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Financial Planning Assignment: Case Scenarios Based On Ethics & Professionalism

Question

Task:
Financial Planning Assignment Task: Questions 1, 2 and 3 are based on the case study below.

Paul Irving (age 44) established PlanforIt Financial Services 15 years ago. Five years ago he brought Joanne Redbank (age 49) into the partnership. They are both owners and principals and hold their own Australian financial services (AFS) licence. You are a senior financial adviser employed for the past five years by PlanforIt, with an offer for equity in the business within the next few years. With the business having experienced exceptional growth over the past 12 months, PlanforIt has decided they need an additional adviser. Rather than hire outside the firm, they have opted to transition their young support staff, Emily, into an adviser role. Paul’s clients are predominantly self-funded retirees, with a small number who require specialised aged care financial advice. His clients have accumulated their wealth through successful small businesses. Paul prefers to look after his existing clients, with any new clients referred to yourself or Joanne.

Joanne’s clients (ages 35 to 55) are successful wealthy professionals from a mix of professional backgrounds. Given their wealth, Joanne has recommended self-managed superannuation funds to a number of these clients.

Emily has worked in the practice in a number of support roles over the last three years while she was completing her university degree. Emily graduated 12 months ago with an approved Bachelor of Financial Planning degree. As part of her career planning, you have agreed to supervise Emily through her professional year and she is currently in the third quarter of her professional year.

You have 10 years’ experience as a financial adviser and are fully qualified to provide advice on a wide range of strategies and products. Half of your clients followed you to PlanforIt, from your previous financial advice role. When Paul or Joanne are on leave, you also help out by providing advice to their clients.

Scenario 1
Les and Marg Nicholls have been clients of the practice for many years, mainly dealing with Paul. They have one child, a son Robert, with whom they have a strained relationship and they are not on speaking terms. They do however see their only grandchild, Jennifer (age 22), who is Robert’s daughter, on a regular basis. As Jennifer is just about to complete her university degree, Les and Marg think it would be a good time to give Jennifer $200,000, as they have significant wealth accumulated and would prefer to see Jennifer benefit from the funds while they are alive.

Les and Marg have already spoken to Paul about how they believe the money should be managed and invested. Before telling Jennifer about the gift, Les and Marg asked her what her financial goals are. Jennifer said she wasn’t sure but would like to travel overseas or save towards a deposit for her own home. Les and Marg insist that Jennifer receives financial advice before they gift her the money, to ensure she has an effective financial plan in place. They think it would be better for Jennifer to deal with an adviser closer to her own age and suggest that Emily would be suitable. Les and Marg have always found Emily to be friendly over the years and are comfortable that you and Paul will be mentoring Emily. This will be Emily’s first meeting (indirectly supervised) as a provisional relevant provider. You ask Emily about her current plan for the interview and she provides you with the following outline:

Jennifer’s grandparents have already spoken to Paul about how Jennifer’s gift should be managed and invested. Les and Marg have been Paul’s clients for a long time and have done well financially and I’m assuming they know what they are talking about and will be able to provide Jennifer with the right guidance on investments too.

To save a bit of time, I’ve already emailed the FSG to Jennifer and I’ll get her to acknowledge she has received it, when I see her.

The money will be given to Jennifer as cash. Given that Jennifer is in her early 20s, she has a long-term investment horizon and it sounds like high-growth investments will be an appropriate solution for her. We’ve got some really great model portfolios of direct shares on our approved product list, which are currently generating high returns for other clients that I can talk to her about. I am a bit concerned her grandparents may not be happy for her to put all the funds just in shares, so I may need to check with them about that.

This meeting should be straightforward as we will focus just on investing the $200,000 gift and I doubt whether Jennifer will need any insurance, given her young age. She will eventually inherit all of her grandparents’ money anyway, and I’m sure they would look after her if anything was to happen to her in the meantime.

Question 1: You are required to undertake independent research to answer the following questions.

  1. Define ‘unconscious bias’ and examine how it may be influencing Emily while she is planning for the meeting with Jennifer.
  2. Analyse Emily’s conduct and discuss whether it complies with Standard 1 and Standard 2 of the FASEA Code of Ethics in her dealings with Jennifer.
  3. Examine and discuss Emily’s compliance with the value of Fairness in the FASEA Code of Ethics if she proceeds with the interview as planned.

Support your answers with reference to the case study and scenario facts and research.

Scenario 2
One of your longstanding clients, Rodney Edwards, has called to arrange an appointment for you to see his mother Joan (age 78). Rodney’s father passed away a little over six months ago and his estate has now been finalised with all assets transferring into Joan’s name. Rodney’s father John always looked after their own finances and invested primarily through direct shares. Rod has emailed you a portfolio listing all the shareholdings now in Joan’s name as well as details of all the cash holdings. The cash and shares add up to just over $2 million, based on the current share prices.

Rod was going to attend the meeting with his mother but has been caught up at work and is now unable to make it. He calls you and says to meet with his mother anyway, as it is her money and she is quite capable of making her own decisions.

You commence your meeting with Joan by providing her your FSG and explaining the information about your practice and the advice you can give. Joan just nods along with what you are saying and you ask her if she understands what you have outlined. Joan replies, ‘some of it, but it doesn’t really matter, you always look after Rodney and he says you will look after me’. While you are not entirely convinced that Joan understands everything you have said, you are confident that she has the legal capacity to make her own decisions, so you decide to continue with your initial meeting.

You begin the fact-finding process and ask Joan a range of questions to understand her current situation, goals and objectives. She says that Rodney should have provided the details of the investments and aside from that she just wants ‘things to continue as they were before John passed away’. He always said they had enough money to see them through and had things set up to provide a regular amount into the bank account for them to spend and Joan is happy for this arrangement to continue. She admits that she has never been part of the decision making financially, mainly because she was not interested and just let her husband deal with things. Now she is on her own, she just wants things to continue and says that as long as Rodney agrees with what you recommend, she will be happy with that and will sign whatever needs to be signed.

Question 2: You are required to undertake independent research to answer the following questions.

  1. Briefly identify and describe a potential ethical issue that may arise from Joan’s apparent minimal knowledge or experience with investing and overall disinterest in financial planning process.
  2. Identify at least three (3) relevant Standards under the FASEA Code of Ethics that have arisen for consideration based on the approach or actions that Joan has displayed, and explain the concerns, with references to the Standards.
  3. Based on your meeting with Joan, identify and describe two (2) different appropriate ethical frameworks that could be used to deal with this client interaction/situation.

Support your answers with reference to the case study and scenario facts and research.

Scenario 3
Joanne has not been well lately and has just been diagnosed with early-stage breast cancer. Her doctors have recommended she take at least six months off from work to concentrate on her treatment plan, which they are in the process of finalising. As Joanne will be away from the office for some time, she asks you to provide advice for her existing clients.

Your first meeting with one of Joanne’s clients will be with Sanjit and Anika Kumesh. You will be meeting them for the first time and Joanne has told you they are important clients because they often recommend family, friends and their own clients (from their business) to the practice.

Sanjit and Anika operate a successful book-keeping business where they manage the accounts for many self-employed clients. There has been a longstanding referral relationship between Joanne and the Kumeshes which sees them share many clients. There remains frequent cross-referral of clients between Joanne and the Kumeshes; however, this arrangement has been altered due to the introduction of the FASEA Standards. Where in the past, Joanne simply paid them a referral fee, she now adjusts her advice fees (up or down) to Sanjit and Anika, in lieu of referral payments.

You read in the client notes that Joanne recommended the Kumeshes establish an SMSF and this has now been in place for nearly three years. The file notes state they have rolled over superannuation from their previous superannuation funds with Australian Super and Aware Super. Both funds were previously invested in the ‘balanced’ options. As book-keepers, the Kumeshes undertake a lot of the SMSF administration works themselves. As you read through their file, it appears they have little knowledge of investing. The only assets currently in the SMSF are a $1.4 million term deposit with the CBA and the SMSF administration account with about $60,000. You review their risk goals and objectives listed in their file and note that their main goals are to build wealth for their retirement and help their adult children. After introducing yourself to the Kumeshes, you explain that as you are not fully aware of their financial situation, and as part of the review process it would be worthwhile revisiting their current situation, goals and objectives. Partway through the meeting, Sanjit takes a phone call and states he will need to leave immediately to take care of some urgent business, and Anika can update him later on what was discussed. However, as he leaves, he says that he just wants you to invest the money in the way you think is appropriate for them as ‘Joanne does this all the time’. He adds, ‘we know how the process works, so we don’t really need to go through all the paperwork’.

Question 3: You are required to undertake independent research to answer the following questions.

  1. Explain how Joanne’s conduct would be assessed under the value of Diligence and Standard 5 of the FASEA Code of Ethics.
  2. Explain any issues or potential breaches that may arise from Joanne’s actions of adjusting advice fees as a result of cross-referrals with Sanjit and Anika.
  3. Discuss whether Joanne’s previous advice to Sanjit and Anika meets the best interests obligations under Standard 2 of the FASEA Code of Ethics.

Support your answers with reference to the case study and scenario facts and research.

Answer

Answer 1
a) The concept of unconscious bias discussed in this part of financial planning assignment is defined as the prejudice that gets produced with the judgement of any favour to be received even it is on unfair terms. The unsupported bias against a group or individuals makes the decision to be unequitable with the exclusion of certain factors like democratic judgement ethically (Sharpe, 2019). In terms of social identity theory, the unconscious bias is adjusted with the pre-reflective attribution elements concerned in the stereotyped decisions. Thus, this unconscious bias makes a person gain the inaccurate perception of the information to be shared and this leads to the attribution bias too as an outcome towards the design of solutions in any decision.

Emily is found to be engaging in theunconscious bias for financial planning towards Emily’s future financial plan of $200,000 that is to be received as gift from the grandparents. The unconscious bias is mainly arisen from the attribution error caused through the observation discrepancy by Emily. The fact that has made Emily get into the judgemental bias that grandparents of Jennifer will look after her even after anything happens to Jennifer. The in-built attitude that is assumed by Emily in terms of the duty of grandparents to look after the grandchild and the inheritance to be received by Jennifer makes a very discriminatory financial planning attitude. Emily has been found to be also taking advantage of Jennifer’s young as the determinant to deduct the insurance requirement in her financial planning and rather focusing on the stock market from the market trends of financial planning by the Gen Z(Millhouse, 2020).

The insurance to be not required by Jennifer can bring a huge defect in the financial budget planning with the expenses being totally cut off from the financial planning. Emily has crafted a very biased financial and security planning statement for Jennifer that will also include the risk of investing into the stock market with the debt crisis on her bank balance. This can make Jennifer insolvent at a later stage due to such inaccurate predictions made by Emily. Most importantly, from the attribution error it can be found that Emily has gained much favourable bias towards Les and Marg that makes her present them as the ideal grandparents who should inherit their property to their grandchild, as they are close to her rather than their son Robert. This brings much maladjustments of the financial planning errors with no medical insurance or the career insurance for Jennifer who is in her 20’s.

b) In line with FASEA Codes, 2019 the financial planning advice that Emily intends to make for Jennifer does not comply with Standard 1 and Standard 2.

According to standard 1, the advice to be provided by financial provider should be diligent and fair in terms of the ethical obligations rather than circumventing the facts based on the investors who lack the financial competency knowledge to know about the financial advice dealings(Australia et al., 2018). Emily’s intent is much dishonest and unfair with respect to the undue advantage of familiar contacts with Les and Marg for financial planning with Jennifer and leading her to wrong path. Based on the intent of laws as designed, Emily is not providing the financial advice in line with the Corporation Act. This is because Emily does not have the proper financial knowledge to guide or provide any advice. In terms of investment on complex financial product instruments like shares and the loans, the financial advisor should have the competency to advise based on the financial portfolio and the capacity of the client base. The legal course of action as to be taken by the financial advisor in this code should be provided but not based on protection to the clients with whom they are dealing with personal profits. Emily is found to be occupied with the attribution error of considering Jennifer’s grandparents as close circle due to which she can produce less diligent advice.

According to Standard 2, the question of integrity does not comply with Emily due to the legal obligations as being required to be fulfilled was not performed by conducting a risk assessment and benefits analysis on the financial products upgrade law in line with grandparents’ forfeiture of the inheritance possibility for Jennifer rather than assuming. The prioritise of client’s needs over own is not found in this scenario when Emily planned for high-growth investments for Jennifer and manipulating her grandparents regarding the full investment on shares which can be risky decision(Richards et al., 2021). With the objective of generation of high returns based on the records of others clients, the needs analysis of Jennifer was ignored and assuming the circumstance that Jennifer will get her loss in the share market be accustomed through inheritance money. The promises as made by financial advisor be it in implicit and the explicit form should be expressed to the clients. But, Emily ahs not fulfilled standard 2 based on the amount of biased plan structures.

c) Emily’s compliance in terms of the fairness as discussed in the FASEA Code of Ethics is not undertaken in the prescribed scenario with the planning of interview. The FSG although has been mailed to Jennifer with written consent but the advising of model portfolios based on the other client’s progress is provided on attribution error. The professional engagement of Jennifer in the process of financial advice consultation was not done by Emily that makes the code of fairness not undertaken in the process (Richards et al., 2021). There has been mitigation of threat of own loss and more unconscious bias towards the profitable advantage from the client, Jennifer with looking towards the personal interests. This make the code of fairness be not at all attended in the scenario. The public scrutiny as well as the actions to be perceived the community in the engagement of the financial advice planning have not been conducted by Emily. Therefore, as per the interview which showcase the amount of own benefit seeking from the client, if this interview is proceeded by Emily then based on unfair conduct; the financial planning will be illegal as per FASEA Code of Ethics.

Answer 2
a) The scenario describes the issue of management of wealth for Joan, who is 78 years of age and has just been widowed. Her wealth and all the other related properties had been taken care of and managed by her husband , John, with Joan having minimal or less participation in it. She is left with her son, Rodney, who is one of the esteemed and loyal clients and seeks help in regards to the management of his mother, Joan’s wealth and assets , worth $2 million, which is a heavy amount.

Rodney leaves the decision on his mother Joan, as it is her wealth and considers her to be cognitively able to take decisions on the management and transfer of her wealth. Joan on the other side, wants Rodney , her son to be the confidante of the wealth and money management process and considers any decision that would ensure a continuation of the process of wealth management that had been occurring till date and was conducted by her husband, until his demise. She doesn’t want to take any additional pain to manage her wealth and agrees with anything that is agreeable by her son, Rodney.

Assuming the role of the financial advisor for Rodney , I could find that Joan is not really interested in taking her own discretion and thereby relies on anything that is recommended to her and is agreeable by Rodney and at the same time does not disrupt the continuation of the past processes, as followed by John. This scenario identifies the instance of ethical blindness. Ethical Blindness refers to a state, wherein the decision maker fails to make a proper decision on his/her own, as he/she fails to adhere to the rationalization process, which gets automatically removed from the ethical points of view.

Such a state occurs not because Joan is not able to take a financial decision on her own, but she rather acts “blindly” and relies on the financial advisor to recommend a process, for following the past procedure. According to the ideas shared by Bazerman and Tenbrunsel (2011), on the ethical blind spots, it has been found that there are five specific areas, which may considered the person to be acting in an ethically blind manner. In regards to the given case study, it is obvious that Joan acts blind in taking her own decision and may even overcome unethical behaviour from the third party, in case the outcome is good, which means that Joan is able to get back her old days, in regards to her wealth and money management, as was done by her husband, John.

b) The FASEA Code of Ethics refers is the abbreviation for e Financial Adviser Standards and Ethics Authority standards that have been implemented within the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (Fasea.gov.au, 2021). These standards invites changes and amendments to the Corporations Act 2001, to boost up and encourage education, training and ethical standards of financial advisers, by ensuring the financial advisors to have a certain amount of degree and qualification and act ethically and professionally, for restoring the financial interests of the clients (De Bruin, 2015).

Following the release of the FASEA regulations, in association, with the Legislative Instruments (LI), Explanatory Statements (ES) and Policy Statements, there are basically 12 standards , which are included within the prerogatives of the ethical conduct, termed as the standards of Code of Ethics (Fasea.gov.au, 2021). These standards ensure that the financial advisors adhere to the aspect of due diligence, along with complying with the ethical standards of delivering financial services (Ahmed and Md, 2016).

Under Standard 1: Code of Ethics, it includes 15 sub-standards, which identify some relevant rules that need to be complied with, since, January, 2020 (Yan and Maheshwari, 2020). These standards acknowledge special considerations and amendments that need to be adhered to by the financial advisors, who are professionally trained in delivering services on financial advising (Fpa.com.au, 2021). These 12 standards act in areas of client care, ethical behaviour, quality process, and professional commitment. All these 12 standards are administered and monitored under the audits, conducted, following the ASIC regulations (Australia, 2018). These 12 standards include the following:

Standard 1: acting in accordance with the law and codes and not try to shun the intent

Standard 2: act with integrity in the best interest of the clients

Standard 3: must not advice the client of any activity, which may harm the interest of the finances

Standard 4: act for the client, only with the free permission from the client

Standard 5: recommendations to be shared in the interest of the clients

Standard 6: advise considering the long-term interest of the client

Standard 6: advise considering the long-term interest of the client

Standard 7: must be following informed consent Standard 8: the records about the client are kept as accurate

Standard 9: recommendations for the client, must be given in good faith

Standard 10: develop, maintain and apply high levels of knowledge

Standard 11: compliance with the ASIC rules

Standard 12: promote ethical standards in advising

In regards to the given case study, it is evident that Joan had flouted some of the standards that may affect the decision making process of managing her wealth, after her husband. The three relevant standards, wherein Joan might have flouted with the FASEA regulations , include the following:

Standard 4: Joan seemed not to comply with the applicable laws and code of ethics and avoided the right ways to take the decisions for herself, regarding her wealth management. Joan intentionally refuses to take her decision, as she blindly trusts on what the financial advisor has to recommend along with agreeing upon any decision that her son Rodney, agrees to. Hence, the financial advisor acts on behalf of the client, with her due permission, but does not comply with the standards.

Standard 5: the client Joan does not act in integrity, as she does not take part in active decision making in regards the management of her wealth. She does not express any conflict of interest, but is blindly ready to vouch on the advisor’s decision. Additionally, the recommendations, on the situation are duly shared with the client, on her interest and not on the ethical code of conduct.

Standard 6: there could be lack of good faith, as the client does not seem to act diligently and blindly follows the advice of the advisors, without using her own intelligence.The advice shared by the advisor is considered on the long-term interest of the client, as it is evident that the client wants a long-term interest to be taken care off, instead of understanding the legal procedure.

c) Conducting a meeting with Joan, it is obvious that she does not intentionally take part in active decision making and blindly trusts the advices by financial advisor and agrees upon with his son, Rodney. The two approaches that need to be followed in regards conducting a client interaction include the following:

Virtue ethics: This theory suggests that one should focus on on the virtuous character of the individual (Hursthouse and Pettigrove, 2017). It refers to the processes, wherein the financial advisor needs to act virtuously to deliver positive suggestions and advices to the clients.

Utilitarian theory: This theory suggests that an action is morally right or wrong , if it would give rise to a good consequence and would lead a positive utility (Scarre, 2020). Hence, it needs to be suggested that the financial advisor must look into the aspects that would lead to a positive consequence, and best interest of the clients (Tannsjo, 2019).

Answer 3
a) In regards to the given case study, it needs to be stated that the clients of Joanne, Sanjit and Anika had been sharing a mutual and agreeable relationship, wherein Joanne had been successfully managing their wealth and financial planning. However, due to the sudden diagnosis of early stage of Breast Cancer of Joanne had been challenging for Sanjit and Anika, as they are looking for a proper financial advice and support on the management of wealth and finances.

Additionally, the situations arise, wherein Sanjit needs to leave immediately, following some urgent business requirements, while Anika is left all alone to take of their business operations. Sanjit asks the financial advisor to invest money, as Joanne used to do and does not want to get engaged in any kind of paperwork. Therefore, assuming the role of the new financial advisor, for Sanjit and Anika, in Joanne’s place, I feel that working in the best interest of the client is largely appreciated, while there is need to act ethically and morally upright, while investing in the business.

According to Howson (2017), it is obvious that while indulging in any kind of financial planning, it is important to act with due diligence. Due Diligence refers to the action oriented activities, which ensures a strong trust building with the clients and must create a sense of assurance that the clients are able to count on the financial advisor and can apply and implement the knowledge of the advisor (Richards et al.2021). The Value of Ethics, as per the FASEA Code of Ethics commences, as of 1st January, 2020, and includes five basic principles, which guide towards the process of identifying and acknowledging diligence (Fasea.gov.au, 2021).

According to the FASEA Code of Ethics, due diligence refers to the efficient delivery of a financial service or advice, within the stipulated time and in an efficient manner and is based on the best knowledge of the financial advisor (Cumming et al. 2019). This process follows a cost-effective manner of implementation and used the relevant knowledge of the advisor to act in the best interest of the client (Rudnickiet al.2017). Exploring standard 5 of the FASEA Code of Ethics, it needs to be stated that all the financial advice and recommendations , shared with the client by a financial advisor must be in the best interest of the client and shall suit the preferences of the client (Millhouse, 2020).

The financial advisors must also be satisfied with the fact that the client is able to understand all the details of the financial planning process , along with the costs, risks and benefits , by providing the reasonable grounds of explanation (Richards et al.2021). Hence, from serving in the best interest of the clients, it is obvious that Joanne had been working with Sanjit and Anika, for a long time, and suited their needs and preferences. Initially, she had been paying a direct amount as a referral fee to Sanjit and Anika, but later on adjusted her consultation fees, in terms of the referral amounts.

Therefore, she hardly provided any detailed paperwork on the same transactions and the Sanjit and Anika, seemed to believe and trust her. From the perspective of standard 5 , it is obvious that Joanne did work in accordance to the best interest of the client, however, she did not provide any paper work and neither did Sanjit and Anika ask for one. For the current advisor, as replacement of Joanne , Sanjit and Anika hardly showed any interest in paperwork. Although the advisor must work in best interest of the client, yet there is lack of integrity (Benoliel, 2015). This lack of integrity is evident as the advisor is requested not to provide any paperwork, which may disrupt the ethical aspect of conducting the financial advising process.

b) In regards to potential breaches in financial advising, as per the FASEA code of ethics, it needs to be stated that the adjustments made by Joanne, in regards to the referral fees, and including cross-referrals with Sanjit and Anika , standard 3 of the Code of Ethics applies. According to Standard 3 of the FASEA code of ethics, it needs to be stated that concept of referral fees is not considered a part of the ethical conduct , within the process of financial advising (Hauptman and Belak, 2015).

According to the standard , it needs to be stated that the Corporations Act requires a financial advisor to disclose any form of referral fees that is paid to the advisor, on producing a client reference , by the existing client and vice versa (Klontz et al.2015). However, under the act, the financial advisor must not act in case of any kind of conflict of interest. Further, explaining the same, it needs to be stated that referral fees are not expressly permitted under the Corporations Act 2001, nor are they expressly excluded. Section 963 of the Corporations Act 2001, the referral fees are not expressly included , in regards to the exclusions to the aspects of conflicted remuneration (Fasea.gov.au, 2021).

On the contrary, any benefits that are received or are likely to be received shall be disclosed. Hence, this act provision means that any financial advisor is liable to receive benefits, both monetary and non-monetary, provided all the necessary disclosures, related to the transactions are documented and recorded, which may include the Financial Service Guide (FSG) and Statement of Advice (SOA) (Brimble, 2015). Under sections 912 , 961 and 963, referral fees are not considered to be adding conflicts to the transaction between the client and the advisor, unless, the benefit, associated with the receipt of referral fees for the advisor is taken into consideration (Fasea.gov.au, 2021). The referral fees are not included under the conflicted remuneration unless it falls under these circumstances:

  • There is need for a professional assessment of the referral payment
  • The standard of professional judgment is missing

In the given case study, it is obvious that there is an absence of any kind of paperwork or professional assessment of the referral payment made to Joanne, by Sanjit and Anika. Also the professional judgment is missing, which make the referral payment weaker and unethical in approach.

c) The case study shows that the Joanne had been a long term financial advisor for Sanjit and Anika, and receiving referral fees on consultation references. Both the client and the advisor share a conducive relationship with compromises on the financial record keeping part and disclosure of required information. However, the issue lies in identifying the activities of Joanne, in regards to restoring the best interests of Sanjit and Anika. According to standard 2 of the FASEA Code of Ethics, it emphasizes on the activities and delivery of financial advisors to act with integrity and in the best interest of the clients.

From the case study, it is evident that Joanne shares a positive relationship with her long term clients Sanjit and Anika and has personally agreed on payments of referrals, on providing references to Joanne, by the clients, Sanjit and Anika. Although Joanne, works in the best interest of the clients, as Sanjit and Anika have agreed upon the payment of referrals along with not providing any paperwork, as the clients don’t require them.

However, the aspect of integrity is an issue in this case study. It can be stated that the receipt of referrals from the clients seem to infringe upon the integrity aspect (Pineda-Zumaran, 2018). It can be stated that the taking secret referral payments from the clients, by Joanne, lacks the fundamentals of integrity, in regards to delivering the best of the financial services.

Answer 4
Multiple debates persist on the concept of defining financial planning as either a profession or an industry. According to the estimates from U.S Bureau of Labor Statistics, it has been found that employment as personal financial advisors have grown as a profession, off late and is shown to witness a growth in the numbers of 2020 to an estimated growth of 5% by 2030 (bls.gov, 2020). Despite being challenged by the limited employment growth and scope, there are approximately more than 20,000 new openings as financial advisors in the US , alone.

However, the critical aspect lies in establishing financial planning, as a profession of industry. Simply defining the concept of financial planning, it can be stated that financial advisors are the professionals, who are a part of the financial planning industry (Conway, 2021). However , critics have stated that there is an indeed prominent difference between the concept of industy and the concept of profession. Professionals mean the distinguished people, who are associated with specific work activities and specializes in the same (Chira, 2016). On the contrary, the concept of industry refers to the typical section of companies that operate across a particular business service.

Characteristics of a financial advisor

  • Proactive
  • Must be calm
  • Honest
  • Confident and trustworthy
  • Must have a clear strategy

Nonetheless, the debate still remains, seeking response to the concept of financial planning to a specific profession. It has been found in most of the researches that the concept of financial planning is not yet considered to be a profession (Hopkins, 2018). The greatest reason behind such an ideation lies in the aspect, wherein the individuals, who wish to provide financial advices to the clients may indulge in extensive education, experience, examination and ethical requirements , yet these individuals can voluntarily choose to label themselves as a financial advisor, professionally (Clikeman, 2019). Hence, it often becomes difficult for the clients to mark the difference between the professionals who are engaged with financial advising and the individuals, who are technically qualified in the profession.

Another critical aspect includes the issue, wherein it is considered, until the financial planning regains a control of the relative terms, along with the financial services that pursues to ensure that the financial advisors tend to elevate themselves to the standards of being appropriate professionals in the field (McNeily, 2018). Additionally, in order to determine between the financial planning professional with the industry, it needs to be stated that working as a financial planner or a financial advisor certainly provides an opportunity to work directly with the clients and the associated businesses , to ensure a proper navigation of the foundational principles of managing the personal finances (Starr, 2017).

It is these financial advisors, who advise their clients to smartly manage the wealth and assets, to ensure that the clients are able their financial objectives. Although these professionals do provide with adequate financial planning advices, and work in larger investments or companies, yet they often work independently (Matthew, 2016). Therefore, needs to be stated that the crucial aspects related to the distinction between the profession and the industry still persists, considering it to be labeling the same as a profession.

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Cumming, D.J., Johan, S.A. and Zhang, Y., 2019. The role of due diligence in crowdfunding platforms. Journal of Banking & Finance, 108, p.105661.

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