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FPSCh2 - 2010 Reed International Books Australia Pty...

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© 2011 LexisNexis Australia 1 Financial Planning in Australia 4ed –by Taylor, Juchau, Houterman Solutions by Sharon Taylor CHAPTER 2 THE CLIENT–ADVISER RELATIONSHIP Solutions to Questions Question 1: Every day the volume of information available to the general public and advisers alike grows exponentially. What are the sources of this information and what is its impact on the client and the adviser? Impact of information explosion In today’s world we are exposed to the ever-increasing amount of information available in the marketplace. It is important to recognise that there are both advantages and limitations as to the use of this information from the perspective of both the clients and financial planning practitioners. Today we live in an information- rich society. We are continually faced with increasing amounts of information from all directions — television, print media, internet, radio, journals and magazines, as well as the advice of friends and relatives. The media has played a very important role in the distribution and speed at which information is available. Whether from television, books, consumer magazines, radio programs and the like, it seems we, the consumers, are inundated with information. The ultimate information source, the internet, has only added to this plethora of information. In the past, the majority of ‘average’ investors have found it difficult to understand the small amount of information that was available to them and, consequently, the financial adviser took on the role of educating the client as to how to reliably use the most appropriate information. In the nineties we saw a wealth of information become readily available. Now, anyone who is interested can readily educate themselves on investment, risk management and the variety of products available in the marketplace. The accessibility of information, as well as the volume of information available, has impacted greatly on the relationship between the client and the adviser. It is important to understand how this information may affect the attitudes of both the client and the adviser. Impact of the information explosion on the adviser The adviser now has another dimension to manage within the adviser–client relationship. The client may now have access to a whole range of information, which previously was the domain of the adviser. Hence, if advisers are to add value to the relationship © 2011 Reed International Books Australia Pty Limited trading as LexisNexis. Permission to download and make copies for classroom use is granted. Reproducing or distributing any material from this website for any other purpose requires written permission from the Publisher. © 2010 Reed International Books Australia Pty Limited trading as LexisNexis.
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