MenuFAAA Principles of Good Professional Practice
Stage 3 - Analysing and assessing the client's financial situation
Stage 3 of the financial advice process – Analyse and assess the client’s financial situation – is where financial advisers dig into the information gathered from the client to understand their current financial situation.15
This involves:
- reviewing both the client’s goals and their actual and prospective financial resources;
- identifying any gaps, risks, or conflicts between objectives; and
- evaluating whether the client’s current path is likely to meet their needs.
Advisers use this analysis to confirm priorities and assumptions, helping shape the strategies and recommendations that follow. It’s about turning raw data into meaningful insights that guide the rest of the advice journey. Again, it may be necessary to revisit the scope of advice or the service provided and obtain the client’s informed consent to amend this, if the analysis shows that the originally agreed scope is narrower than what is in the client’s best interest.
The FAAA Principles of Good Professional Practice booklet is also available to download.
Outcomes
1. Analyse the client’s financial situation16:
- Review all relevant client data within the scope of the engagement.
- Consider both client-stated objectives and broader financial factors (e.g. retirement age, income needs, risk tolerance)
2. Assess alignment with client goals:
- Compare the client’s current financial status to their objectives, needs, and priorities.
- Identify gaps, risks, or conflicts between goals.
3. Confirm and document client priorities:
- Discuss and resolve any conflicting objectives.
- Reach agreement with the client on which goals take precedence.
4. Evaluate feasibility and assumptions:
- Determine whether the client’s current course of action is likely to meet their goals.
- Use reasonable assumptions based on the client’s circumstances.
5. Prepare for strategy development:
Ensure the analysis supports the next stage of advice.
Adjust the scope or seek additional information if needed to proceed responsibly.
The FAAA Principles of Good Professional Practice booklet is also available to download.
15 FPSB Standards 7, 8, 9, 10
16 s961B(2)(b)(i), (2)(g)
Please note
These principles are intended as a foundation on which advisers can develop their own approach to best practice. This guidance is not exhaustive and is not intended to prescribe how advice must be provided. It outlines principles of good practice and the outcomes they are intended to achieve, rather than specific actions.
Advisers must apply their own professional judgement when using this material, taking into account the needs and circumstances of their clients, relevant legal and regulatory obligations, and any licensee requirements.
