Don works as a financial adviser in a practice with three other advisers. They each own 25%

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Question:

Don works as a financial adviser in a practice with three other advisers. They each own 25% of the business and while they each look after their own clients, they do share back office, paraplanning and administration support within the practice. As with many other advice practices, Don and his partners are developing and refining their work processes to account for the new FASEA Code of Ethics and are determined to position their advice practice at the pinnacle of ethical standards in the profession.

Geoff has been a close friend of Don since their teenage years and has sought Don's advice on a range of financial issues including his superannuation and personal insurances. Don has never asked friends or family about their financial affairs and has only ever dealt with them when they have approached him. While Don and Geoff have discussed financial issues in general in the course of their friendship over many years, Don has never explicitly provided Geoff with financial advice.

As Geoff has recently proposed marriage to Don's sister Emily, he wants to get his financial affairs in order before the wedding later this year. Geoff has provided Don with his latest superannuation statement, a couple of payslips and suggested that Don call his accountant Michael to get a copy of his latest tax return. Michael, also a friend of Don, has been his accountant for many years, and it was Don that referred Geoff to Michael about five years ago.

Geoff says he trusts Don without question. He has also told Don not to worry about all the paperwork he normally has to provide to clients and will just do whatever he tells him to do. As a friend and soon to be relative, it is unlikely that Geoff will take any formal action against Don in the event of a dispute, so Don is considering just telling Geoff what he needs to do to sort out his financial affairs rather than working with Geoff through the formal advice process.

QUESTION

Evaluate and explain, with reference to the case study facts and the relevant legislation, if the financial adviser (Don) has acted in the best interests of the client (Geoff). In your discussion also provide comment on whether Don has acted in the best interests of the financial planning profession.