"But They're Both Happy for Me to Act": The Financial Interdependency Trap
A long-standing couple walks into your office. They’ve been clients for years. Recently, quietly, things have changed: they’ve ended the relationship, made separate wills, and now they’d each like some advice of their own. They’re still living under the one roof, still sharing the mortgage and the bills, and crucially, they’re both completely comfortable with you continuing to look after each of them.
It feels like the easy, service-minded answer is yes. They’ve consented. They’re not fighting over assets. You know their whole financial picture already. What could be cleaner?
This is exactly the moment to slow down. Because the instinct that says “they’ve consented, so it’s fine” routes you to a Standard 3 breach under the Financial Planners and Advisers Code of Ethics.
Two rulebooks, two different answers
Advisers operate under two overlapping layers, and they don’t say the same thing about conflicts.
The Corporations Act 2001 takes a manageable view of conflicts. The best interests duty (s961B), the appropriateness and priority obligations (ss961G and 961J), and the requirement for licensees to maintain adequate conflicts arrangements (s912A(1)(aa)) all assume conflicts may arise. Rather than prohibiting them outright, the Act requires conflicts to be identified, managed and controlled, with the client's interests given priority. Disclosure and informed consent may be part of that process, but are not necessarily sufficient on their own.
The Code of Ethics sets a higher standard. Under Standard 3, an adviser must not advise, refer or act where a conflict of interest or duty exists. That includes conflicts between duties owed to different clients, not just adviser-client conflicts. Where an actual conflict exists, the answer is not "disclose and proceed" – it isdon't act.
Client consent does not cure a Standard 3 actual conflict of duty.
A couple’s willingness for you to act may be relevant to disclosure and conflict-management arrangements. But consent does not permit you to proceed where an actual conflict of duty exists. That distinction between what clients believe their consent allows and what the Code actually permits, is where advisers often get caught out.
Is there really a conflict here? Almost certainly.
The Code applies a “disinterested person” test: would an unbiased person, knowing all the facts, reasonably conclude the arrangement could induce you to act other than in each client’s best interests?
Two factors deserve extra weight.
Financial interdependence does not resolve the conflict. It intensifies it. While it may be tempting to assume that because the parties remain financially connected their interests continue to align, the reality is often the opposite. Each person may still rely on the shared household, yet no longer wish to remain financially tied to the other. In that context, advice designed to strengthen one party’s position e.g. reducing contributions, protecting assets, or changing beneficiary arrangements can directly disadvantage the other. Advising both would mean structuring each person’s affairs partly against your other client.
Estate planning, super, and social security are most contentious areas (especially for a couple in their 60s). Separate wills are only the opening point. Binding death benefit nominations, reversionary pensions, insurance beneficiary nominations and Centrelink’s “member of a couple” assessment all turn on questions where two separating-but-cohabiting partners have directly opposed interests. Death benefit nominations are the clearest example of all: advising Spouse A on who should receive their super is inherently adverse to Spouse B, who – as a former partner and financial dependant – might otherwise have had a claim or an expectation.
The confidentiality problem you can’t disclose your way out of
Even if you set Standard 3 to one side, there’s a second trap waiting. You owe each client a duty of confidentiality. Something you learn from one e.g. an intention to change a nomination, a plan to protect an asset, may be highly material to the advice you owe the other. Yet you cannot use it without consent, and you cannot disclose it.
That creates a separate and potentially irresolvable conflict. Because you are unable to take relevant information into account, or explain why certain advice is being given, you may be prevented from providing each client with fully informed advice. In turn, that can make it impossible to satisfy the best interests duty under s961B that you owe to each client individually. Put simply, you would be advising with one hand tied behind your back, while being unable to explain why.
So what should you actually do?
Not “throw both clients out.” The Code requires you to exercise professional judgement to determine whether you can continue to act without a conflict of interest and provide advice that is genuinely in each client’s best interests. There’s a sensible, defensible path through this.
Document a conflicts assessment first. Run the situation against Standard 3’s standard for judgement before you do anything else and treat it as live. Standard 3 requires ongoing monitoring, because interests can diverge at any point.
Act for one; refer the other out. Across the full scope of what these two will need – and certainly for estate planning, super death benefit nominations, insurance and social security – an actual conflict of duty exists. The defensible position is to act for one client and refer the other on. As a sole adviser, you can’t build an information barrier “with yourself,” so the referral should ideally go to an adviser at a separate practice or licensee, rather than to a colleague within the same office.
Don’t lean on consent to authorise acting. Say it plainly to the couple: their consent helps with disclosure and the licensee’s conflicts arrangements, but it doesn’t let you act through an actual conflict.
If – and only if – there’s a genuinely narrow, non-adverse piece of advice where their interests still align, you may act for both on that limited basis: explicitly scoped, disclosed, consented to, and continually reassessed. Be honest with yourself about how narrow that lane really is for two people at this life stage.
Run it through the licensee. The s912A(1)(aa) conflicts obligation sits with the AFSL. We require our Authorised Representatives to get compliance sign-off by lodging the matter through the Conflicts Register within the Compliance Hub.
Point them to independent legal advice. Separation-under-one-roof has consequences well beyond financial advice, particularly around estate and family-law issues.
Key Takeaway
When a couple has separated, even if they remain under the same roof and continue to share finances, their interests are no longer presumed to be aligned. Their ‘happiness’ for you to act for the both of them does not extinguish your obligation to comply with Standard 3 of the Code of Ethics, which prohibits advisers from acting where actual conflict exists.
The most defensible approach is to recognise the conflict early, document your assessment, and ensure each client can receive advice that is independent, objective and unequivocally in their own best interests.