Future Of Financial Advice Report

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FUTURE OF FINANCIAL ADVICE REPORT

INTRODUCTION:

The Australian financial industry underwent a comprehensive overhaul in the administration of both financial based products and services introduced in July 2012 under guidelines referred to as the Future of Financial Advice Reforms, (Van Eekelen, 2014, p. 1.6). All avenues involving the dissemination of financial advice to clients have been affected by the new compulsory guidelines since July 2013. Under new guidelines, financial advisors need to maintain the highest standards of professionalism when soliciting investment advice that is readily available and contains reliable information demonstrating awareness for client diversity within the financial services industry, (Home: Future of
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The affected reforms include adherence to compulsory regulations involving best interest duty and the prohibition of illegal remuneration between parties who are deemed to have an influence on the final outcome of a particular financial product and service, (FOFA: The Nuts and Bolts, n.d). Both reform components, including the provision of scaled advice to clients, will be discussed in detail below.

BEST INTERESTS DUTIES:

The dissemination of personal advice involving financial products and services provided to a client from a financial advisor is referred to as best interests’ duties. During consultation, financial advisors need to demonstrate a comprehensive understanding of a client 's current situation to ensure their long term financial goals are fulfilled. Appropriate advice, clarification on information deemed to be either absent or incorrect and prioritising client needs must be adhered to at all times. Advisors are able to recommend a suitable financial product or service after undertaking further investigation on a client. Subject to passage of legislation, additional forms of financial advice after initial consultation have been removed since June 30th 2014 and are not mandatory until after December 31st 2015, (FOFA: The Nuts and Bolts, n.d).

ILLEGAL REMUNERATION PRACTICES:

Financial advisors accepting remuneration that influences the overall outcome with client recommendation of financial advice or products constitutes a significant breach of
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