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FINA2209 Final Exam Semester 2 Notes by Jacqueline Wong 14th November 9am Winthrop Hall
35 x MCQ worth 1 mark each 7 short answers worth 5 marks each Calculation ~30% Discussion ~70%
Introduction to Financial Planning, Process Key Definitions + BiD Week 1 and 2
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What is: Financial Service? • RG 36.2 Generally, a person provides a financial service if they: (a) provide financial product advice (note “product”) (b) Deal in a financial product (c) Make a market for a financial product (d) Operate a registered scheme (e) Provide a custodial or depositor service (f) Provide traditional trustee company services (g) Engage in conduct of a kind prescribed in the Corporations Act 2001
Collect info Establish goals objectives Analyze data issues/needs/problems Develop SoA Implement Review and revise
Note: please see the comments
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What is a financial product? • S.763A 1. A facility through which or through the acquisition of which, a person… (a) Makes a financial investment (b) Manages financial risk (c) Makes non‐cash payments s.764A: super, banking, general/life insurance, managed funds, securities, derivatives, margin loans..
Rippoll report‐ gives the margin loan product as an example of where product had troubles, inadequacies of what was provided
Brief History
Required documents Financial Services Guide: who we are, what we do, what we charge Statement of Advice: our advice is… considering… why… implement… review… cost…. Product Disclosure Statement: this is the product, what it does, costs, risks Under FoFA there are 2 new required documents: Fee Disclosure & Opt in: every 2 years xx paid for…
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Satisfying Best Interests Duty s961B “safe harbour” • 2(a) identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions; (b) identified: (i) the subject matter of the advice that has been sought by the client (whether explicitly or implicitly); and (ii) the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on that subject matter (the client’s relevant circumstances);
c) where it was reasonably apparent that information relating to the client’s relevant circumstances was incomplete or inaccurate, made reasonable inquiries to obtain complete and accurate information; (d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice; e) if, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a fin. product: (i) conducted a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and (ii) assessed the information gathered in the investigation;
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(f) based all judgments in advising the client on the client’s relevant circumstances;. (g) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances
MCQ review Financial Planners owe a duty of care to their clients, but at the same time have contractual obligations to their licensee. Potential and existing clients expect a certain level of competency from their financial advisers which is exhibited in a level of education and skills and ongoing training A legal requirement of a Statement of Advice is that it must be in writing You must do sufficient research on products within your authorisation and which are on your licensee s Approved Product List to be able to match the product outcomes to client needs before you recommend a product
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MCQ review Clients have the option to opt‐in to receive ongoing advice services and fees every 2 years How are financial plans implemented? An implementation schedule should be presented as part of the SOA with details of each task to be completed and who is responsible for it. ASIC is responsible for licensing financial advisers The purpose of disclaimers are used to assist the client in understanding the risks involved in accepting and implementing financial advice.
MCQ review Recommendations of Wills and PoA should appear in an SoA A FSG must include: Disclosure of fees and commissions Annual reviews are important as they allow for the changing nature of client s circumstances and that of financial markets. Trust is at the heart of successful business relationships and is not earned with low ethical standards, even if there are no legal breaches.
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