PS Case Study $3-$ Jennifer

Professional Standards & Ethics Case Study # $3$

Click here to open the Code of Conduct Explanatory Notes

Case Study: Jennifer

Jennifer Boswell, a financial advisor with a small firm, came into the office on Monday morning at $9$:$00$am as usual. She turned on her computer and as it was warming up her phone rang. It was Helen Mitchell. Helen and her husband Brad had been clients of Jennifer for about $5$ years.

Helen and Brad each had TFSA and RRSP accounts with Jennifer's firm. In addition, the couple had $$50,000$ invested in mutual funds in a jointly held non$-$registered account. It was the non$-$registered account that Helen had called to discuss. Helen explained to Jennifer that the couple had an urgent need for cash. She would like Jennifer to sell all of the mutual funds and have the cheque made out to her. Jennifer tried to ascertain the need for immediate cash, but Helen told Jennifer it was a personal matter and she didn't want to discuss it$.$

Jennifer attempted to explain that it would be more tax efficient to take the money from their TFSAs, but Helen wouldn't listen. Jennifer hung up the phone. What could have happened over the weekend to make Brad and Helen need $$50,000$ in cash so urgently? Putting her musings aside, Jennifer filled out the trade tickets as per Helen's request. She submitted the trade tickets to the trading desk and re$-$started her morning routine.

Jennifer was still thinking about Helen's instructions when she opened her email. The third message in her inbox was from Brad Mitchell.

The email read:

Dear Jennifer,

I hope you are well. Helen and I have had a family emergency and need to get our hands on some quick cash. Could you please sell the mutual funds in our non$-$registered account and make the cheque out to me$?$ I$\text{'}$d also like to change the beneficiary on my life insurance from Helen to our son, Joshua. I will fill out the paperwork later this week. Thanks very much for you cooperation in this matter.

Regards,

Brad Mitchell

The email was time stamped $10$:$53$ pm$,$ Sunday. It seemed there was more going on than she had been told. How would she respond to this email from Brad? Jennifer could infer what was happening, but what did she really know?

Her clients had given Jennifer slightly conflicting instructions, but it was clear they wanted the mutual funds sold. She had done that. She could try to cancel the trade, however that may seem she was disregarding Helen's instructions.

Ethical Analysis

What's the dilemma?

Question $1(1$ point$)$

Listen

$1\mathrm{.}1$

What are the red flags that Brad and Helen may be having a marriage breakdown?

Question $1$ options:

a$)$ They both want the cheque for the sale of mutual funds made out to themselves individually

b$)$ Brad wants to change the beneficiary on his life insurance

c$)$ They are only interested in liquidating the joint account

d$)$ All of the above

Question $2(1$ point$)$

Listen

$1\mathrm{.}2$

Which Code of Professional Conduct Principle$($s$)$ should Jennifer look to in this case?

Question $2$ options:

a$)$ Principle $1$: Priority of Client's Interests

b$)$ Principle $3$: Competence

c$)$ Principle $7$: Confidentiality

d$)$ All of the above

Question $3(1$ point$)$

Listen

$1\mathrm{.}3$

How should Jennifer respond to Brad's instructions?

Question $3$ options:

a$)$ Explain the mutual funds have been sold as per Helen's directions

b$)$ Offer to liquidate his TFSA instead

c$)$ Ask Brad if he would like the transaction cancelled

d$)$ Ask for Brad if they are going through a martial breakdown

Question $4(1$ point$)$

Listen

$1\mathrm{.}4$

If Brad and Helen are experiencing a marital breakdown and giving Jennifer conflicting information, is it ethical for Jennifer to retain them both as clients?

Question $4$ options:

a$)$ Yes

b$)$ No

c$)$ We need more information to decide

Question $5(1$ point$)$

Listen

$1\mathrm{.}5$

If Helen calls again and asks Jennifer about Brad's email and wants to have it forwarded to her, what is the best course of action for Jennifer?

Question $5$ options:

a$)$ She should refrain from any further engagement with Helen

b$)$ She should inform Helen about the email but not forward it to her

c$)$ She should forward the email to Helen

d$)$ She should not tell Helen anything about the email