Conceptualising Financial Advice in Australia: The Impact of Business Models and External Stakeholders on Client’s Best Interest Practice

Financial Services Review, 28 (2): 133 - 158

28 Pages Posted: 27 Jun 2019 Last revised: 1 Jun 2020

See all articles by Daniel W. Richards

Daniel W. Richards

York University - Faculty of Liberal Arts & Professional Studies

Elizabeth Morton

RMIT University

Date Written: November 22, 2019

Abstract

Abstract: Many individuals entrust financial advisors to navigate through important financial decisions, yet extant research and persistent scandals bring the effectiveness of advice into question. In examining the Australian financial advice sector, we determine when financial advice can be provided in a client’s best interest and formulate a model differentiating types of financial advice and their relationship to best interest practice. We extend this model to form an integrated framework considering external stakeholders that encourage, and business models which prevent, best interest practice. Our examination reveals some business models prioritise financial institution interests whilst thwarting external stakeholders encouraging best interest practice.

Keywords: Financial advice, Financial planning, Ethics, Fiduciary duty, Client best interest

JEL Classification: G02, G18, G20, G28, G29

Suggested Citation

Richards, Daniel and Morton, Elizabeth, Conceptualising Financial Advice in Australia: The Impact of Business Models and External Stakeholders on Client’s Best Interest Practice (November 22, 2019). Financial Services Review, 28 (2): 133 - 158, Available at SSRN: https://ssrn.com/abstract=3410517 or http://dx.doi.org/10.2139/ssrn.3410517

Daniel Richards (Contact Author)

York University - Faculty of Liberal Arts & Professional Studies ( email )

Toronto, Ontario M3J 1P3
Canada

Elizabeth Morton

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

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