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Nikhil, a provisional relevant provider, skips his licensee's pre-recommendation checklist because he 'knows all about client biases' from his degree. His supervisor reminds him that Standard 10 requires him to 'develop, maintain and apply a high level of relevant knowledge and skills'. In explaining why the checklist still matters, it is correct that … (i) biases affect clients but not professional advisers who understand them. (ii) heuristics are mental shortcuts that can be useful but can also lead to systematic errors.
Statement (i) is false: ASIC's curriculum requires candidates to analyse 'sources of judgement and biases and their influence on financial advice', which includes advisers' own biases, and knowing about a bias does not make a person immune to it (Kahneman 2012, on ASIC's Exam preparation guidance v6.0 reading list). Statement (ii) is true: heuristics speed decisions but can produce predictable errors (Plous 1993). Applying knowledge under Standard 10 of the Code of Ethics 2019 means using tools such as checklists, not relying on awareness alone.
The exam tests advisers' own biases, not only clients'.
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