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
Date Written: November 22, 2019
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: Suggested Citation