45 original practice questions for the ASIC financial adviser exam, from every topic in the Adviser Exam Prep bank. Try each one, then open the answer: you get the reasoning, the section of the law or the Code of Ethics standard it rests on, and the trap to avoid. No sign-up needed. They are not past or real exam questions; ASIC publishes no past papers.
Priya is an authorised representative of only one AFS licensee, Harbour Wealth. Without Harbour Wealth's knowledge she recommends a product that is outside her written authorisation, and the client loses money. Which statement BEST describes Harbour Wealth's position as between it and the client?
B: Harbour Wealth is responsible for Priya's conduct even though it was outside her authority
Where a representative acts for only one licensee, the licensee is responsible, as between itself and the client, for the representative's conduct whether or not it is within authority (Corporations Act 2001 s917B, compilation 19 Sep 2026), and that responsibility extends to the client's loss (s917E). The only escape is s917D: the representative disclosed the lack of authority before the client relied on it, with enough clarity and prominence. Nothing here suggests that disclosure, so Harbour Wealth is responsible. Supervision failures are not a condition of s917B, and the licensee and Priya are jointly and severally liable (s917F(2)), so the client need not pursue Priya first.
The trap: Candidates assume 'outside authority' breaks the licensee's liability. Under s917B it does not; only a clear, prominent disclosure under s917D does.
Tom has finished quarter 2 of his professional year, has passed the exam and is now a provisional relevant provider. His licensee prints business cards reading 'Tom Nguyen, Financial Adviser'. Is this permitted?
B: No: a provisional relevant provider must not use that term
Section 923C(1)(c)(ii) of the Corporations Act 2001 (compilation 19 Sep 2026) makes it an offence for a person to use the restricted words 'financial adviser' or 'financial planner' in relation to a financial service if the person is a provisional relevant provider. Passing the exam does not lift the restriction; Tom can use the expressions only once he is a relevant provider who is no longer provisional. Authorised representatives who are full relevant providers may use the term, so holding a licence personally is not the test.
The trap: Passing the exam feels like the finish line, but the restricted-terms rule keys off provisional status, which lasts until the professional year is complete.
Grace is in quarter 2 of her professional year. She has booked the 5 November 2026 exam sitting but will not receive her result until December. Her supervisor wants her to start quarter 3 activities in mid-November. What is the position?
D: She cannot start quarter 3 work activities or structured training until she has passed the exam
Under s12(2) of the Corporations (Work and Training Professional Year Standard) Determination 2018 a person must not start the work activities or structured training for quarter 3 unless they have passed the exam; ASIC's FAQs: Professional year (updated Aug 2026) say the same. An accelerated completion certificate for quarter 1 or 2 does not affect that requirement (s12(4), Note 1). Sitting the exam is not enough; the pass is the condition.
The trap: Accelerated progression is real, but the Determination says expressly that it does not override the exam requirement for quarter 3.
At a community seminar on retirement, an attendee tells the presenter she is 61, has $310,000 in super and wants to stop work next year, then asks whether she should move into a balanced option. The presenter replies, 'In your position I'd switch to balanced.' What kind of advice has she given?
D: Personal advice: a reasonable person would expect her situation to be considered
Under s766B(3) of the Corporations Act 2001 (compilation 19 Sep 2026), advice is personal advice if the provider has considered one or more of the person's objectives, financial situation and needs, or a reasonable person might expect the provider to have considered them. The presenter responded to the attendee's own age, balance and retirement plans, so a reasonable person would expect them to have been considered. The setting and a printed warning do not change the character of the advice, and advice about switching investment options within a fund is still advice about a financial product (s766B(1)).
The trap: The seminar setting suggests general advice, but s766B(3) looks at what was considered (or would reasonably be expected to be), not where it was said.
Marcus has net assets of $4.1 million and gives his adviser a qualified accountant's certificate dated last month. He asks for personal advice about consolidating his two superannuation funds. How must the adviser treat him for this advice?
A: As a retail client: super advice is always retail advice
Section 761G(6) of the Corporations Act 2001 (compilation 19 Sep 2026) treats a financial service that relates to a superannuation product or RSA as provided to a retail client (except advice to an employer about a default fund in some cases). The wealth tests in s761G(7)(c) and the $2.5 million net assets and $250,000 gross income thresholds in reg 7.1.28 of the Corporations Regulations 2001 apply only to products other than general insurance, superannuation and RSAs, so the certificate does not help here.
The trap: The accountant's certificate is valid, but s761G(7) expressly excludes superannuation products from the wholesale tests.
An authorised representative posts a short video recommending that viewers consider a particular exchange-traded fund. Which statement about the general advice warning is correct?
D: It must be in the video itself, given at the same time as the advice
Section 949A(3) of the Corporations Act 2001 (compilation 19 Sep 2026) requires the warning to be given at the same time as the general advice and by the same means. Because the advice relates to a particular product, the warning must also tell viewers to obtain and consider the PDS before deciding (s949A(2)(c)). Section 766B(3) covers advice given by electronic means, and s949A applies to general advice to any retail client, not only existing clients.
The trap: A later email feels like enough, but the warning must travel with the advice.
A client says she wants advice only on whether to make a $20,000 personal deductible contribution this year. During the fact find the adviser notices her credit card debt is listed as 'unknown'. Which safe harbour step is MOST directly engaged by that gap?
D: Making reasonable inquiries to get complete and accurate information on her circumstances
Section 961B(2)(c) of the Corporations Act 2001 (compilation 19 Sep 2026) requires the provider, where it is reasonably apparent that information about the client's relevant circumstances is incomplete or inaccurate, to make reasonable inquiries to obtain complete and accurate information. Her debt is relevant to whether a large contribution suits her (cash flow, priorities), so the gap must be followed up. Scaled advice is permitted, but it does not excuse ignoring an apparent gap; an investigation of 'every' product is not required (s961D).
The trap: Scaled advice narrows the subject matter, but s961B(2)(c) still applies within that subject matter.
A relevant provider who specialises in retirement income is asked by a client for advice on structuring a complex derivatives strategy over an inherited share portfolio. The provider has no training or experience in derivatives. What does s961B(2)(d) require?
D: That he decline to give advice on the derivatives strategy
Section 961B(2)(d) of the Corporations Act 2001 (compilation 19 Sep 2026) requires the provider to assess whether they have the expertise to advise on the subject matter sought and, if not, to decline to provide the advice. A warning or consent cannot substitute for expertise, and switching to general advice would not meet the client's request for advice on his own portfolio. Standard 10 of the Code of Ethics 2019 and referral obligations point the same way.
The trap: Warnings and consents feel protective, but the statutory step is to decline.
An adviser follows every step in s961B(2), documents her investigation and recommends a portfolio. A reviewer later shows that, objectively, the recommended portfolio could not reasonably be considered appropriate for the client. Which statement is correct?
A: Following all the steps does not save her from s961G: the advice itself must be appropriate
The safe harbour in s961B(2) of the Corporations Act 2001 (compilation 19 Sep 2026) is a way to show compliance with the best interests duty in s961B(1). Section 961G is a separate obligation: the provider must only give the advice if it would be reasonable to conclude it is appropriate to the client, had the duty been satisfied. Advice that is objectively inappropriate breaches s961G regardless of process. Nothing suggests the information was incomplete, so s961H is not the issue.
The trap: The safe harbour covers the duty to act in the client's best interests, not the separate appropriateness test.
A licensee discovers that one of its advisers told a retail client that a hybrid security was 'capital guaranteed'. It was not, and the client has not yet lost money. Is this breach deemed significant for breach reporting?
D: Yes: misleading conduct about a product is deemed significant
Under s912D(4)(c) of the Corporations Act 2001 (compilation 19 Sep 2026), a breach of a core obligation constituted by a contravention of s1041H(1) of the Act or s12DA(1) of the ASIC Act (misleading or deceptive conduct about a financial product or service) is taken to be significant. Loss is a separate deeming ground in s912D(4)(d), and frequency is one of the factors in s912D(5) for breaches that are not deemed significant. A reportable situation must be reported to ASIC within 30 days (s912DAA(3)).
The trap: Material loss is only one deeming ground; misleading conduct is deemed significant without any loss.
On 3 March a licensee first knows there are reasonable grounds to believe that a significant breach has occurred. By when must it lodge the report with ASIC?
C: Within 30 days after 3 March
Section 912DAA(3) of the Corporations Act 2001 (compilation 19 Sep 2026) requires the report to be lodged within 30 days after the licensee first knows that, or is reckless with respect to whether, there are reasonable grounds to believe the reportable situation has arisen. It is 30 calendar days, not business days, and the obligation is one of strict liability and a civil penalty provision (s912DAA(4), (7)). ASIC's RG 78 explains the regime.
The trap: Many advice deadlines use business days; the breach-reporting clock runs in days.
A licensee begins investigating whether an adviser has been charging fees without valid consent. After 35 days it still has not reached a conclusion. What is the position?
D: The investigation itself is now a reportable situation that must be reported to ASIC
Section 912D(1)(c) of the Corporations Act 2001 (compilation 19 Sep 2026) makes it a reportable situation if a licensee investigates whether there is a reportable situation under s912D(1)(a) or (b) and the investigation continues for more than 30 days. If the investigation later finds there was no reportable situation, that outcome is also reportable (s912D(1)(d)). ASIC's RG 78 explains that this is designed to stop long investigations delaying reports.
The trap: Waiting for a finding feels prudent, but a long-running investigation is itself reportable.
An adviser's licensee is a reporting entity because it arranges investments for clients. A new client insists on investing $180,000 split into many small deposits from accounts in other people's names, and the licensee forms a suspicion of money laundering on Tuesday. By when must it report to AUSTRAC?
B: Within 3 business days after the day it formed the suspicion
Section 41(2)(a) of the AML/CTF Act 2006 (compilation 1 Oct 2026) requires a suspicious matter report within 3 business days after the day the reporting entity forms a suspicion of the kinds in s41(1)(d)-(f), (i) or (j), which include money laundering. The 24-hour deadline in s41(2)(b) applies to suspicions related to terrorism financing, and 10 business days is the threshold transaction report deadline (s43(2)). Waiting for an internal investigation is not permitted.
The trap: The 24-hour period is for terrorism financing; money laundering suspicions get 3 business days.
After his licensee lodges a suspicious matter report about a client, an adviser is asked by the client why a transfer is delayed. Which response is MOST consistent with the AML/CTF Act?
D: Give a neutral reason without disclosing that a report was made to AUSTRAC
Section 123 of the AML/CTF Act 2006 (compilation 1 Oct 2026) makes it an offence for a reporting entity or its officers, employees or agents to disclose information about a suspicious matter report where the disclosure would or could reasonably be expected to prejudice an investigation. Telling the client about the report or the suspicion risks tipping off. A neutral explanation keeps the client informed without disclosing the report.
The trap: Transparency with clients is usually right, but here it can be an offence.
A reporting entity receives an application from a new client who wants to start investing tomorrow. The client has not yet produced identification. What does the AML/CTF Act require?
B: It must not start providing the service until initial due diligence is done
Section 28(1) of the AML/CTF Act 2006 (compilation 1 Oct 2026) prohibits a reporting entity from commencing to provide a designated service unless it has established on reasonable grounds the matters in s28(2), including the customer's identity, whether they are a politically exposed person or sanctioned, and the nature and purpose of the relationship, using verification appropriate to the ML/TF risk (s28(3)). Personal acquaintance or a declaration is not a substitute. (The 2024 amendments replaced 'applicable customer identification procedures' with initial customer due diligence from 31 March 2026.)
The trap: Delayed verification is a narrow, rule-based exception, not a general 30-day grace period.
An adviser recommends that a client invest $28,000 in a managed fund. To avoid preparing an SOA, she gives the advice as two separate recommendations of $14,000 each, a month apart, so that each one falls under the $15,000 small investment threshold. She believes each step is technically lawful. Which standard is MOST engaged?
C: Standard 1: she is trying to avoid the intent of the SOA requirement
Standard 1 of the Financial Planners and Advisers Code of Ethics 2019 requires a relevant provider to act in accordance with all applicable laws, including the Code, and not try to avoid or circumvent their intent. Splitting one recommendation to slip under the small investment threshold in s946AA of the Corporations Act 2001 (compilation 19 Sep 2026; reg 7.7.09A sets $15,000) is designed to defeat the purpose of the SOA requirement; s946AA in any case looks at the total the client may invest as a result of the advice. Nothing suggests poor records, lack of knowledge or non-cooperation with ASIC.
The trap: Technically lawful steps that defeat a law's purpose breach Standard 1.
A client accidentally pays an adviser's invoice twice. The adviser notices but says nothing, reasoning that the client can afford it and will not check. Which value and standard are MOST clearly breached?
C: Honesty, and Standard 2's duty to act with integrity
Standard 2 of the Financial Planners and Advisers Code of Ethics 2019 requires a relevant provider to act with integrity and in the best interests of each client, and the value of honesty in cl 5 calls for 'complete integrity in all your professional dealings', including transparency 'even where this may cause you personal detriment'. Keeping a duplicate payment the client does not know about is a plain integrity failure.
The trap: The amount and the client's wealth are irrelevant; integrity is not proportional.
An adviser's spouse owns a property development company. A client asks whether to invest $200,000 in a development fund run by that company. Under Standard 3, what should the adviser do?
D: Not advise on the investment: he has a conflict of interest
Standard 3 of the Financial Planners and Advisers Code of Ethics 2019 provides that you must not advise, refer or act in any other manner where you have a conflict of interest or duty. A spouse's commercial interest in the product is an actual conflict. FASEA's guidance (FG002) took the view that disclosure and consent do not cure a conflict under Standard 3; the adviser should decline to advise on that investment or refer it elsewhere.
The trap: Disclosure works for Corporations Act conflicts management, but Standard 3 is framed as a prohibition.
An adviser's engagement letter for a new client runs to 14 pages of dense legal text, and the client, whose first language is Vietnamese, signs it at the first meeting without reading it. Which standard is MOST at risk?
D: Standard 4: consent to act must be free, prior and informed
Standard 4 of the Financial Planners and Advisers Code of Ethics 2019 lets a relevant provider act for a client only with the client's free, prior and informed consent. A signature on a document the client could not realistically understand is not informed consent; the adviser should explain the engagement in plain terms and consider an interpreter. Records (Standard 8) may be complete, but that does not cure the consent problem.
The trap: A signature proves consent was recorded, not that it was informed.
An adviser recommends a capital-protected structured product to an 82-year-old client who, when asked, cannot explain how the protection works or what happens if she exits early. What does Standard 5 require before the advice is implemented?
D: That the adviser has reasonable grounds to be satisfied she understands the advice and its risks
Standard 5 of the Financial Planners and Advisers Code of Ethics 2019 requires the adviser to be satisfied, on reasonable grounds, that the client understands the advice and the benefits, costs and risks of recommended products. Her inability to explain the product's key features shows that test is not yet met. A signed acknowledgement does not create understanding, family members cannot consent for a capable adult, and target market status is a separate DDO question.
The trap: Paper acknowledgements are not evidence of understanding when the client cannot explain the product.
A 58-year-old client wants to use $150,000 of super to pay off his mortgage when he becomes eligible. The adviser focuses only on interest saved. Under Standard 6, what else should the adviser actively consider?
A: His longer-term retirement income, Age Pension effects and his partner's position
Standard 6 of the Financial Planners and Advisers Code of Ethics 2019 requires an adviser to take into account the broad effects of the client acting on the advice and to actively consider the client's broader, long-term interests and likely circumstances. Moving super into the home affects retirement income, social security means testing (the home is exempt from the assets test) and his household. A discharge fee is relevant but narrow.
The trap: The client's narrow question does not narrow Standard 6's broad-effects duty.
An adviser who has always advised on accumulation super is asked by long-standing clients to advise on aged care accommodation payments. She has never studied aged care. Which response BEST reflects Standard 10 and the best interests duty?
A: Refer the aged care advice to a specialist, or decline until she gains the expertise
Standard 10 of the Financial Planners and Advisers Code of Ethics 2019 requires a provider to develop, maintain and apply a high level of relevant knowledge and skills, and s961B(2)(d) of the Corporations Act 2001 (compilation 19 Sep 2026) requires declining advice on a subject matter where the provider lacks the expertise. Referral is the usual way to protect the clients while keeping the relationship. A disclaimer or a quick read does not create competence.
The trap: Knowing the clients well is not the same as knowing the subject matter.
ASIC writes to an adviser asking for client files relating to an investigation of a former colleague's possible Code breaches. The adviser worries the files will reflect badly on the practice. What does Standard 11 require?
D: To cooperate with ASIC in the investigation
Standard 11 of the Financial Planners and Advisers Code of Ethics 2019 requires relevant providers to cooperate with ASIC and monitoring bodies in any investigation of a breach or potential breach of the Code. ASIC also has compulsory information-gathering powers. Selective disclosure would breach Standard 11 and Standard 2 (integrity), and AFCA processes do not delay ASIC investigations.
The trap: Protecting the practice's reputation is not a ground for limiting cooperation.
An adviser sees that a colleague in the same practice keeps placing clients into an expensive product without comparing alternatives. The colleague is a friend. Which response BEST fits Standard 12?
A: Raise it with the colleague and escalate to the licensee if needed
Standard 12 of the Financial Planners and Advisers Code of Ethics 2019 requires providers, individually and with peers, to uphold and promote the profession's ethical standards and hold each other accountable for protecting the public interest. Raising concerns with the colleague and escalating through the licensee's processes (which may lead to breach reporting under s912DAA of the Corporations Act 2001) is the appropriate path. Contacting clients directly or posting anonymously could breach privacy and is not a proper accountability process.
The trap: Accountability runs through proper channels, not public shaming.
A client asks for advice only on which share fund to buy with $50,000. The adviser learns she has $30,000 of credit card debt at 21% interest. What does acting in her best interests MOST likely require?
D: Raising the debt: a reasonable adviser would see it as relevant to the subject
Under s961B(2)(b) of the Corporations Act 2001 (compilation 19 Sep 2026), the adviser must identify the client's relevant circumstances for the subject matter sought, and s961E tests what a reasonably expert adviser would regard as in the client's best interests. Investing while carrying 21% debt is unlikely to be in her interests, so the debt must at least be raised and considered. ASIC's RG 244 says scaled advice still requires the provider to consider whether the scope is appropriate.
The trap: Clients set the scope, but the adviser cannot ignore a fact that makes the requested advice inappropriate.
After receiving advice to stay invested, a client insists on selling all his shares to buy a cryptocurrency his neighbour recommended. The adviser has no expertise in crypto. What is the MOST appropriate course?
D: Document his advice and the client's decision, and decline to advise on or arrange the crypto
Clients can make their own decisions, but an adviser must not give advice he lacks the expertise for (Corporations Act 2001 s961B(2)(d), compilation 19 Sep 2026) and must keep complete and accurate records (Code of Ethics 2019, Standard 8). Recording the advice given, the client's contrary instruction and the adviser's decision not to advise on crypto protects the client and the adviser. Recasting the client's idea as personal advice would make it the adviser's recommendation.
The trap: Following an instruction is different from recommending it.
An authorised representative repeatedly fails to act in clients' best interests. Which consequence can follow for him personally?
A: A banning order by ASIC or action by a Financial Services and Credit Panel
ASIC may ban a person who has not complied with a financial services law (Corporations Act 2001 s920A(1)(e), compilation 19 Sep 2026), and Financial Services and Credit Panels can take action against relevant providers, including warnings, reprimands and restrictions (ss921K-921L). Authorised representatives can also face civil penalties (s961Q), and the responsible licensee is liable too (s961K). AFCA resolves complaints against the licensee but does not fine advisers.
The trap: AFCA determinations bind licensees; regulatory sanctions on advisers come from ASIC and the Panels.
An adviser believes a listed property trust is undervalued. When reviewing research, she notes the reports that support her view and dismisses two negative ratings as 'too cautious'. Which bias is she MOST likely showing?
B: Confirmation bias
Confirmation bias is the tendency to seek out and give weight to information that supports an existing belief while discounting contrary evidence (Pompian 2012; Plous 1993, both on ASIC's Exam preparation guidance v6.0 reading list). Favouring supportive reports and dismissing negative ratings fits that pattern. For an adviser, it undermines the reasonable investigation and objective assessment the best interests duty requires (Corporations Act 2001 s961B(2)(e)).
The trap: Anchoring is over-reliance on a starting value; the key here is filtering evidence to fit a prior view.
After three years of strong returns from his tactical calls, an adviser tells clients he can 'reliably time' market falls and moves their portfolios frequently. Which bias is MOST evident?
D: Overconfidence
Overconfidence is an unwarranted faith in one's own judgement and ability to predict, often reinforced by self-attribution of past success (Pompian 2012; Barberis and Thaler, both on ASIC's Exam preparation guidance v6.0 reading list). Claiming to time markets reliably and trading frequently on that belief is the classic pattern. It also risks misleading clients (Code of Ethics 2019, Standard 9).
The trap: Loss aversion would make him reluctant to act; he is doing the opposite.
When estimating a client's retirement income need, an adviser starts from the $50,000 figure in a newspaper article and adjusts slightly, without building a budget from the client's actual spending. Which bias does this illustrate?
B: Anchoring on an initial reference figure
Anchoring is relying too heavily on an initial value and adjusting insufficiently from it (Kahneman 2012; Plous 1993, on ASIC's reading list). Starting from a published figure rather than the client's own spending can produce advice not based on the client's relevant circumstances, contrary to s961B(2)(f) of the Corporations Act 2001 (compilation 19 Sep 2026).
The trap: Using a benchmark is fine; failing to adjust it to the client is the bias.
A client refuses to sell a share that has fallen 40% and no longer fits her goals, saying she will sell 'once it gets back to what I paid'. Which bias BEST explains her decision?
C: Loss aversion, shown as the disposition effect
Loss aversion is the tendency to feel losses more strongly than equivalent gains; its trading form, the disposition effect, is holding losers too long and selling winners too early (Kahneman 2012; Pompian 2012, on ASIC's Exam preparation guidance v6.0 reading list). Anchoring to the purchase price as the point at which she will sell is typical. An adviser can help by reframing the decision around her goals rather than the past price.
The trap: Her purchase price also acts as an anchor, but the behaviour of refusing to realise a loss is loss aversion.
A couple keep $40,000 in a 'holiday account' earning 1% while carrying $15,000 on a credit card at 20%, because the holiday money 'isn't for debts'. Which concept BEST describes this?
D: Mental accounting
Mental accounting is treating money differently depending on the 'account' or purpose people assign to it, even though money is fungible (Barberis and Thaler; Pompian 2012, on ASIC's Exam preparation guidance v6.0 reading list). Paying 20% on debt while holding savings earning 1% is the classic cost. Advice that respects the couple's goals while showing the cost of the split can help.
The trap: Inertia may also play a part, but the separate labels on money point to mental accounting.
Most members of a super fund stay in the default investment option for decades, even when another option suits them better. Which behaviour does this MOST reflect?
D: Inertia and status quo bias
Inertia and status quo bias describe a preference for leaving things as they are, especially where a default exists and choosing requires effort (Kahneman 2012; Pompian 2012, on ASIC's Exam preparation guidance v6.0 reading list). Defaults are powerful, which is why default (MySuper) design matters and why advice can add value by prompting an active, informed choice.
The trap: Doing nothing is still a choice, shaped by the default.
A 66-year-old retiree says she is 'very comfortable with risk' and wants 100% shares, but her $280,000 super is her only asset besides her home and she will draw on it from next month. Which concept should MOST shape the advice?
B: Her capacity for loss, which is low whatever her stated tolerance
Risk tolerance (willingness to accept volatility) is different from risk capacity (financial ability to absorb losses without harming goals). With limited assets and immediate drawdowns, a large fall early in retirement could permanently reduce her income (sequencing risk). Advice must be appropriate to her relevant circumstances (Corporations Act 2001 ss961B(2)(f), 961G, compilation 19 Sep 2026); Hunt (2016) on ASIC's reading list discusses the limits of questionnaire-based risk profiles.
The trap: A high stated tolerance does not create the capacity to recover from losses.
Two retirees each start with $600,000 and draw the same income. Both earn the same average return over 20 years, but one suffers a 25% fall in the first year of retirement and the other in year 15. Which outcome is MOST likely?
D: The retiree with the early fall ends with less: withdrawals lock in losses
Sequencing risk is the risk that the order of returns, not just their average, affects outcomes when money is being withdrawn: losses early in retirement, when balances are largest and withdrawals continue, reduce the capital left to recover (Iskra and Smark 2017, on ASIC's Exam preparation guidance v6.0 reading list). Strategies such as cash buckets or lower volatility around retirement address it.
The trap: Identical average returns can produce very different results once withdrawals are involved.
A 45-year-old client returned to part-time work after ten years caring for children and has $65,000 in super; her husband has $410,000. Which consideration is MOST relevant for their joint advice?
B: Her lower super from career breaks, and options such as spouse contributions
Research on ASIC's reading list (Craft et al 2018, Retirement outcomes for female primary carers) identifies career breaks and part-time work as major causes of lower super for women. Advice should address her individual position (for example spouse contributions, contribution splitting or catch-up concessional contributions) because separation, death or divorce can leave her reliant on her own balance. Standard 6 of the Code of Ethics 2019 requires considering long-term interests and likely circumstances.
The trap: A couple may plan jointly, but each partner's own retirement security still matters.
When ASIC assesses whether scaled advice met the best interests duty, which question does RG 244 say it will consider?
D: Whether a reasonable adviser would expect her to be better off following it
RG 244.63 of ASIC's Regulatory Guide 244 (updated Dec 2021) says ASIC will consider whether a reasonable advice provider would believe the client is likely to be in a better position if they follow the advice; RG 175.228-175.235 give more detail. The note to RG 244.63 adds that being better off can include advice that is not product-specific, including advice to do nothing. A signed scope form does not by itself show compliance.
The trap: Advice to do nothing can leave a client better off; a product is not required.
A client asks for advice only on whether to make a $10,000 personal super contribution, and asks the adviser not to look at anything else. According to RG 244, who decides the scope of the advice?
C: The adviser, using judgement, though either party may suggest limiting it
Table 2 and RG 244.65 of ASIC's Regulatory Guide 244 say either the adviser or the client can suggest limiting the subject matter, but the advice provider must use their judgement and determine the scope in a way that is consistent with the client's relevant circumstances and the advice sought. A client's request is an important input, not a decision that removes the adviser's duty under s961B of the Corporations Act 2001 (compilation 19 Sep 2026).
The trap: The client can request a narrow scope, but the adviser remains responsible for whether it is appropriate.
A client asks for advice on rolling his super into a new fund. The adviser scopes out his insurance inside super, although the rollover will cancel that cover. Under RG 244, what is the problem?
A: The excluded topic is directly affected, so the scope is inappropriate
ASIC's RG 244 examples (and RG 175.261-175.280) say advice cannot be scoped in a way that is inconsistent with the client's relevant circumstances; excluding insurance when the recommended rollover will cancel it leaves out a consequence that is integral to the advice. The adviser should expand the scope or not give the advice. Section 947D of the Corporations Act 2001 (compilation 19 Sep 2026) also requires the SOA to disclose benefits that will be lost.
The trap: Scope limits are acceptable only when what is excluded is not affected by what is advised.
Leanne's employer pays $15,000 of super guarantee for her in 2026-27. She has used all her past concessional cap and has no carry-forward amounts. What is the MOST she can salary sacrifice in 2026-27 without exceeding her concessional cap?
C: $17,500
The general concessional contributions cap is $32,500 for 2026-27 (ATO, Contributions caps, updated 11 Sep 2026; it was $30,000 in 2024-25 and 2025-26). Employer SG contributions count towards the cap, so $32,500 less $15,000 leaves $17,500 for salary sacrifice. $32,500 forgets that SG counts towards the cap, $15,000 applies the old $30,000 cap, and $12,500 subtracts the SG twice from the old cap.
The trap: The cap rose to $32,500 from 1 July 2026; using last year's $30,000 gives $15,000.
Rob earns $120,000 in 2026-27 and is considering salary sacrificing $10,000 into super. Ignoring other offsets and Division 293, roughly how much extra ends up in his super compared with taking the $10,000 as salary and paying income tax at his 30% marginal rate plus the 2% Medicare levy?
A: About $1,700 more
Taken as salary, $10,000 at 30% (Income Tax Rates Act 1986 Sch 7, the $45,001-$135,000 band in 2026-27) plus the 2% Medicare levy leaves $6,800. Sacrificed into super, contributions tax of 15% leaves $8,500. The difference is about $1,700. $3,200 is the full rate gap (32%) without allowing for the 15% contributions tax, $4,700 adds the two rates instead of subtracting them, and $8,500 is the net super amount itself.
The trap: The benefit is the gap between net amounts, not the whole sacrificed amount.
Nina, 52, has a total super balance of $380,000 at 30 June 2026 and unused concessional cap amounts from the previous four years. She sold an investment property and has a large capital gain in 2026-27. Which strategy may be available to her?
B: Using carry-forward concessional contributions to make a large deductible contribution
From 1 July 2018, a person whose total super balance was under $500,000 on the previous 30 June can use unused concessional cap amounts from up to 5 previous years (from 2019-20 onwards) (ATO, Contributions caps, updated 11 Sep 2026). A large personal deductible contribution can reduce taxable income in a high-income year. The downsizer rules apply to a home with a main-residence exemption, the bring-forward rule applies to non-concessional caps, and at 52 she is under her preservation age of 60, so a TTR pension is not available.
The trap: Bring-forward is for non-concessional contributions; carry-forward is for concessional ones.
Before a licensee issues a margin loan to a retail client, when MUST it assess the facility as unsuitable?
D: If, in a margin call, she would likely be unable to pay, or only with substantial hardship
Section 985H(2) of the Corporations Act 2001 (compilation 19 Sep 2026) requires a margin lending facility to be assessed as unsuitable if it is likely that, if the facility went into margin call, the retail client would be unable to comply with their obligations or could only comply with substantial hardship. The provider must make reasonable inquiries about the client's financial situation (s985G) and may also find a facility unsuitable for other reasons.
The trap: The statutory test is the client's ability to meet a margin call, not past returns or inexperience alone.
A client borrows $100,000 and adds $100,000 of her own money to buy $200,000 of shares. If the shares fall 25%, what happens to her own equity, ignoring interest and costs?
A: It falls by 50%, from $100,000 to $50,000
The portfolio falls 25%, from $200,000 to $150,000, but the $100,000 loan is unchanged, so her equity falls from $100,000 to $50,000, a 50% loss. Gearing magnifies both gains and losses, which is why the suitability of geared strategies depends on the client's capacity for loss and cash flow (Corporations Act 2001 ss961G, 985H, compilation 19 Sep 2026; ASIC Moneysmart guidance on borrowing to invest).
The trap: The percentage loss on equity is larger than the market fall when money is borrowed.
A 45-year-old client holds 80% of her investments in shares of the bank she works for. What is the MAIN risk an adviser should highlight?
C: Concentration risk, linked to her job
Holding most of her wealth in one company exposes her to concentration (company-specific) risk, and because her salary also depends on the same employer, a problem at the bank could hit her income and savings at once. Diversification reduces unsystematic risk. Advice must be based on her relevant circumstances (Corporations Act 2001 s961B(2)(f), compilation 19 Sep 2026).
The trap: Familiarity with an employer feels safe, but it doubles up the risk.
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