ASIC financial adviser exam, Adviser biases and professional judgement question: lead to systematic errors

ASIC examAdviser biases and professional judgement

Consider these statements. (i) Biases only affect clients, not professional advisers. (ii) Heuristics are mental shortcuts that can be useful but can also lead to systematic errors.

A (i) True, (ii) True
B (i) True, (ii) False
C (i) False, (ii) True
D (i) False, (ii) False

Show the answer and explanation

Answer: C. (i) False, (ii) True

Statement (ii) is true: heuristics speed decisions but can produce predictable errors (Kahneman 2012; Plous 1993, on ASIC's Exam preparation guidance v6.0 reading list). Statement (i) is false: ASIC's curriculum expressly requires candidates to analyse individual biases and their influence on decision making and on financial advice, which includes advisers' own biases.

Common mistake

The exam tests advisers' own biases, not only clients'.

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Original practice material mapped to the learning outcomes in ASIC's exam guidance. Independent, not affiliated with or endorsed by ASIC. Verify figures and rules against current guidance before relying on them.