Alan is a very experienced financial adviser who is authorised to give personal advice on a
wide range of strategies and products. He has been in his small financial planning advice
business for eight years. The business consists of two other partners and ten staff.
Alan has known John and Carla for many years as they live in the same suburb and their
children went to primary school together. He and John have also been involved in the same
football club for almost 20 years.
Alan has provided financial advice to both John and Carla over the last six years. Although
Carla was always more interested in planning for their future, John expressed the view in
meetings with Alan that ‘financial planning was a waste of time’. Despite this reticence John
has referred a number of his associates to Alan over the years.
John and Carla have always appeared to enjoy a lifestyle beyond their declared income. Alan
has queried Carla about their lavish lifestyle and she has responded saying that she is hesitant
to get involved in John’s business but she knows from their bank account that it’s his business
that provides the extra funds to support their lifestyle.
Alan had not talked to either client for some months and was surprised to hear from Carla
when arranging their annual review meeting that she and John had separated. She indicated
that John had disappeared overseas with his new, younger partner and she is now struggling
financially to support her daughter Amanda who is studying at university and to pay the
mortgage on their house.
The solicitors have started to work out a financial and property settlement and divorce
proceedings. Alan meets with Carla and agrees to act solely for her from this point forward to
help her to resolve her personal financial situation and plan for her future. Carla indicated at
the meeting that she has had no direct contact with John for the last twelve months.
After the meeting, Alan walked Carla to her car, and she suggested “Why don’t we meet for
drinks and dinner this Friday night to celebrate?”.
Alan emailed John the next day to advise him that he could no longer act as his adviser and
would no longer receive any fees in relation to his insurance and investment products. Alan
believed this was the best option to avoid a conflict of interest moving forward.
Over the following weeks, Alan’s office continued to receive notifications concerning John’s
investment accounts and stock trades held in John’s name. John had always said to Alan at
the football club that the shares and investments he held were for ‘a rainy day’ and Alan
suspected that Carla was not aware of these accounts.
Attachments:
gsz458-assess….pdf
