Financial advice is a service that provides households and firms with the necessary information to effectively manage financial inflows and outflows such as investments, income and estate planning etc. For the majority, this service is essential and unavoidable as there is a distinct knowledge gap between the general public and those who are qualified to provide such a service; yet “it is concerning that only one in five Australians access financial advice” (Shorten, 2011) . This raises the question as to why this is the case? Is it concern about whether these qualified professionals are acting in their best interests or those of their clients? And are regulations sufficient to ensure people are not taken advantage of?
Recent reforms have taken place in regards to various issues being raised about the legitimacy and quality of
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This means that Scaled Advice provided must also comply with the Best Interest Duty. Limited in scope refers to advice that is not holistic and is tailored to a specific area of a client’s needs such as a specific component of a client’s investment portfolio. It is often a cheaper form of financial advice and hence there are question raised regarding the quality of advice provided and qualifications of those who provide scaled advice. Under the new reforms, it is stated that Scaled Advice, despite being limited in scope, cannot be lesser quality advice and financial advisors providing scaled advice cannot be of lower training standards. All scaled advice provided must meet minimum legal obligations as outlined in the Regulatory Guide 146 Licensing. The level of scope provided is negotiated and agreed upon by the provider and client during the initial stages of the relationship, it must be made known to the client the level of advice that will be provided and what is not being provided as well as the implications of this decision. (ASIC,