If it ain’t broke, don’t fix it, says FPA
The Financial Planning Association (FPA) has warned financial planners not to intervene with unnecessarily higher risk strategies where clients are already capable of achieving their financial goals.
The FPA’s message, published in its latest Quarterly Complaints and Discipline Report, followed some clients’ allegations that their financial planner’s advice was unsuitable because their original financial course was already capable of leading them to their financial objectives.
The association said it was important to “pause and consider whether the client will get to where they want to be without professional intervention”.
“Like physicians, financial planners have an ethical obligation to avoid harm to their client/patient, and thus to consider in the first instance whether professional intervention or ‘treatment’ is warranted,” the complaints report stated.
The FPA said it was of key importance to clearly define, prioritise and document client objectives, as well as to keep evidence of professional analysis of clients’ financial situations.
With this in mind, the FPA highlighted another issue: a lack of analysis of a client’s financial information was a common flaw in some financial planning practices.
“In some cases, retirement planning advice was provided with little evidence the financial planner had conducted any analysis of the client’s present financial situation, or the assets likely to be available to the client at the time of retirement based on reasonable assumptions,” the association added.
The FPA's latest quarterly complaints and disciplinary report can be found in the November 2010 edition of Financial Planning Magazine.
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