Lessons About Best Interests Duty

Bruhn, Aaron; Miller, Michael V.

doi:10.14453/aabfj.v8i4.3

Cited by 13 publications

(8 citation statements)

References 24 publications

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“…For those with margin loans as additional investment leverage, losses were exacerbated with many losing their home and/or life savings. Bruhn and Miller (2014), Ferris (2011) and Smith (2009) summarise some of the critique of the Storm investment model. This includes the ‘one‐size‐fits‐all’ strategy, the targeting of those for whom it was unsuitable and the high levels of gearing.…”

Section: Methodsmentioning

confidence: 99%

The primacy of ethics in the provision of financial advice

Bruhn

Asher

2020

Accounting & Finance

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Most people need professional advice to navigate complex financial markets. However, information asymmetry between adviser and client makes the assessment of advice difficult, and is exacerbated when providers are motivated by self-interest. This undermines the effectiveness of the financial system. New regulations aim to mitigate such issues, prohibiting some conflicts of interest and imposing educational requirements and a code of ethics for financial advisers practising in Australia. An Australian case study highlights the main ethical issues and suggests that the lens of virtue ethics can assist the development of more appropriate financial advice, and inform further regulatory developments.

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Section: Methodsmentioning

confidence: 99%

The primacy of ethics in the provision of financial advice

Bruhn

Asher

2020

Accounting & Finance

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“…The collapse of Storm Financial Services provides significant insight into the understanding of fiduciary duty and acting in a client’s best interest. Bruhn and Miller (2014) researched the high-profile collapse of Storm Financial and examined factors that constitute good advice, couched in terms of a ‘best interests’ duty from adviser to customer. The authors concluded that the key aspects of best interest are that advice is personalised to the client, explicitly accounts for a customer’s goals and risk tolerance, is communicated clearly and allows for alternative advice to be sought (Bruhn and Miller, 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

Ethics in financial planning: Analysis of ombudsman decisions using codes of ethics and fiduciary duty standards

Richards

Ahmed²,

Bruce

2021

Australian Journal of Management

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Scandals show that ethics is an important topic in financial planning. Our research analyses 212 financial ombudsman decisions (2013–2018) to understand the nature of financial planning misconduct in complaint decisions. We develop a coding structure to ascertain what professional conduct involves and then use content analysis and cluster analysis to identify the aspects of professional conduct occurring in these misconduct decisions. Diligence, acting in the client’s best interest and having no reasonable basis for advice are interconnected elements in over half of these decisions. Secondary elements are misleading statements, conflicts of interest and disclosure. Analysis of decisions involving fiduciary duty showed that financial planners failed to ascertain a client’s circumstances and did not form advice based on their client’s information. As financial planning professionalises, future research, financial planning education, policy and practice should address these issues. JEL Classification: D14, G20, G50

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“…Worthington (2006) amongst others notes low levels of financial literacy exist across the Australian community echoing findings in other countries (Calcagno and Monticone 2015). The low level of financial literacy across households suggests that they are at risk of making suboptimal financial decisions or that they may, in the face of complex or difficult financial situations, chose to do nothing or use non professional sources of information such as the internet (Bruhn and Miller 2014). The consequences of doing nothing or relying on inappropriate information may be detrimental to their financial health.…”

Section: Market Failure and Financial Advicementioning

confidence: 99%

Market Failure, Regulation and Education of Financial Advisors

Steen¹,

McGrath²,

Wong³

2016

AABFJ

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This paper explores the recent series of financial scandals in the Australian financial advice industry. It examines the causes, consequences and responses to these scandals by financial institutions, investors and regulators through the lens of relevant finance theory and extant literature. Although the paper focuses on the recent Australian experience the discussion and findings presented are of relevance to financial market regulation worldwide. It is proposed that a combination of compensation, education, training and structural reforms are required to reduce the undesirable effects of information asymmetry, adverse selection and moral hazard in the finance sector. AbstractThis paper explores the recent series of financial scandals in the Australian financial advice industry. It examines the causes, consequences and responses to theses scandals by financial institutions, investors and regulators through the lens of relevant finance theory and extant literature. Although the paper focuses on the recent Australian experience the discussion and findings presented are of relevance to financial market regulation worldwide. It is proposed that a combination of compensation, education, training and structural reforms are required to reduce the undesirable effects of information asymmetry, adverse selection and moral hazard in the finance sector. JEL Classification: M40

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Lessons About Best Interests Duty

Cited by 13 publications

References 24 publications

The primacy of ethics in the provision of financial advice

The primacy of ethics in the provision of financial advice

Ethics in financial planning: Analysis of ombudsman decisions using codes of ethics and fiduciary duty standards

Market Failure, Regulation and Education of Financial Advisors

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