ASIC expects financial advisers to analyse a client’s requested strategy before implementing it when providing personal advice. This applies to AFS licensees and authorised representatives when the strategy affects the client’s relevant circumstances. Client instructions do not replace best interests, appropriateness, or record-keeping obligations.
Expanded Answer
ASIC’s position is that personal advice must be based on the client’s relevant circumstances, not simply on the client’s preferred outcome. Under the Corporations Act advice obligations, an adviser must act in the client’s best interests and provide advice that is appropriate to the client.
In practice, a client request can help define the scope of advice, but it does not remove the need to test the strategy. The adviser should assess the client’s objectives, financial position, needs, risks, alternatives, costs, consequences, and whether the strategy is suitable for the agreed scope.
Regulatory scrutiny increases where the file shows implementation but not reasoning. A defensible file should show why the strategy was recommended or why the adviser declined to proceed. See Documenting the strategy and selection process.
Why it matters
Implementing a requested strategy without analysis creates advice risk. ASIC, AFCA, and an AFS licensee may treat the missing analysis as evidence that the adviser failed to act in the client’s best interests or failed to provide appropriate advice.
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Practical guidance
- Test the requested strategy against the client’s objectives, needs, financial position, and risk profile
- Record the alternatives considered, the reasons for rejection, and the consequences explained to the client
- Decline or rescope the advice where the requested strategy cannot be supported by the analysis