Discuss the Relevance and Importance of the Following as They Apply to a Financial Adviser

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The review should follow the same steps of constructing the initial plan. That is, by including gathering client information, establishment of financial goals and objectives, analysing data and identifying financial issues, modifications of the SOA, and implementation of changes.

The review process of a financial plan should be established and agreed upon when the plan is implemented. A written agreement should be prepared by financial planner. Financial planner should communicate with their clients to explain the importance of periodic review on goals achievement, and let clients know the process, content and costs of the review.

6. Describe five compliance issues to which a financial planner must adhere when preparing a financial plan for a client.

- Having a reasonable basis for recommendations

The Corporations Act requires that a financial planner should ‘know your client’. In other words, a financial planner must know the relevant personal circumstances of the client and have a reasonable basis for giving the advice. According to the advice requested by the client, the financial planner is responsible for making different level of reasonable inquiries in relation to the personal circumstances of the client. A financial planner has a duty to provide appropriate recommendations to meet the investment objectives, risk profile, financial position and particular needs of the clients, and warn the client if advice is based on incomplete or inaccurate information.

2) Best advice

The financial planner is required to act in the best interest of the client when advices are prepared to be provided. The client’s need must come first. The financial planner must establish the relevant personal circumstance of the client through interviews and questionnaires, and provide understandable and achievable advices to satisfy the client’s requirements based on client’s needs, objectives and risk profile.

For example, for a mature-age and inexperienced retail investor, financial planner should provide the best advice of avoiding high-risk investment although the company of the financial planner specialises in selling this high-risk investment product.

3) Client record

When seeking financial advice services provided by financial planners, clients are willing to establish a private trust and confidential relationship with financial planners. This planner-client relationship is based on the confidentiality and safety of the information offered by clients. In order to effectively provide the expected services and the protection of customer privacy, financial planners must keep such information confidential. They also need to strictly adhere to the guidelines of the Privacy Act to ensure that organisations that collect information about people retain the information responsibly.

4) Disclosure of remuneration

In order to satisfy the client’s increasing demand in integrity, honesty and transparency of financial planners. Financial planners have obligation to disclose all fees, commissions and any material interests that may result from their financial recommendation. In SOA, financial planners are required to detail these remunerations in percentage terms and potential situation including entry and exit fees, review cost, soft commissions, any benefit a third party might receive in relation to the recommendations being made, and any other costs to be borne by the client.

5) Integrity and objectivity

Financial planners are required to keep the objectivity of their work. They should concentrate on the customer's interests and avoid their own subjective judgments affecting the client's mind which resulting in inappropriate decisions.

7. Discuss the purpose of a financial plan

The purpose of a financial plan is to improve the value of the property and achieve personal and family goals. According to different life stage and financial situation, the goals may be different. A financial plan can be conducted for better living level especially for the old age, or for some specific demands like education and housing.

Financial plan can be regarded as a series of decisions on how much money are needed to achieve client’s goals and how to get the money in the coming period of time. In order to achieve the goal of clients, the financial planner should focus on client’s personal family situation including income, expenditure content, as well as assets, liabilities, insurance and other specific circumstances, and then collect other information related to the individual while listening to the needs of the individual. Based on a comprehensive analysis of current situation, financial planner will develop a detailed plan of personal assets including investment strategy, tax measures, the insurance policy, and appropriate assistance will be provided to help the implementation of the plan.