Learning outcomes

3 Apply good conduct, ethical, and professional obligations in a financial advice situation.

4 Outline the six-step advice process.

Instructions

Complete and submit your assessment according to the Open Polytechnic’s Assessments webpage. This includes information on academic integrity, formatting, word limits and referencing.

• Include your name, student number and the assessment number.
• Number your pages.

Task 1: Hierarchy of the financial services framework

Your professional association is running a series of articles on its online education hub regarding the regulatory framework for giving financial advice in Aotearoa New Zealand.

You’ve been asked to write the first article called:

‘The hierarchy of the financial services framework’

Write the article, explaining each of the following layers of the regulatory framework.

Provide one example of each:

• Legislation (Acts).
• Regulations.
• Codes of practice.
• Principles of professionalism.
• Good conduct.

Task 2: The six-step advice process and principles of professionalism

For this task, assume you are a financial adviser in one of the following areas:

• Investments.
•  Life and health insurance.
•  General insurance.
• Residential property lending.

You are mentoring Brent, a new trainee adviser.

a. In your first session with Brent, he asks the following question:

‘I notice our public disclosure statement talks about following an advice process. Can you explain what that is, please, and any tools we use to help us?’
Answer Brent’s question:

i. Identify and explain the purpose of each step in the six-step advice process.

ii. Identify one piece of documentation that you will use to help complete each step. Explain why the document is required.

b. Brent follows that with a further question:

‘Oh, I understand now. But I do have another question. Our website talks about us always acting professionally. How does that fit into the six-step advice process?’

Answer Brent’s question:

i. For the principle of competency, knowledge and skill:

• explain, with an example in each case, what Brent must do to attain,
  maintain and remain within his field of competency, knowledge and
  skill.

ii. For each step in the process:

• select one principle of professionalism (other than competence, knowledge and skill) that is relevant to that step – select a different principle for each step
•  describe one example of an activity that is relevant to the step and shows compliance with the principle.

Task 3: The Code of Professional Conduct for Financial Advice Services

a. Standard 9 of the Code of Professional Conduct for Financial Advice Services (the Code) requires all advisers to undertake continuing professional development (CPD).

Create a CPD plan for yourself:

•  Include six activities, two from each of the following categories:
  o Product knowledge and technical skills relating to the nature and scope of
  the advice you provide.
  o Best practice, legislation, and compliance knowledge.
  o Interpersonal and business management skills.
• Include the following information:
  o Activity: Describe the training activity you will undertake.
  o Objective: Explain why you have chosen the training activity.
  o How: State the way in which the objective is achieved.
  o Source: State who provides the training activity.
  o Time: State the estimated total number of hours to complete the training activity.
  o Completion: State the date for completing the training activity

Use the following table format:

Note: you may complete the table in note-form as long as the meaning is clear.

b. For this part of the task, assume you are a financial adviser in one of the following areas: Investments.

•  Life and health insurance.
•  General insurance.
•  Residential property lending

You are in a meeting with a client, Latesha. She asks:

‘Your disclosure statement says you are bound by the standards of ethical behaviour, conduct and client care set out in the Code of Conduct. Can you explain that a bit more please?’
Answer Latesha’s question:

• For each of Standards 1–5, describe one example of how you will comply with that standard in your dealings with Latesha.

Task 4: Good conduct

For this task, assume you are one of three directors at Aotearoa Financial Planning (AFP), a financial advice provider. You are all financial advisers and manage your own portfolios of clients. The business also employs 12 other financial advisers and nominated representatives, each with their own clients, and two support staff.

As directors, you are currently developing a ‘good conduct’ strategy for the business. This will be based on the Financial Markets Authority’s five factors of the good conduct profile in ‘A guide to the FMA’s view of conduct’.

For each of the five factors of good conduct you are required to:

•  identify the factor
•  write one process or policy for AFP that supports each factor.