Ethics and Professional Conduct for Retirement Advisers
This domain tests fiduciary behaviour in retirement advice: suitability, disclosure, confidentiality, competence, and fair dealing with vulnerable clients. The standard is the client's interest, not product sales volume.
Core rules and concepts
- Fiduciary duty: act in the client's best interest, place the client's interest above the adviser's remuneration, and avoid or disclose conflicts.
- Suitability: match the recommendation to goals, horizon, risk capacity, liquidity needs, health, and tax position. Document the rationale.
- Disclosure: reveal commissions, trail income, product bias, and any relationship with issuers in writing, not orally.
- Confidentiality and KYC/AML: protect client data, obtain and verify KYC, and keep records as prescribed.
- Competence: know the product, keep certification current, and refer out when a matter is outside your expertise.
- Vulnerable clients: older clients, widows, and clients with cognitive decline need extra care; check for undue influence and capacity.
Worked example
A 70-year-old widow with a low risk appetite needs stable monthly income. An adviser recommends an equity-heavy fund because it pays a higher commission, without disclosing the commission or recording a suitability assessment. This breaches fiduciary duty, suitability, and disclosure. The correct process is to quantify essential expenses, assess health and liquidity needs, consider an annuity or a debt ladder for the income floor, disclose all remuneration, and document why the recommendation fits. The reasoning: the product may be legitimate, but the process and conflict disclosure fail.
Traps that cost marks
Oral-only disclosure; product pushing; guaranteeing returns; borrowing client money; failing to document suitability; and ignoring signs of reduced capacity in senior clients.