Essay About Transaction Costs And Financial Adviceregulationbroad Definition

Management
Lecture 10 – Providing Financial AdviceRegulationBroad definition: Gvmt intervention in firm decisions/market outcomesNarrow definition: Focus on administrative regulation, “economic regulation”, health/safety/risk, environmentalTypes of regulation: economic regulation, environmental/health/safety regulationEconomic rationale for regulatory interventions, market failureNatural monopoly (oligopoly)incomplete or missing marketsinformation failures, transaction costs, bounded rationalityA strong financial planning industry is important to all sectors of the economyMajor stakeholders in the Oz economyGovernment Maximise tax revenueMinimise outgoingsProvides services as expected by constituentsMaintain individual, business and foreign confidenceStay in powerFinancial marketsMaintain confidence of all usersProvide efficient marketplacesGain market shareEconomies of scaleGain world recognition and supportBusinessMaintain or increase profitability through cost controlIncrease market shareIncrease product linesDiscriminatory pricingBuild a sustainable businessIndividuals/familiesEarn sufficient money to meet current expensesGain security of residenceMeet goals for childrenEnsure a secure retirementPotential for conflicts of interestCurrent regulatory and industry issuesMany of these issues have been flagged by past reviews of the financial systems but have never been fixedTransparency of disclosure of all fees and costs and the impact of such practices as volume discounts from platform providersManagement of conflicts of interest, fund managers, licensees and individual advisorsInsider tradingThe impact that a commission-based system has on the provision of adviceAppropriate education and training for financial advisorsThe ability of the regulators to proactively monitor the industry and enforce existing laws and regulationsThe effectiveness of the complaints resolution processAdvice versus product salesThe ASIC Shadow Shopping Study Advice needs to meet the requirement of ‘appropriate advice’ under s945A of the Corporations Act