Financial Product Advice

Question 1

What are the two types of AFSl that can be issued by ASIC?

Answer 1

Unrestricted or limited to a specific range

of financial products.

Question 2

Can licensees put further restrictions on financial planners?

Answer 2

Yes.

Question 3

How must a licenesee provide financial services?

Answer 3

In an appropriate manner.

Question 4

What resources does a licensee need to provide financial services?

Answer 4

Sufficent resources.

Question 5

Does a licensee need to maintain competence to provide financial services?

Answer 5

Yes.

Question 6

Does a licensee need to have adequate risk management systems?

Answer 6

Yes.

Question 7

Does a licensee need to mangage conflicts of interest?

Answer 7

Yes.

Question 8

Does a licensee need dispute resolution systems?

Answer 8

Yes.

Question 9

Does a licensee comply with all licence conditions?

Answer 9

Yes.

Question 10

What must a representative comply with?

Answer 10

Best interests duty, hawking prohibitions,

disclosure requirements and consumer protection provisions.

Question 11

Can financial planners receive penalties for breaching legislation?

Answer 11

Yes.

Question 12

Can financial planners receive penalties for breaching code of conduct?

Answer 12

Yes

Question 13

Can financial planners receive penalties for breaching directions of their AFS licensee?

Answer 13

Yes.

Question 14

What are wholesale clients deemed to have?

Answer 14

The knowledge and resources to protect their

own interests.

Question 15

What is advice defined as?

Answer 15

A statement that is intended to influence a person or
persons in making a decision about a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products, or could reasonably be regarded as being intended to have such an influence.

Question 16

What are five types of advice?

Answer 16

General advice, personal advice, class of product advice, scaled advice, and further advice.

Question 17

What is an execution only service?

Answer 17

An execution-only service occurs when an adviser implements a client’s instructions
without providing any advice.

Question 18

What is a financial product?

Answer 18

Something used to make a financial investment; managing financial risk; or making non-cash payments.

Question 19

Is private health insurance a financial product?

Answer 19

No.

Question 20

Is government insurance schemes a financial product?

Answer 20

No.

Question 21

Is reinsurance loans a financial product?

Answer 21

No.

Question 22

Are funeral benefits a financial product?

Answer 22

No.

Question 23

What are the six steps of the financial planning process?

Answer 23

Data collection, data analysis,
recommendation development, SOA preparation, recommendation implementation,
and financial plan monitoring and review.

Question 24

What is RG 175?

Answer 24

RG 175 ‘Licensing: Financial product advice — Conduct and disclosure’. =

Question 25

What does RG 175 set out?

Answer 25

ASIC’s expectations in the way financial planners work and interact with clients

Question 26

What are three disclosure document requirements?

Answer 26

Financial Services Guide (FSG), Statement of Advice

Question 27

What does the Corporations Act and RG 175.309 state?

Answer 27

Where advice relates to financial products with an investment component, the adviser should collect information including investment return needs, liquidity needs, tolerance for loss and tolerance
for investment outcome variance.

Question 28

Should the clients understand the elements of risk in any strategy?

Answer 28

Yes.

Question 29

What are common investor risk categoris?

Answer 29

Highly conservative (or secure), conservative, balanced, growth and aggressive.

Question 30

When must an adviser provide warnings to clients?

Answer 30

Advice based on incomplete or inaccurate information and general advice warning.