5 - Financial Planning Recommendations - (5/80)

Question 1

Developing Recommendations

Answer 1

1. Identify objectives
2. Identify products and strategies to meet these objectives
3. Evaluate each alternative (suitability, affordability, cost/benefit, adv/dis)
4. Select the most appropriate to meet objectives
   - > Offer alternative routes if no solutions can be found
   - > Be able to justify each recommendation

Also include projections/illustrations, effects of recs, assumptions

Question 2

Financial Plan Contents

Answer 2

1. Current financial position
2. Objectives and priorities
3. Risk tolerance
4. Specific considerations
5. Recommendations to achieve objectives

Client must have a thorough understanding of:

• How recommendations achieve objectives
• Risks, rewards, outcomes

Question 3

Suitability Reports

Answer 3

Required for new customers, fund changes, switching (not for top-ups)

1. Specify demands and needs
2. Explain why suggested transactions are suitable
3. Explain potential disadvantages

Question 4

Key Features Document

Answer 4

Required for non-packaged retail and insurance products (PRIIPs), cash ISAs and Lifetime ISAs

Contains: 
Nature and complexity of product
How it works
Limitations
Min. standards
Benefits
Risks

Question 5

Key Features Illustration

Answer 5

Required for non-PRIIP packaged products (protection, investment)

Contains: 
Premium/investment
Guaranteed benefits e.g. cover
Projection of final benefit based on FCA growth rate
Effect of charges/commission

Question 6

Reviewing the Client’s Situtation - Process

Answer 6

1. Establish whether situation or objectives have changed (ask in advance)
2. Review the plan to assess progress
3. Assess if recommendations are still valid
4. Agree any modifications