ASIC financial adviser exam, Adviser biases and professional judgement question: background and love of sailing

ASIC examAdviser biases and professional judgement

Daniel, a relevant provider, spends about 90 minutes explaining options to clients who share his background and love of sailing, but gives other clients 30-minute meetings and more standardised advice. Standard 2 of the Code requires him to act 'in the best interests of each of your clients'. Under Standard 2, the MOST significant concern is that…

A the clients who get 30 minutes may not receive value for money for the same fee
B his rapport with clients like him may create a conflict of interest under Standard 3
C standardised advice is scaled advice, which needs each client's agreement to its scope
D a bias towards clients like him may leave others with poorer advice

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Answer: D. a bias towards clients like him may leave others with poorer advice

Favouring people similar to oneself (similarity or affinity bias in the social-psychology sense; Pompian uses 'affinity bias' for choosing products that express one's values) can mean some clients get less thorough advice. Standard 2 of the Code of Ethics 2019 requires best interests advice for each client, and s961B of the Corporations Act 2001 (compilation 19 Sep 2026) applies to every client equally. Value for money under Standard 7 may also be in question, but it follows from the poorer advice, which is the MOST significant concern under Standard 2. Rapport is not an interest of Daniel's that conflicts with the client's, so Standard 3 is not the main issue. Scaling needs the client's agreement, but here Daniel, not the client, is narrowing the advice, which is the bias itself.

Common mistake

Bias can show up in effort and attention, not only in product choice.

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