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J10 - Discretionary Investment Management > 1. Investment Advice Process > Flashcards

1. Investment Advice Process Flashcards

1
Q

A. Investment advice process (pages 2 and 3)

A

Involves balancing the emotional and financial needs of the client against the expected or unexpected performance of the various available investments.

Taking a structured and disciplined approach to the investment advice process is essential to delivering consistent client outcomes and fulfilling regulatory requirements.

Overall objective is to compile and obtain the client’s agreement to a portfolio designed to meet their key requirements as closely as possible.

The aim is that each client gets the same service and outcome leading to solid long-term relationships.

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2
Q

A. Investment advice process (pages 2 & 3)

A
  • ESTABLISHING and defining the relationship between client and adviser
  • GATHERING client data and determining goals, expectations and any ethical issues
  • ANALYSING and evaluating the client’s financial status
  • CREATING a risk profile in agreement with the client
  • FORMULATING the investment strategy for asset allocation
  • SELECTING investment, funds and products
  • SELECTING a choice of wrappers
  • PRESENTING and implementing recommendations
  • MONITORING the portfolio, and when appropriate, rebalancing and switching out underperforming funds
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3
Q

B. Establishing the client relationship (page 3)

A

At the start of a client relationship the adviser will be looking to establish a rapport with the client.

This will enable the information required to be obtained.

This will also help set the basis for their ongoing relationship where the goal of the adviser is to obtain TRUSTED ADVISER STATUS in the eyes of the client.

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4
Q

B1. Regulatory requirements (page 3)

A

At the start of the relationship, the adviser should provide the client with information about the:

  • Scope of the services that are offered
  • Cost of any work that will be carried out

Regulatory requirements are contained in the FCA Conduct of Business Sourcebook (COBS)

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5
Q

B1A. Client categorisation rules (pages 3 & 4)

A

Firm’s are required to categorise clients if it is carrying on designated investment business.

This includes potential clients and people acting as an agent for another person.

Clients may be categorised as:

  • RETAIL CLIENT (most clients fall into this category, as do Public and Local Authorities)
  • PROFESSIONAL CLIENT
  • ELIGIBLE COUNTERPARTY
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6
Q

B1A. Client categorisation rules (pages 3 & 4)

THERE ARE TWO TYPES OF PROFESSIONAL CLIENT

A
  1. PER SE PROFESSIONAL. These are clients treated automatically as professional clients such as:
  • Other authorised firms (investment firm, insurance company)
  • ‘Large undertakings’
  • National or regional governments
  • Institutional investors
  1. ELECTIVE PROFESSIONAL CLIENTS. Are retail clients who have chosen to ‘opt out’ to be treated as a professional client. To be able to do so, they have to meet certain quantitative and qualitative criteria.
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7
Q

B1A. Client categorisation rules (pages 3 & 4)

CONTINUED

A

New clients must be notified of how the firm has classified them.

A firm must advise them of their right to request re-classification (and changes in any protections) before any services are provided.

Firms must have appropriate written internal policies and procedures to categorise their clients:

  • Required to make a record of any form or notice provided to clients and each agreement entered with them
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8
Q

B1B. Information about the firm, its services and charges (page 4)

A

Firms must provide the following appropriate information in a durable medium or on their website in a manner that the client can understand:

  • the FIRM and ITS SERVICES
  • INVESTMENTS and INVESTMENT STRATEGIES it proposes to use (including guidance and warnings)
  • EXECUTION VENUES it will use (this is where a stock exchange trade is executed - so details which exchange is used)
  • COSTS and ASSOCIATED CHARGES

This information should:

  • Allow the client to reasonable understand the nature and risks of the service
  • Mention the types of investment involved
  • Be provided in good time before the provision of investment services
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9
Q

B1C. General information (page 5)

A

Firm’s must provide a retail client with general information such as:

  • Name, address, contact details of the firm
  • Confirmation that the firm is authorised
  • Languages in which the client may communicate
  • Methods of communication allowed with the firm
  • Nature, frequency and timing of the reports on the performance of the services provided by the firm
  • Firm’s conflicts of interest policy
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10
Q

B1C. General information (page 5)

CONTINUED

A

Firms providing an advisory service must tell their clients:

  • Nature and type of advice they will provide
  • Whether or not the advice will be independent
  • Whether the advice is restricted or whole of market
  • Whether the service will include a periodic assessment of suitability (review) and if so, details of how and when (frequency) this will be conducted
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11
Q

B1D. Information relating to managing investments (page 5)

A

Firms proposing to manage investments for a retail client must provide the following information:

  • Method and frequency of valuation of the portfolio
  • Details of any delegation of the management
  • Specification of any benchmark used to compare
  • Types of investment that may be included
  • Types of transaction that may be carried out
  • Client’s investment objectives and level of risk
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12
Q

B1D. Information relating to managing investments (page 5)

CONTINUED

A

A benchmark must be used so that the client can compare their portfolio to something.

  • The benchmark must be meaningful
  • It must provide an appropriate indication to the client of what performance could have been achieved based on their investment objectives and types of investment included in the portfolio
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13
Q

B1D. Information relating to managing investments (page 5)

CONTINUED

A

Information on instruments and investment strategies must include:

  • Appropriate risk warnings (including how the client may exit the strategy and any associated risks)
  • Functioning and performance of such instruments in different market conditions
  • Additional disclosures where an instrument is comprised of two or more instruments or services
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14
Q

B1E. Information on safeguarding investments and money (pages 5 & 6)

A

Where a firm holds client money or investments, it must provide details of how they will be held and protected:

  • Summary of the steps the firm has taken to protect client assets (including relevant compensation schemes)
  • Terms of any charge or right of ‘set-off’
  • Whether the assets may be held by a third-party on behalf of the firm
  • Where the investments cannot be separately designated in the country in which they are held by a third party
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15
Q

B1F. Disclosure of costs and charges (page 6)

A

Firms must provide retail clients with information on the costs and charges they will incur such as:

  • Total price to be paid
  • Commissions charged by the firm
  • Basis on which they will be calculated (if they cannot be disclosed at the time)
  • What currency the costs/charges are in and the relevant conversion rate/cost
  • What other costs could be incurred
  • How the costs are to be paid
  • Information about compensation schemes
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16
Q

B1F. Disclosure of costs and charges (page 6)

CONTINUED

A

Where a firm provides investment services, costs and charges information must be provided to both RETAIL and PROFESSIONAL clients:

  • Covering investment and advice services (and how these will be paid for)
  • Separately identifying third party payments
  • Including an illustration where a service is given showing cumulative effect of costs on return)
  • Costs information must be aggregated to show overall cost to the client
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17
Q

B1G. Client agreements (page 6)

A

Main purpose of client agreements is to ensure clients have a understanding of:

  • Reporting on investments
  • Frequency of reviewing circumstances and plans

The disclosure of the above is usually made using an initial disclosure document.

There is an obligation to enter into a written basic agreement with professional as well as retail clients.

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18
Q

B1H. Data protection (page 7)

A

The Date Protection Act 2018 implemented the EU-wide GDPR and include:

  • the right of individuals to have their personal data erased and to transfer it from one organisation to another (data portability)
  • mandatory requirement to report a breach within 72 hours of it becoming known
  • to inform the individual concerned ‘without undue delay’ if their rights are likely to be at risk
  • introduction of a Data Protection Officer (DPO)
  • tougher fines for non-compliance
  • application of the GDPR to firms outside the EU processing information on EU-citizens
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19
Q

B1H. Data protection (page 7)

CONTINUED

A

The Information Commissioner’s Office expects firms to undertake a risk assessment based on:

  • the personal information held
  • how the personal information is used
  • how valuable, sensitive or confidential the personal information is
  • what damage or distress could be caused to individuals if there was a security breach
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20
Q

B2. Trusted adviser status (pages 7 & 8)

A

In today’s market, restoring trust and acting ethically is at the forefront for regulators, industry bodies and firms.

Trust comprises of three components:

  1. Trust in technical competence and know-how
  2. Trust in ethical conduct and character
  3. Trust in empathic skills and maturity
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21
Q

B2. Trusted adviser status (pages 7 & 8)

CONTINUED

A

Gaining trust requires three basic skills:

  1. Earning trust
  2. Giving advice effectively
  3. Building relationships
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22
Q

B3. Relationship phases (page 8)

A

Relationships tend to move through phases as trust is built:

  1. Working relationship started by a task being performed using expert knowledge
  2. Client recognises that the adviser has capabilities beyond their perceived areas of expertise (can solve general queries too)
  3. Adviser becomes a valued resource
  4. Trusted adviser status is at the apex of the client-adviser relationship
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23
Q

C. Aims and objectives (page 8)

A

Gathering detailed information about a client’s personal and financial circumstances is used to identify their:

  • aims
  • expectations
  • attitudes
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24
Q

C1. Regulatory requirements (pages 8 & 9)

A

The FCA requires advisers to have enough personal and financial information about a client to be able to give suitable advice, in particular, whether a client:

  • can afford the recommended investment / product
  • understands the risks involved in the investments
  • understands how the recommendations meet their aims and needs
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25
Q

C2. Fact-find (pages 9 & 10)

A

Information collected in the fact-finding stages:

  • personal information
  • needs and objectives
  • assets and liabilities
  • income and expenditure
  • priorities
  • attitude to risk / capacity for loss
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26
Q

C2. Fact-find (pages 9 & 10)

CONTINUED

A

Hard-facts: Age and income
Soft-facts: Ethical and family values, attitude to risk

Factfinding helps to identify:

  • a client’s true investment aims / what they want to achieve
  • the level of risk they are comfortable with
  • how much they wish to invest and for how long
  • ethical beliefs, responsible investing etc
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27
Q

C3. Determining goals and expectations (pages 10 & 11)

A

An experienced adviser will usually do this via open questions before embarking on a detailed fact-find at outset.

Open questions allow a client to speak about their experiences (which will have shaped how they feel about money).

Questions about financial satisfaction can add further detail; this is because satisfaction is personal.

Advisers should also try to elicit what principles matter to a client (i.e. they may have strong views about where / where not to invest their money).

It is also important to identify what life stage the client has reached.

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28
Q

C4. Assessing aims and objectives (pages 11 & 12)

A

Client’s initial statement about aims and objectives should not be taken at ace value.

  • some aims are unrealistic
  • some aims are mutually incompatible
  • some aims may cause conflicts between spouses

Clients often change their views and priorities as they learn more about financial issues.

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29
Q

C4. Assessing aims and objectives (pages 11 & 12)

CONTINUED

A

Client’s objectives need to be clear, unambiguous and achievable. SMART should be used as below:

  • Specific (want to retire at age 65)
  • Measurable (want a retirement income of £20,000)
  • Action-related (make a lump sum contribution)
  • Realistic (we can afford to make this contribution)
  • Time-related (pop worth £50,000 in ten years)
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30
Q

C4. Assessing aims and objectives (pages 11 & 12)

CONTINUED

A

Fact-finding leads to a range of aims and objectives which need to be prioritised. A simple method of doing this is to use a ‘needs analysis grid’:

Must do now || Must do later

Adviser’s role is to identify the main needs opposed to the wants and prioritise them so that they are achievable based on the available resources.

Unrealistic goals need to be pointed out to the client and realistic ones negotiated.

31
Q

D. Risk profile (pages 12 & 13)

A

Advisers need to find out what risk means to a client, i.e.

  • what would be the most worrying about an outcome from an investment in relation to a particular goal
  • what level of loss is a client prepared to tolerate from their investments in return for the prospect of investment returns
32
Q

D1. Investment risk aversion (page 13)

A

Clients need to understand that being risk averse is reasonable, and that investment planning involves managing risk rather than avoiding it altogether.

The difference in yield (growth) between two investments in known as the RISK PREMIUM. So equities would have a higher risk premium than bonds or cash.

Diversification can reduce risk, either through the use of different asset classes or because the various asset classes are uncorrelated. However, diversification can become ineffective during a market crash when most asset classes move in the same direction.

PAST PERFORMANCE IS NOT A RELABLE INDICATOR OF FUTURE PERFORMANCE.

33
Q

D2. Risk assessment (pages 13 & 14)

A

Three distinct elements the adviser needs to take into account when undertaking the risk assessment process:

  1. Risk Tolerance (client’s willingness to access a certain level of fluctuation with their investments)
  2. Risk Perception (client’s personal opinion on the risks associated with making an investment)
  3. Risk Capacity (client’s actual ability to absorb financial losses that may arise from making a particular investment)

Taken together these should allow an adviser to determine a risk classification or profile that is acceptable to the client.

34
Q

D2. Risk assessment (pages 13 & 14)

CONTINUED

A

Client’s risk profile should be based on their:

  • Attitude to (risk)
  • Tolerance of (risk)
  • Capacity for (risk)
35
Q

D2A. Risk tolerance (pages 14 & 15)

A

Risk Tolerance:

  • the degree of uncertainty that an investor can handle in regards to a negative change in their portfolio value

Consequence of limited investment risk is that the client is more vulnerable to:

  • inflation risk
  • loss of buying power
36
Q

D2A. Risk tolerance (pages 14 & 15)

CONTINUED

A

There are a number of OBJECTIVE FACTORS that can be established that will help define this:

  • Timescale (over which the client can invest will determine product selection)
  • Commitments (such as supporting children in further education)
  • Wealth (client with few assets cannot afford to lose them)
  • Stage of life (younger people will have a longer time frame to make up for losses than older people)
37
Q

D2A. Risk tolerance (pages 14 & 15)

CONTINUED

A

There are also a number of SUBJECTIVE FACTORS that can be established that will help define this:

  • Level of financial knowledge (investors with more experience are generally happier taking more risk)
  • Comfort level with risk (being psychologically able to take more risk)
  • Preferred investment choice (shares or bank accounts for example)
  • Approach to bad decisions (how they accept or don’t accept past bad decisions)
38
Q

D2B. Risk perception (page 15)

A

Risk perception is a subjective view that clients have on the characteristics and severity of risk.

Refers to the understanding of the risks involved in making a particular investment when compared to the alternatives available, based on their own knowledge and experience.

Example - placing money into cash has no capital risk, BUT may be subject to inflation risk (which the client is unaware of).

Risk perception will improve over time and advisers need to appreciate this and not be patronising early on.

39
Q

D2C. Risk capacity (page 15)

A

Risk capacity is the client’s ability to absorb any negative financial outcome that may arise from a particular investment.

Risk capacity is matter of fact.

Key question: What would be the consequence to the client if losses were incurred?

Risk capacity is greater when the amount being invested equals a smaller fraction of the client’s overall wealth.

40
Q

D3. Risk profiling tools (page 16)

A

These can be computer-based assessments and psychometric profiling tools.

41
Q

D3A. Risk descriptions (page 16)

A

These are usually ‘1-5’ or ‘No risk, low risk, medium risk, medium-high risk and high risk’.

Problematic as when not out into context they are relatively meaningless.

Therefore, any measure of risk used should describe the type of risk incurred.

42
Q

D3B. Critical yield (pages 16 & 17)

A

An important risk for clients is SHORTFALL RISK which is where the return on an investment will not meet their objectives.

Achieving the target level of funds is dependent on two factors:

  1. Level of investment
  2. Rate of investment return

The rate of return needed to meet the objective, based on a given level of investment, is known as the CRITICAL YIELD.

43
Q

D3B. Critical yield (pages 16 & 17)

CONTINUED

A

Once the CRITICAL YIELD has been identified the choice is then to accept:

  1. A higher level of risk (as the CRITICAL YIELD required is usually riskier than the client’s attitude to risk)
  2. A lower standard of living (i.e. a lower fund value at conclusion)
  3. The need to invest more now or in the future

Stochastic modelling should probably be used in conjunction with the critical yield process as it shows the chances of the yield being met without exposing the investor to unacceptable levels of risk.

44
Q

D3C. Psychometric risk profiling (pages 17 & 18)

A

The aim of psychometric risk profiling is to assess the client’s psychological risk tolerance or preference.

Clients answer a questionnaire and a risk profile is assigned based on the outcome. The adviser can then determine an appropriate asset allocation.

45
Q

D3D. Stochastic modelling (pages 18 & 19)

A

Stochastic Modelling is asset allocation based on an economic model. The aim of these models is to predict probable outcomes for different investments depending on a range of assumptions in an uncertain world.

In other words, having a chance or random element and is also referred to as ‘Monte Carlo simulation’.

46
Q

D3E. Modelling risks (page 19)

A

Assumptions used should be:

  • Conservative
  • Consistent (in terms of Inflation Rates and Returns)
  • Realistic (assumptions should draw on past experience)
47
Q

D3F. Recording the client’s risk profile (page 20)

A

The result of the risk profiling exercise should be recorded in the client file and any report sent to them.

Any report written should contain a statement, in terms the client will understand, what their chosen level of investment risk means.

48
Q

D4. Regulatory perspective

A

If a firm relies on the automated output from a tool it is important that:

  • the tool is fit for purpose
  • it is used only in the circumstances, and for the target market, for which it was designed
  • users understand how the tool works (any limitations)
  • the customer is able to understand and engage with the process as designed
49
Q

E. Investment objectives and constraints (pages 20 & 21)

A

The outcome of the fact-finding and risk profiling exercise should be a set of agreed objectives and constraints that can be converted into an investment strategy.

50
Q

E. Investment objectives and constraints (pages 20 & 21)

CONTINUED

A

Return objectives for private investors:

CAPITAL PRESERVATION - General for risk-adviser investors (achieve return equal to or above inflation)
CAPITAL APPRECIATION - For longer term investors where capital growth in the main objective
CURRENT INCOME - For investors focusing on income rather than capital growth/gains
TOTAL RETURN - For longer-term investors who are looking for growth to come from capital growth/gains and the reinvestment of income

51
Q

E1. Constraints (page 21)

A

Constraints which impact the investment made in the portfolio need to be considered:

  • time horizon
  • liquidity
  • tax
  • any legal and regulatory factors
  • any unique needs and preferences
  • ethical considerations
52
Q

E2. Time horizon (page 21)

A

Time horizon is the length of time the investment will be made for.

Shorter time horizon - more important to preserve the capital value (so using cash or fixed-term deposits)

Longer time horizon - maintain value or product returns above inflation (so using equites)

53
Q

E3. Liquidity (pages 21 & 22)

A

All personal portfolio should include some level of cash liquidity, but there are degrees of liquidity.

Key factors:

  • Investors should not be forced to realise an investment at an inappropriate time
  • An element of liquidity allows an investor to take advantage of short-term investment opportunities
  • Most people need money that is readily available so will hold it in cash for that purpose
  • Longer terms may provide higher returns so it is important to work out what degree of liquidity is needed
54
Q

E4. Tax (page 22)

A

A client’s tax position will have a significant impact on any investment recommendations and the structure of a portfolio.

Adviser needs to establish:

  • Client’s residency and domicile
  • Any tax allowances that can be used
  • Income tax position
  • How CGT will affect any gains or losses
  • Opportunities for deferring any tax
55
Q

E5. Environmental, social and governance considerations (ESG) (pages 22, 23 & 24)

A

Positive screening - investing in companies that have a responsible approach to business practices, products or services.

Negative screening or avoidance - not investing in companies that do not meet the ethical criteria that the fund sets.

56
Q

F. Analysing the client’s financial position (page 24)

A

Analysing the client’s current financial position has three main aspects:

  1. Synthesis (bringing together all of the information into a clear summary)
  2. Analysis (the identification of the strengths and weaknesses of the current situation)
  3. Prioritisation (ordering the importance of issues)
57
Q

F1. Synthesis (page 24)

A

Is essentially the fact-finding process. Enough information must be gathered to ensure that the recommendations are suitable and relate to the client’s aims.

58
Q

F1A. Personal details (page 25)

A

Personal details need to be collected by the adviser such as:

  • Due diligence (collecting forms of identification) to meet anti-money laundering regulations
  • Date of birth to establish their life stage
  • Collecting their age also helps with identifying if they may be sitting on substantial CGT gains (if elderly for example)
59
Q

F1B. Health status (page 25)

A

It is important to identify the health status of the client (i.e. whether in good health or have serious medical conditions).

  • Good health could lead to longevity and needing to plan for a longer retirement
  • Poor health could mean having to look at enhanced annuities in retirement or estate planning on early death
  • Poor health could also mean needing a more immediate income from investments
  • Good health could mean requiring total return to provide capital growth to sustain an income over a longer period of time
  • Health also affects attititude to risk
60
Q

F1C. Details of family and dependants (page 25)

A
  • Couples may have different attitudes to risk
  • Previous divorces may need to be factored in, in terms of maintenance payments
  • May be a requirement to help provide financial support to elderly or young relatives (school fees)
61
Q

F1D. Details of occupation, earnings and other income sources (pages 25 & 26)

A

Need to establish:

  • Source and amount of client’s income
  • What their tax status is
  • If the client is a business, need to understand the future plans for the company
  • Business experience can help determine a client’s investment experience

If a Politician is the client, a Blind Trust may need to be used to hide investment decisions from them because of the client’s potential knowledge of deals etc.

62
Q

F1E. Present an anticipated outgoings (page 26)

A

It is important to understand what a client’s outgoings are, now and in the future.

This can affect investment decisions being made as if they are high then saving for a particular event or funding school fees may be hard to do.

63
Q

F1F. Assets and liabilites (pages 26 & 27)

A

Details of the client’s assets and liabilities needs to be obtained in full along with:

  • Location of the assets
  • Whether any are held in a nominee account
  • Tax treatment of the investments
  • If held in a tax wrapper
  • Aquisition costs / CGT calculations needed
  • Details of any early encashment penalties
64
Q

F1G. Pension arrangements (pages 27 & 28)

A

Ned to decide whether the pension is viewed and managed as a sub-portfolio (part of the main portfolio of investments) or on it’s own.

65
Q

F1H. Potential inheritances (page 28)

A

Client needs to provide information on potential inheritances as this will have an effect on taxation and amounts to be invested. It also means that more assets will be available in the future which can have an effecy on retirement planning.

66
Q

F2. Analysis (page 28)

A

This is where the data is turned into comprehensible information and subject to analysis.

Main areas to be considered are:

  • Cash flow statement
  • Net assets statement
  • Tax position
  • Lifetime cashflow projections
67
Q

F2A. Cash flow statement (page 28)

A

The aim of this should be to summarise and analyse income and its relation to expenditure, both in terms of the amounts and timing.

  • Should quantify the income that needs to be generated from the investments
  • Should show if there is a surplus which could be invested
  • Tax calculations which show which method of income generation is more efficient
  • Could be used to show where shortfalls will occur
68
Q

F2B. Net assets statement (pages 29 & 30)

A

The NET ASSETS STATEMENT show what the client OWNS and OWES at a point in time.

Assets need to be considered in different ways:

  • The home, although an asset, should be seperate
  • Pensions should be considered as investments]
  • Ltd Company shares should be seperate because they are illiquid
69
Q

F2B. Net assets statement (pages 29 & 30)

CONTINUED

A

Key variables for investments shown in the summary:

  • Asset class
  • Ownership
  • Income yield
  • Tax wrapper
  • Base value for tax purposes

The summary should also list which funds are categorised as ESG / ethical.

70
Q

F2C. Tax position (page 30)

A

It is important to know what tax rate applies to a client, what income after tax is and what their CGT position may be.

The aim of the analysis is to highlight issues from a tax perspective such as:

  • How much income is subject to HR or AR tax for pension contribution planning
  • Tax planning opportunities such as spreading ownership of assets between spouses
  • Use of inappropriate tax wrappers
  • Potential CGT or income tax liability on switches
  • Saving CGT by spreading disposals over tax years
71
Q

F2D. Lifetime cash flow projections (pages 30 & 31)

A

This is a powerful tool as it allows the client to see their entire financial life in a single illustration.

The main use is to project forward income vs expenditure.

72
Q

F3. Prioritisation (page 31)

A

This is where the advsier determines which aims and objectives are the most important to the client, placing them in a priority list or order.

This may mean that some aims are dealt with now and others at a later date.

73
Q

F4. Investment recommendations (pages 31 & 32)

A

The end products of the synthesis, analysis and proioritisation are the investment recommendations.

How each recommendation meets the client’s aims and objectives must be explained to the client is a way that they will understand.

The chosen invstment startegy should be summed up in an investment policy statement:

  • The purpose of the investments
  • Income or growth objectives
  • Timescales
  • Statement about client’s risk profile
  • State about asset allocation
  • Other issues such as ethical investing / SRI / ESG
74
Q

Chapter 1 Key Points (page 33)

A
  • A structured approach is an essential part of providing suitable advice
  • Regulation requires a series of disclosures to be made to the client at outset (to ensure they have full details of the firms, its services and charges)
  • Fact-finding is carried out to gain a clear understanding of the client’s goald and expectations
  • Client’s risk profile should be based on attitude to risk, tolerance of and capacity for loss
  • Profiling tools can be used to aid discussions about risk
  • Computer packages can reduce time
  • Main client objectives are concerned with return requirements and risk tolerance
  • Risk is very closely associated with time horizon
  • Analysing the client’s financial position has theee aspects: synthesis, analyse and prioritise
  • Essential for advisers to obtain enough information to ensure recommendations are suitable
  • Main areas to be analysed: cash flow statement, net assets statement, tax position and lifetime cash flow projections
  • Investment strategy should be summed up in an investment policy statement (which is based on the client’s risk profile and investment goals)

J10 - Discretionary Investment Management (15 decks)

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