of person for whom the advice is useful (Pujari and Mallika, 2018).
 The time frame during which the advice would be valid.
 Future performance of assets, economy or its specific sections, associated taxation issues and
interest rates in the future.

Explain the terms ‘risk disclosure’ and’ ‘no guarantee of performance, in the context of financial
advice.
Activity 9 Answer
Risk disclosure and no guarantee of performance means that no financial products are free from risks
and this must be disclosed in advance by the financial planners to their clients. Also, to maintain their
personal reputation and professional standard, they need to disclose the risk involved in the investment,
and they can't guarantee the performance of any financial product.

Why should a client read an SOA carefully?
A c t ivit y 10 Answe r
SOA must be read carefully to ensure understanding of the policies, plan and transactions that have been
proposed. Client is required to read disclosure associated with the product, applicable T&C and take
advice from the planners accordingly.