Conflict of Interest, Disclosure and Vertical Relationships: An Experimental Analysis

Chen, Paul; Richardson, Martin

doi:10.1111/1759-3441.12245

Cited by 3 publications

(2 citation statements)

References 8 publications

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“…The licencing regime awards significant power to the AFS licensee over financial planners (Richards and Morton, 2020). In addition, vertical integration has occurred where AFS licensee providing financial planning services are amalgamated or connected with financial product providers (Chen and Richardson, 2019). This creates conflicts of interest as a financial planner must weigh the interests of their AFS licensee against the interests of their client (Chen and Richardson, 2018;Richards and Morton, 2020).…”

Section: Financial Planning In Australiamentioning

confidence: 99%

“…Financial planners in Australia exist in an environment with agent-principal issues due to conflicts of interest (Chen and Richardson 2019;Richards and Morton, 2020). Acting as both a client's and financial product provider's agent sets financial planners in dual agency roles, which could trigger agency problems (Jensen and Meckling, 1976).…”

Section: Agency Theory Conflicts Of Interests and Financial Planningmentioning

confidence: 99%

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Disclosure effectiveness in the financial planning industry

Richards

Safari

2021

QRFM

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Purpose Scandals in the Australian financial services industry highlight the conflicts of interest between those who provide financial advice (financial planners) and their clients. Disclosure is a potential governance tool to manage these conflicts of interest by reducing asymmetries in information. Yet, the efficacy of disclosure is questionable as scandals persist, so this paper aims to research the effectiveness of disclosure in financial planning. Design/methodology/approach This research used a qualitative approach involving the triangulation of data from parliamentary inquiries in financial services with data collected in semi-structured interviews with financial planning professionals. Findings The findings draw a clear portrayal of the disclosure requirements and illustrate how disclosure processes are onerous and complex. Starting with detangling the complex interactions between the beneficial role of disclosure in reducing information asymmetry and unethical behaviour and the detrimental effect of information overload, the authors then highlight effective disclosure techniques used by financial planners, including visualisation of material information. The study reveals that financial planners perceive their role as filtering information for clients and ensuring clients’ comprehension, due to the onerous disclosure requirements. Research limitations/implications The study is of interest to researchers, practitioners, policymakers and society as it implies that how disclosure occurs is as important as what information is disclosed. Those who wish to foster effective disclosure in the financial services industry need to consider the quantity, quality and process of disclosure. A limitation is the research focusses on financial planning practices and not client outcomes, which could be considered in future research. Originality/value The study adds to the understanding of how disclosure is used as a governance tool and how the quantity of information may impede the effectiveness of disclosure in the financial planning industry. In addition, the study identifies and elaborates on the influential factors and best practices for enhancing the disclosure effectiveness by financial planners.

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Section: Financial Planning In Australiamentioning

confidence: 99%

Section: Agency Theory Conflicts Of Interests and Financial Planningmentioning

confidence: 99%

Disclosure effectiveness in the financial planning industry

Richards

Safari

2021

QRFM

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Behavioural Aspects of Financial Advice

Richards¹

2022

Behavioural Business

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Determinants of conventional and digital investment advisory decisions: a systematic literature review

Wagner

2024

Financ Innov

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The growing demand for digital investment advisory services and the advancing technological process led to increased attention to this topic in recent literature. In light of these developments, the question arises whether conventional and digital advisors behave differently in their investment advisory decisions. I therefore conducted a systematic literature review and evaluated 97 publications on the determinants of conventional and digital investment advisory decisions. Based on the literature, five main determinants were identified that are important for investment advisory decisions. These determinants are identical for both variants of the advice, but there are differences in the way they are addressed. This systematic literature review provides an overview of the current state of research and can therefore help identify areas where investment advice can be improved in the future.

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Conflict of Interest, Disclosure and Vertical Relationships: An Experimental Analysis

Cited by 3 publications

References 8 publications

Disclosure effectiveness in the financial planning industry

Disclosure effectiveness in the financial planning industry

Behavioural Aspects of Financial Advice

Determinants of conventional and digital investment advisory decisions: a systematic literature review

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