Explain the difference between the corporations act

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Question: You prepared draft of the financial advice for your manager to approve. You note that your manager is also recommending an additional ongoing yearly advice fee of $2,400 per annum (each) to be deducted from the clients new Superannuation Funds. You mention to your manager that with the new ongoing advice fee he is recommending they pay via their new superannuation funds that they will be paying more in fees from their superannuation than they were in their existing superannuation funds, albeit this is refuted by your manager explaining that the client will be better off because they will be getting professional advice moving forward and it won't be an issue, as the ongoing fees are quoted separately in the Statement of Advice, so the clients will only see that their superannuation fees are less, which is highlighted in the product comparison tables in the Statement of Advice. Plus, he explains the on[1]going advice fees are disclosed in the Statement of Advice, so we have met our legal requirements.

Section 7.7A of the Corporations Act (2001) stipulates that an adviser must demonstrate that they meet the best interest duty when providing advice to a client/s. The Corporations Act also stipulates that an adviser must prioritise their client's interests. Based on how your manager is justifying his advice is he demonstrating that he has prioritised the client's interests over his own?

In justifying your answer explain what is the primary difference between how the best interest duty under the Corporations Act deals with a conflict of interest and what the Code of Ethics requires a financial adviser to do? In your response, include a definition of what a conflict of interest is and explain the difference between the Corporations Act and Code of Ethics (including the standards that apply).

Reference no: EM133474566

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