Client interests: first, best or last?

Understanding professional duties

“Acting in the best interests of a client” seems self-explanatory but is also hard to define concisely.  It means something like evaluating and balancing all elements to promote the advantage of the client. This contrasts with the Code Standard obligation to “place interests of the client first” which appears to be much narrower.  “Client interests first” simply tells us that if the interests of the adviser and client conflict, then the client’s interests are to take priority. Exactly what does this mean in a professional context?   

Many, including the regulator, regard the “interests first” duty as satisfied if the products and advice are simply “fit for purpose”.  Whatever that means (apparently it means different things in different circumstances).  Shouldn’t advice be prepared with the client’s best interests in mind?  Why should an adviser settle for a solution they know to be the third best or even the worst?

Torturing the words “client interests first”

The Code of Conduct itself provides little guidance on what “interests first” means.  It simply suggests that “interests first” will be determined by "what is reasonable in the circumstances”.  This just parks the issue of interpretation for the future.  It has allowed everyone to interpret “interests first” to mean whatever they want.

What does “client interests first” mean for an adviser who only recommends managed funds produced by that adviser’s firm? What if they know one of their firm’s managed funds is the most poorly performing (after fees), least diversified and most volatile compared to competitor funds?  What if they know it to be bottom ranked in its category?  How can they possibly be putting client interests first if they only consider, offer and recommend a product produced in-house that they know to be inferior?