It’s not easy being a financial planner.
One of the reasons it’s not easy being a financial planner is the lack of practical guidance available to financial planners to help them deal with the day-to-day dilemmas created by complicated client presentations.
One dilemma is what should an adviser do, or not do, to satisfy the best interests duty?
The best interests duty
The best interests duty is a statutory duty introduced as part of the 2013 FOFA reforms. It is found in section 961B of the Corporations Act. It says, with deceptive simplicity:
the provider must act in the best interests of the client in relation to the advice.
ASIC sums it up at paragraph RG 175.224 and 225 where it says:
RG 175.224: Consumers who seek financial advice expect that their adviser will act in their best interests and that, as a result, the advice provided will leave them in a better position.
RG 175.225: When assessing whether an advice provider has complied with the best interests duty, we will consider whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice.
Dover’s Q & A on the best interests duty
Dover wants to know what “reasonable advice providers” believe is in the client’s best interests?
Each month we post a series of real life scenarios that try to answer this question.
The answers are made public as the responses come in, and are shared with everyone.
Please take the time to read the questions, think carefully, then answer them.
Your time is appreciated.
Feel free to suggest questions that arise in your practice. If we can help shed light on what a reasonable advice provider believes will leave your client in a better position we will!