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3 Feb
2020

Ethics and Professionalism in Financial Advice (FPC002B) AssignmentTutorOnlineAssessment -1 Strategic Briefing Paper (Individual) AssignmentTutorOnline | Good Grade Guarantee!

Ethics and Professionalism in Financial Advice(FPC002B)
AssignmentTutorOnline
Assignment
Assignment marks: 95 | Presentation and referencing marks: 5(Total marks: 100 | Word limit: 4,300 words)
Student No.:
[Enter your Student No.]
I have read the Assessment Preparation Guide in the ‘General assessment information’ and have applied the word count principles to my work.
My word count for this assignment is:
[Enter your word count] words
Your assignment should be loaded into KapLearn by 11.30 pm on the due date.All times are based on AEDT/AEST time zones. Refer to ‘Time remaining’ on the ‘Assignment’ page in KapLearn to ensure you submit your assignment by the specified due date and time.
Checklist
 I have completed my assignment using Word.
 I have completed my assignment using Calibri, Arial, Times New Roman or Verdana fonts.
 I have added my Student No. on this page.
 I have added my word count on this page.
 I have added my Student No. in front of the filename in the footer on the second page.
 I have saved the file to be uploaded as StudentNo_FPC002B_AS_v3.
 Each question of my assignment is within the word limit guidelines for that question as per the ‘General assessment information’ (Assessment  Assignment  General assessment information).
 My assignment file size is no larger than 2 MB.
 If tables were required, they are visible as text, not as links or images.
 I have not removed the marking grid from the footer.
 I have submitted my assignment as per the instructions in KapLearn.
Marker feedback
Comment on overall performance:
For marker use only.
Instructions to students • This assignment covers Topics 1 to 7 and accounts for 40% of your final grade. • In this assignment there are four (4) questions worth a total of 95 marks, and 5 marks for presentation and correct use of the Harvard referencing style (total: 100 marks). You should answer all questions. • The overall word limit for the assignment is 4,300 words. Marks will only be awarded for answers up to the word limit (plus 10%) for each question. Any material written after this will not be counted towards your mark for that question. Headings, quotes and references within the body of the answer are included in the word count. Numerical tables, calculations, and reference lists are not included. For more information on word counts and their rationale, go to Assessment  Assignment  General assessment information. • Refer to the Criteria-based Marking Guide for guidelines on what is expected for each question. • The ‘General assessment information’ section in KapLearn contains information about format and presentation, word limits, citations and referencing, collusion, plagiarism and other policies, useful resources, submitting your assignment and accessing your results. • Answers are to be in your own words. Reference and cite all your sources (within the text of your answer) when quoting or using material from external sources. Include a reference list at the end of your assignment. For further information on referencing, refer to the ‘Referencing Guide’ available under the Additional resources from the Library ‘Learning Hub’. • Marks will be awarded for research effort as well as quality of presentation and referencing. • Weightings are noted beside each question. Use these weightings to assist you with your allocation of time and resources. The weightings indicate the relative importance of each question. • State all assumptions used in providing your answer. • Requests for special consideration or information pertaining to special consideration written in the body of the assignment will not be considered by the marker. Refer to the ‘special consideration’ section of the Assessment Policy on Kaplan’s website for more information.
Learning outcomes (LO) mapping
Marks
1. Explain the role of ethical frameworks and professional standards within the financial planning profession.
25
2. Assess the impacts of cognitive, judgement and decision biases on financial advisers and their clients.
20
3. Demonstrate an understanding of professional obligations and conduct required by the values and standards of the FASEA Code of Ethics.
25
4. Identify and solve ethical dilemmas encountered as a financial adviser through application of ethical frameworks and professional standards.
25
Presentation and referencing style.
5
Total marks

Assignment presentation and referencing (5 marks)
You are required to research beyond the subject notes in answering the questions in this assignment. Reference and cite all your sources when quoting or using material from external sources. Include a reference list at the end of your assignment.
You are required to:
• use appropriate presentation and format for your assignment
• demonstrate appropriate use of relevant references
• follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’ available from the Library ‘Learning Hub’ in KapLearn
• include in-text citation in each question and a reference list at the end of your assignment following the recommended referencing style
• adhere with the assignment word limit.
Criteria-based Marking Guide for presentation and referencing
The Criteria-based Marking Guide provided at the end of each question is designed to assist students to understand what is expected of them in each question and to let them know how their performance will be judged. It provides advice about the criteria used in the marking of the question and what discriminates between an excellent, satisfactory and unsatisfactory answer.
Excellent (Mark range: 4–5 marks)
Satisfactory (Mark range: 2.5–3.5 marks)
Unsatisfactory (Mark range: 0–2 marks)
• clear and appropriate assignment layout and structure • adheres to assignment and question word limits • appropriate use of referencing • accurate use of Harvard referencing style • in-text citation in each question and a comprehensive reference list provided at end of assignment
• adequate assignment layout and structure • adheres to assignment and question word limits • appropriate use of referencing • use of Harvard referencing style • in-text citation in each question and a reference list provided at end of assignment
• poor assignment layout and/or structure • assignment is significantly under or over the word limit • no use of references • referencing does not use Harvard referencing style • no or inadequate in-text citation and a reference list provided at end of assignment
Instructions to students There are four (4) questions in this assignment. Answer all questions.
Case study
You are a senior financial adviser who has been employed by Arbour Financial Services Pty Ltd (AFS) for the past four years. Geoff Arbour (64) established his business 20 years ago and went into partnership with Caroline Green (49) five years ago to establish AFS, which holds an Australian financial services licence (AFSL). Geoff and Caroline are the principals and owners of AFS, and Caroline is the responsible manager. Together with Geoff, Caroline and yourself, AFS employs a trainee adviser (provisional relevant provider), Jamie (23).
Geoff 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 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. Geoff prefers to look after his existing clients and any referrals for new clients go to Caroline or you.
Caroline has 20 years’ experience as a financial adviser. Her clients range in age from 35 to 55 years and are established professionals and the children of Geoff’s clients. Many of her clients have self managed superannuation funds. She has a strong interest in improving women’s financial literacy and wellbeing.
Jamie has completed an approved Bachelor of Financial Planning degree as she intends to become a financial adviser. Jamie is in the second quarter of her professional year and you are her supervisor. Jamie is Caroline’s daughter.
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 AFS from your previous role. When Geoff or Caroline are away or on leave, you provide advice to their clients.
Scenario 1
Jamie, the provisional relevant provider, is about to meet with a new client, Nathan Nicholson. Nathan is the grandson of Geoff’s longstanding clients, Barbara and Joe Nicholson. Jamie knows Nathan personally as they played on the same university volleyball team. Nathan is 21 and about to receive a substantial sum from a trust set up by his grandparents when he was born.
Nathan is their only grandchild and he has just been made aware of the trust — not even his parents know about the trust. Barbara and Joe have insisted that Nathan receive financial advice before he receives the funds to ensure he has a good plan in place to manage them wisely for his future.
Jamie attended many client meetings as a paraplanner, but this is her first meeting in her new capacity. She understands that she will need to collect a lot of information from Nathan at this meeting. Jamie is aware that she is required to provide advice that will be in Nathan’s best interests and asks for your advice on how to approach this interview.
You ask Jamie about her current plan for the interview and she replies:
Well, as Nathan’s grandparents have been Geoff’s clients for a long time and they’re very wealthy, I’m assuming Nathan will be pretty well-informed about investments in general and how financial planning works. Also, he is studying business and commerce and I believe he is quite a good student so I shouldn’t have to go into a lot of detail about these aspects. I’ve already sent Nathan my FSG, so I’ll get him to acknowledge he has received it.
I know that the trust money has been invested in a balanced portfolio including fixed interest, shares and property. Nathan has a long-term investment horizon because he’s only in his 20s, so maybe he’ll want higher growth investments — we’ve got some really great direct equity model portfolios that are generating high returns for our other clients that I can talk to him about. However, his grandparents may not be happy for him to change the investment mix — we may need to check with them about that. I doubt whether he’ll need any insurance — he’s coming into a lot of money and anyway, his family would look after him.
Question 1 (25 marks | Word limit: 1,100 words)
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 how unconscious bias may have influenced Jamie’s ethical decision making in relation to her proposed meeting with Nathan. (6 marks)
(b) (i) Analyse Jamie’s compliance with Standard 1 and Standard 2 of the FASEA Code of Ethics. (6 marks)
(ii) Analyse Jamie’s compliance with the value of Fairness of the FASEA Code of Ethics.(3 marks)
(c) With reference to your responses to Question 1(a) and (b) and the financial planning process, discuss what advice would you give Jamie on how to effectively conduct the initial fact-finding meeting with Nathan? (10 marks)
Support your answers by reference to the case study facts and research.
Criteria-based Marking Guide for Question 1(a)–(c)
Excellent (Mark range: 19–25 marks)
Satisfactory (Mark range: 12.5–18.5 marks)
Unsatisfactory (Mark range: 0–12 marks)
• identification and comprehensive discussion of one type of unconscious bias influencing the adviser • concise but comprehensive analysis of compliance with Standards 1 and 2 • concise but comprehensive analysis of compliance with the value of Fairness • comprehensive and relevant strategies to conduct the first meeting • evidence of relevant, independent supporting research
• identification and adequate discussion of one type of unconscious bias influencing the adviser • adequate analysis of compliance with Standards 1 and 2 • adequate analysis of compliance with the value of Fairness • adequate and relevant strategies to conduct the first meeting • some evidence of supporting research
• inadequate identification or discussion of one type of unconscious bias influencing the adviser • inadequate analysis of compliance with Standards 1 and 2 • inadequate analysis of compliance with the value of Fairness • inadequate strategies to conduct the first meeting • little or no evidence of supporting research
Insert your answers to Question 1(a)–(c) below this line
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I would advise Jamie to put all her assumptions to the side. She will need to approach the meeting with Nathan as if he were a new client, not known to her personally. She should also consciously try to ensure that she does not discuss any information about Nathan’s parents and grandparents to maintain privacy.
Jamie should explain to Nathan clearly the financial planning process, even though she has sent him the FSG in advance, it is important that Jamie goes over the document with him. Jamie should then proceed to ask open ended questions to understand Nathan’s current financial position and his goals and objectives. Jamie should get Nathan to disclose the information, even though she may be aware of some of the details. She must identify Nathans’s risk profile before making any investment recommendations. Once Nathan receives the trust funds, his grandparents effectively relinquish their control and Nathan will be the decision maker on how it is invested. Jamie should also conduct an insurance needs analysis, to determine if he requires personal insurance and not assume that he will not require any insurance.
End of answers to Question 1(a)–(c)
Scenario 2
You joined Jamie to meet with Nathan for the first interview. You were pleased to see that Jamie took on board your feedback and suggestions and incorporated these into her approach.
Jamie obtained a lot of new information during the meeting. Nathan is in his second year of a business degree, studying full-time while supporting himself with Youth Allowance payments and casual work as a waiter. While his grandparents are wealthy, his parents are not. They were nearly bankrupted during the global financial crisis due to the collapse of their business and have been careful to keep the details from Nathan’s grandparents. While Nathan doesn’t have a lot of knowledge about financial matters or investments, he is keen to become more educated. His parents’ experience has made him very conscious of financial security and he wants to prudently invest his grandparents’ gift.
Nathan asks Jamie if receiving the funds will affect his current entitlement to Youth Allowance. When Jamie confirms that it will, Nathan asks if he would be better off giving the funds to his parents to invest so he can keep his Youth Allowance benefits.
Apart from purchasing a small second-hand car, Nathan is happy to invest most of the funds for the next five years and reinvest the earnings (unless he loses his Youth Allowance benefits and needs income). The risk profiling questionnaire he completed indicates that he has a balanced risk profile overall. However, his answers to some of the questions relating to his perception of risk and how he would react to market volatility and poor investment performance are more indicative of a moderately conservative profile.
Jamie isn’t sure whether she should consider an investment portfolio for Nathan with an asset allocation suitable for a balanced risk profile (based on the results of the full questionnaire) or moderately conservative profile (based on Nathan’s answers to these particular questions).
Nathan has only a very small superannuation account with a hospitality industry fund, with minimum insurance. He doesn’t have a will or enduring power of attorney. Nathan doesn’t understand why Jamie is asking him about these aspects.
Nathan says he hasn’t discussed his grandparents’ gift with his parents as it seems his grandparents wanted it kept secret, but he admits he feels a bit uneasy about maintaining the secrecy.
Question 2 (30 marks | Word limit: 1,400 words)
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) (i) Briefly identify and explain the ethical issue faced by Jamie in relation to Nathan’s question about his Youth Allowance. (3 marks)
(ii) How might partisanship affect Jamie’s ethical decision making? (3 marks)
(iii) Discuss how rationalisation may influence Nathan (the client’s) ethical decision making regarding his entitlement to Youth Allowance benefits. In your answer make reference to one (1) category of rationalisation according to Anand, Ashforth and Joshi. (4 marks)
(iv) In responding to Nathan’s query about Youth Allowance, discuss which ethical framework you recommend Jamie adopts and why. (4 marks)
(b) Assume Jamie eventually provides advice recommending a balanced investment portfolio for Nathan and he accepts this advice. How would Jamie be able to demonstrate that she has obtained informed consent to recommend and implement the advice (in compliance with Standard 4 and Standard 7 of the FASEA Code of Ethics). (10 marks)
(c) Discuss whether Jamie has any obligation to ask Nathan questions beyond those required to provide this investment advice. Consider the requirements of Standard 6 in your response. (6 marks)
Criteria-based Marking Guide for Question 2(a)–(c)
Excellent (Mark range: 22.5–30 marks)
Satisfactory (Mark range: 15–22 marks)
Unsatisfactory (Mark range: 0–14.5 marks)
• identification and comprehensive explanation of the ethical issue • comprehensive definition and discussion of partisanship as a barrier to ethical decision making, supported by case study facts • comprehensive definition and discussion of rationalisation as a barrier to ethical decision making, supported by case study facts • identification and comprehensive discussion of a relevant ethical framework and with valid application to case study • comprehensive analysis of compliance with Standards 4, 6, and 7, with application to the case study • evidence of relevant, independent supporting research
• identification and adequate explanation of the ethical issue • adequate definition and discussion of partisanship as a barrier to ethical decision making, supported by case study facts • adequate definition and discussion of rationalisation as a barrier to ethical decision making, supported by case study facts • identification and adequate discussion of a relevant ethical framework and with valid application to case study • adequate analysis of compliance with Standards 4, 6, and 7, with application to the case study • some evidence of supporting research
• inadequate identification and explanation of the ethical issue • inadequate definition and discussion of partisanship as a barrier to ethical decision making, insufficiently supported by case study facts • inadequate definition and discussion of rationalisation as a barrier to ethical decision making, insufficiently supported by case study facts • inadequate identification and discussion of an ethical framework, with insufficient application to case study • inadequate analysis of compliance with Standards 4, 6 and 7, with little or no application to the case study • little or no evidence of supporting research
Insert your answers to Question 2(a)–(c) below this line
End of answers to Question 2(a)–(c)
Scenario 3
As part of Jamie’s professional year program, you meet regularly to discuss her professional responsibilities under the FASEA Code of Ethics.
You are preparing for your next meeting in which you will discuss the obligations regarding conflicts of interest and the value of Competence. You explain to Jamie that clients sometimes ask for referrals to other professional advisers. You name several accountancy firms in the local area whose services clients have used in the past and about which you have consistently heard positive feedback. These accountancy firms occasionally refer clients who require financial advice to AFS as well. The arrangements are not exclusive and none of the firms receives any benefit from such referrals.
Question 3 (20 marks | Word limit: 900 words)
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) You ask Jamie to analyse whether the referral arrangements described in the scenario are compliant with Standard 3 of the FASEA Code of Ethics and explain why. How should Jamie respond to this question? (8 marks)
(b) You then ask Jamie to explain how an adviser can use referral arrangements in dealing with retail clients and still be compliant with Standard 5 of the FASEA Code of Ethics. How should Jamie respond to this question? (4 marks)
(c) How can Jamie demonstrate that she has complied with the value of Competence and Standard 9 of the FASEA Code of Ethics in her dealings with Nathan? (8 marks)
Criteria-based Marking Guide for Question 3(a)–(c)
Excellent (Mark range: 15–20 marks)
Satisfactory (Mark range: 10–14.5 marks)
Unsatisfactory (Mark range: 0–9.5 marks)
• concise but comprehensive analysis of the conflicts of interest obligations under Standard 3, linked to the scenario • concise but comprehensive analysis of Standard 5, linked to the scenario • concise but comprehensive analysis of Standard 9 and the value of Competence, linked to the scenario • evidence of relevant independent research that supports conclusion
• adequate analysis of conflicts of the conflicts of interest obligations under Standard 3, linked to the scenario • adequate analysis of Standard 5, linked to the scenario • adequate analysis of Standard 9 and the value of Competence, linked to the scenario • some evidence of research to support conclusion
• inadequate analysis of the conflicts of interest obligations under Standard 3, insufficiently linked to the scenario • inadequate analysis of Standard 5, linked to the scenario • insufficient analysis of Standard 9 and the value of Competence, with little or no linking to the scenario • little or no evidence of research to support conclusion
Insert your answers to Question 3(a)–(c) below this line
End of answers to Question 3(a)–(c)
Question 4 (20 marks | Word limit: 900 words)
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) Commissioner Kenneth Hayne found that ‘the provision of ongoing advice was a matter of form rather than substance’. Identify and discuss how poor standards of record keeping contributed to the ‘fees for no service*’ issues uncovered by the Royal Commission. (10 marks)
(b) Discuss how the obligations under Standard 8 and the value of Diligence of the FASEA Code of Ethics should enhance standards of record keeping in future. (10 marks)
* Refer to Final Report — Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, vol. 1. part 3 Financial Advice, 2. Fees for no service when answering Question 4(a). (This is required reading 1 for Topic 7.)
Criteria-based Marking Guide for Question 4(a)–(b)
Excellent (Mark range: 15–20 marks)
Satisfactory (Mark range: 10–14.5 marks)
Unsatisfactory (Mark range: 0–9.5 marks)
• identification and comprehensive discussion with examples of poor record keeping uncovered by the Royal Commission • comprehensive definition and analysis of the obligations under Standard 8 and the value of Diligence and how these should improve record keeping • evidence of relevant, independent research
• identification and adequate discussion with examples of poor record keeping uncovered by the Royal Commission • adequate definition and analysis of the obligations under Standard 8, and the value of Diligence and how these should improve record keeping • some evidence of relevant research
• inadequate discussion of poor record keeping uncovered by the Royal Commission • inadequate definition and analysis of the obligations under Standard 8 and the value of Diligence and how these should improve record keeping • little or no evidence of research
Insert your answers to Question 4(a)–(b) below this line
End of answers to Question 4(a)–(b)
Insert your reference list below this line
End of reference list
End of assignment

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