Topic 6 - Managing Conflict

Question 1

safe harbour steps

Answer 1

• Identifying the objectives, financial situation and needs of client.
• Identifying the subject matter of the advice
• attempt to obtain complete and accurate information.
• Assessing whether the adviser has the expertise
• If recommending a financial product, ensuring reasonable investigation and assessment
• Exercising judgement based on the client’s relevant circumstances and clearly linking recommendations made to the achievement of the clients objectives.
• other steps

Question 2

Based on past disputes lodged at the Financial Ombudsman Service (FOS)*, financial planners face certain key risks in the provision of advisory services to clients.

Answer 2

• inadequate clarity about the terms of engagement
• lack of clear communication in words the client can understand about the advice process and the recommendations made
• inadequate explanation or understanding by the client about the trade-offs
• failing to match strategy and product recommendations to the clients’ objectives
• lack of assessment of concerns raised by clients about advie

Question 3

FOS’s Top 10 Tips for Getting Financial Advice Right

Answer 3

1. Take detailed file notes
2. Clear goals and strategy
3. Turn clients away or refer when appropriate
4. Explain the risks to clients who choose to act against your advice
5. Explain what types of service you are providing
6. Use template forms and documents carefully.
7. Use risk profiling tools carefully
8. Don’t give cookie cutter advice
9. Understand and explain the products.
10. Be clear about the advice relationship with clients you know.

Question 4

Conflict

Answer 4

is a clash of opinions, values, needs or goals

Question 5

Conflict can arise when:

Answer 5

• needs are not met
• differences of opinion or values
• a person or group interferes with another’s attempts to satisfy their needs, wants or goals

Question 6

Conflict management

Answer 6

is the process of ending a disagreement between two or more people in a constructive fashion for all parties involved

Question 7

Managed constructively, conflict can sometimes produce positive payoffs

Answer 7

• Pressures and frustrations are released
• New perspectives and information can be gathered,
• Complacency can be challenged
• Change can take place
• Cohesiveness can actually increase!

Question 8

Conflict management styles

Answer 8

Avoiding style

Accommodating style

Competing style

Collaborating style

Compromising style

Question 9

Avoiding style

Answer 9

low concern for both their own and the other’s interests

Question 10

Accommodating style

Answer 10

low concern for their own needs and a high concern for others

Question 11

Competing style

Answer 11

high concern for own needs and low concern for others

Question 12

Collaborating style

Answer 12

high concern for both

Question 13

Compromising style

Answer 13

some concern for both their own and the other’s needs

Question 14

If a client makes a complaint to you, you should:

Answer 14

• listen attentively
• acknowledge their emotions
• adapt your communication style to better connect with them
• not make assumptions about what the issue is
• clarify your understanding by paraphrasing what they’re telling you
• explain your AFSL’s dispute resolution process

Question 15

active listening

Answer 15

can be used to improve the quality of information collected during client meetings

Active listening can be equally effective in identifying the root cause of a conflict situation

Listening with empathy helps you to identify both content and feelings

Question 16

three components in the active listening process are:

Answer 16

attend to and focus on the other person
encourage the other person
reflect or mirror the other person’s message

Question 17

Nonverbal communication

Answer 17

includes gestures, posture, eye movements, facial expressions, vocalisations and voice qualities
may support or alter the verbal components of a message

Question 18

Probing questions complemented by active listening

Answer 18

can challenge and encourage all parties in a conflict to communicate openly and honestly

Question 19

In a conflict situation (Non - verbal commumnication)

Answer 19

speak in a pleasant way
send appropriate verbal messages
match your verbal and nonverbal messages
pay attention to the other person’s nonverbal messages
ask questions to check your interpretation

Question 20

The Four R Method

Answer 20

1 Receive the other person’s comments without interruption and avoid defensiveness

2 Repeat the other person’s comments as objectively as possible

3 Request the other person’s proposed ways of dealing with the problem

4 Review the options and decide on the best approach

Question 21

ASIC has adopted the Australian Standard AS ISO 1002-2006 definition of a complaint:

Answer 21

An expression of dissatisfaction made to an organisation, related to its products or services, or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected.

Question 22

The Corporations Act 2001 (Cwlth) requires all Australian financial services (AFS) licensees (AFSLs) and financial product issuers

Answer 22

to have a dispute resolution system available for retail clients.

Question 23

The dispute resolution system must include:

Answer 23

internal dispute resolution (IDR) procedures that meet the standards or requirements made or approved by ASIC; and
Membership of an ASIC-approved external dispute resolution (EDR) scheme.

Question 24

Benefits of effective IDR procedures include:

Answer 24

• Maintaining client satisfaction and preserving relationships
• Resolving disputes quickly and efficiently
• The early identification of recurrent/systemic issues
• The ability to find solutions to your problems without these being imposed by external bodies
• Avoiding EDR involvement and associated costs

Question 25

AFCA

Answer 25

is a new external dispute resolution (EDR) scheme to deal with complaints from consumers involving financial services and products.

Question 26

Issues and problems consumers can complain to AFCA about include:

Answer 26

Advice given about a product or service where the advice wasn’t in the client’s best interests, or was inappropriate or insufficient. Charges or broker commissions that were incorrectly charged, applied or calculated. Where information given about a product, including fees or costs, was misleading or insufficient (including the risk of an investment product). Decisions made by a financial firm, including decisions about the suitability of recommended investments, an inappropriate margin call notice, or investment liquidation. If instructions given by a client (for example, to buy or sell stock) weren’t followed or there was a delay in actioning them. Privacy and confidentiality breaches. Transactions that were incorrect or unauthorised.

Question 27

Causes of Conflicts

Answer 27

``` Scarce Resources Economic Hardship Faulty Communication Differences between people Biology - aggressiveness Environment Health ```

Question 28

Why should you use compassionate curiosity during conflict

Answer 28

Shows desire to understand Asks high level questions Shows a goal to learn Calms down other party

Question 29

Causes of Conflicts

Answer 29

``` Scarce Resources Economic Hardship Faulty Communication Differences between people Biology - aggressiveness Environment Health ```

Question 30

Why should you use compassionate curiosity during conflict

Answer 30

Shows desire to understand Asks high level questions Shows a goal to learn Calms down other party

Question 31

1. Outline two suggestions from the Financial Ombudsman Service (FOS) to ensure clients have appropriate expectations concerning the nature of the advice provided.

Answer 31

1. clearly explain the type of service they are providing. Clients don’t know the difference between information, general advice, personal advice, limited advice and execution-only services. 2. Explain the risks to clients who choose to act against your advice. Be very clear in explaining the risks and documenting that the course of action is against your advice. Explain the risks in language the client understands, make a contemporaneous fi le note and have the client sign it.

Question 32

2. Provide an example of ‘best practice’ recommended by the Financial Ombudsman Service (FOS) for appropriate recordkeeping with respect to client communications.

Answer 32

1. Take detailed file notes. Whenever possible, confirm verbal instructions from a client in writing . 2. Write down a client’s objectives in the words the client has used in answering your questions about their objectives and how to quantify those objectives.

Question 33

3. Based on the FOS’s ‘Top 10 Tips for Getting Financial Advice Right’, how may an adviser’s awareness of their own areas of competency and expertise help to prevent conflict?

Answer 33

If your services are not suited to a particular clientyou must tell them so. Don’t try to shape the client to your offering. Understand any products you are recommending.

Question 34

2. Identify the five conflict handling styles described in the Thomas Kilmann Conflict Model and explain the intentions of a person using each of those styles.

Answer 34

i. Avoiding / withdrawing style ii. Accommodating style iii. Competing style iv. Collaborating style v. Compromising style

Question 35

i. Avoiding / withdrawing style

Answer 35

indicates low concern for both their own and the other’s interests. One party retracts its point of view of backs away from the situation, leaving it unresolved. Dissatisfaction may lead to future conflict.

Question 36

ii. Accommodating style

Answer 36

indicates a low concern for their own needs and high concern for others. One party is willing to ‘give ground’ to meet the needs of the other. Useful option on minor matters or where relationship management is of high importance.

Question 37

iii. Competing style

Answer 37

indicates a high concern for own needs and low concern for others. One party negotiates to maximise their results at the expense of the other party’s needs – destructive for interpersonal relationships, and the solution is likely to be temporary as it leaves person who loses in a difficult / uncomfortable situation.

Question 38

iv. Collaborating style

Answer 38

indicates high concern for both. Parties cooperate to produce a result satisfactory to both. Supports the development of interpersonal relationships, and builds permanent solutions and commitment to these solutions as a result.

Question 39

v. Compromising style

Answer 39

indicates some concern for both their own and the other’s needs. Involves the settlement of differences via compromises by one or both parties

Question 40

Managed constructively, conflict can sometimes produce positive payoffs. For example:

Answer 40

* Pressures and frustrations are released * New perspectives and information can be gathered, leading to better decision making and problem solving * Complacency can be challenged * Change can take place * Cohesiveness can actually increase

Question 41

2. Describe the type of listening most suited to conflict management and resolution

Answer 41

Active Listening Emphatic Listenign Probing Questions with emphathic listening

Question 42

The three components in the active listening process are:

Answer 42

* attend to and focus on the other person * encourage the other person * reflect or mirror the other person’s message

Question 43

Emphatic listening

Answer 43

can help the listener tune into the content and feeling aspects of the message and also help the individual identify his or her own feelings

Question 44

Probing questions complemented by empathic listening

Answer 44

can challenge and encourage all parties in a conflict to communicate openly and honestly.

Question 45

Nonverbal communication (NVC)

Answer 45

includes gestures, posture, eye movements, facial expressions, vocalisations and voice qualities.

Question 46

What are the likely implications of a ‘mismatch’ between the verbal and nonverbal components of a message?

Answer 46

If your verbal message does not match the nonverbal component, there is a tendance to believe the nonverbal part of the message.