How to be ‘standard six’ aware

Financial advisers must consider long term interests and future circumstances when determining the scope of advice and should therefore be ‘standard six aware’, according to TAL.

Speaking at an Association of Financial Advisers (AFA) webinar, TAL national technical manager, David Glen, said the Code of Ethics guide issued in October 2020 emphasised financial advisers must consider long-term interests of the future circumstances of clients when determining the scope of advice.

Standard six stated that advisers “must take into account the broad effects arising from the client acting on their advice and actively consider the client’s broader, long-term interests and likely circumstances”.

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“You very much have to be standard six aware at that point of the scoping and scaling of advice,” he said.

Glen explained the approach that an adviser should take to standard six post-scoping and scaling of the advice.

“So firstly, the standard doesn't require you to provide advice to anyone but for clients. So there was a lot of hysteria when standard six came to light that everyone regarded standard six as requiring the adviser to provide advice and statements of advice to all family members.

“That is not a correct view,” he said.

It was important, he said, to establish the identity of the client in scoped advice.

“Whenever you are dealing with ethics situations, it's not only a standard six situation, you really have to take a step back and ask yourself ‘Who is the client?’

“Now the reason why this is important is very often you will be confronted with complex family structures. And there'll be corporate entities in that family structure, discretionary trusts, partnerships, et cetera.

“You have to really get a complete picture of the client’s family situation and of the client’s business situation, if the client is an SME operator, so that you can establish the identity of all these associated entities and then you can consider the impact of your advice on the associated entities.

“So if, for example, you're giving advice to your client, in the plan's capacity as a member of the SMSF, you're not giving advice to the trustee of the SMSF, which might be a separate corporate entity, but what you need to do is you need to consider the impact of your advice on this corporate trustee when you deliver the advice to the client.”

He said it was therefore very important, at the time of assembling a Statement of Advice, that the adviser is aware of all the associated entities and cover it in the advice, to the identified client.”

Glen said the best approach to take in any ethical matter was to err on the side of caution in any borderline situation.

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Let’s make advice more affordable. Huh huh huh what a load of FARCEAcal BS.
Let’s take into account every possible entity and let’s ensure we cover from age 30 Life Ins recco and be bloody sure to map out and advise long term on the possible effects that Life Ins may have on future aged care cost and management. Because we must look at the long term affects and across all possible entities and family members.
FARSEA another half decent intention hijacked by moronic ASIC & consumer groups to be utterly useless in the real world of Advice.

Colin... you comment on almost every post and your rhetoric consistently reinforces why we can't be treated seriously or be considered a profession. Can you please join the debate in a considered manner or stay in the shadows for the benefit of the industry

Cheers Bob, cry me a river if you don't like the truth.
As a well educated and well experienced, non insto owned adviser, my clients and I have long ago considered my Advice work as professional.
I'm just sick of moronic box ticking clowns in the Canberra bubble that are so far from reality and treat us like 2 year olds.
Can't see what's wrong with calling the BS mass over regulation rubbish, that has been dealt as utter BS costly, useless rubbish.
You must be from Frydenberg's office or from Canberra hey Bob.

Silence and politeness is exactly the reason we ended up in this mess. Colin may not be your cup of tea, but he is voicing how many of us feel at the coal face. If other professions were subjected to the nonsense we have had thrusted upon us, do you really think they would act in a 'considered manner'? You are very naive if you think so. I have doctors, lawyers, accountants, teachers, engineers, pharmacists etc. as friends and clients. They are shocked at how our industry has been treated and the nonsense we have to put up with. They cannot fathom how incompetent our representative bodies are and how it was able to happen.

I wont be taking any advice off the likes of TAL thanks very much.

Once upon a time there was a Know Your Client (KYC) rule. Lot simpler back then compared to now.

This contradicts the TAL provided FASEA Exam training delivered last year which actually stated on slide 38 of the PowerPoint presentation re Standard 6....."consider persons impacted by the advice e.g. family members". The TAL trainers also verbalised that advisers DO need to consider the potential indirect flow-on effects of their advice on other family members. The comments above really has this going in we or don't we?......I guess it all depends on how litigious the lawyer is or how vehemently the adviser wishes to cover all possible bases.

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