Should you provide financial advice to your parents?

Personally I would disagree.

As our parents age and begin to enter retirement and beyond, they will be seeking someone experienced and who they can trust.

It is quite common for one sibling to take on responsibility for their ageing parents in many ways. Especially up to and including possible entering of age care.

It is important to ensure other siblings understand and respect your role.

If a financial planner does not feel comfortable in providing advice to their own family members, I guess I question how they can also for their long-standing and trusting clients.

I would not get too hung up on quoting FASEA to explain how to do what is right.

Just my humble opinion.

Hi Martin

The issue with a child providing financial advice to their parents is not one of competency or even trust.

It's that in this instance the financial planner has dual roles as a child and a professional financial adviser.

You are correct that the role as a child may mean there is a greater level of trust.

But the relationship between parent and child has a layer of expectations to it that come from broader societal expectations, as well as the specifics of the particular relationship. For example, some cultural backgrounds might put respecting a parents' wishes as a higher priority than being completely honest.

When an ageing parent requires care, there is potentially a difference between the parent's desire for care from children, and the children's capacity, desire or willingness to provide care.

As a financial planner we owe our clients an environment where they can be forthright about their wishes.

This environment is created when we're an objective adviser for our clients' goals. It is compromised when achieving those goals are to our own benefit, or at our own expense.

No matter what your area of practice, there is always another adviser who is at least as competent as you are, and can work for your parents' benefit without the potential or perceived conflict of the individual who is both adviser and child.

Wholeheartedly disagree. There are so many points it's not worth listing. However, you must respect an Advisers professional judgement in determining whether a conflict exists and if it is able to be managed. There would be instances where it is not appropriate, yes. To throw a blanket over all advice to parents and to declare it inappropriate is not right.

What a fascinating start to responses to this article!

Financial planners who have transitioned into this industry from an Accounting (and possibly, other professional) background will agree with the conclusion that author Michael has come to in the article.

Codes of Ethics deal with a range of matters, but conflict of interest, real or perceived, is a significant taboo - or at least should be, for all of us.

For those who fail to see the potential risk in this, I trust that their family relationships are very solid and that siblings and other close relatives don't find any aggrievement in how they are managing their parents affairs (and I trust that they are appropriately taking these person's interests into account in the advice process).

Hi Steven

It's the (potential) conflict of interest that often grabs the attention, with the heightened level of attention around standard 3 this is probably natural.

For me, it is the duties of honesty that we owe to all of our clients that is more difficult with family. Our non-family clients speak to us with a level of candour, often about their family, precisely because we are not their family, and we are engaged to consider their interests only.

It's this candour between client and planner that I think is compromised when providing advice to parents, be it because of the specifics of the relationship between the parties, or just what we're conditioned to expect about these relationships by society.

When you combine that with the availability of other great planners who can help our parents, with all the candour the parties deserve, it just seems like such a better solution for our parents, and there will certainly be another client who isn't a family member, who needs your assistance in the same way.