8 - Aims Of Retirement Planning Flashcards
What is the main document used in advice process?
Fact find
The younger the client and further away from retirement means what?
Harder it is to accurately predict income requirements post pension age
Factors to consider when reach retirement age regarding expenses (2)
What expenses will increase and what expenses will reduce
Difference between attitude to risk and capacity for loss
ATR - Extent client will accept risk for possible higher rewards
CFL - effect of losses on standard of living for client
Smaller RPS when compared to overall wealth means they are more likely to take more or less risks with pension investments?
More
Cash flow modelling
Assessing clients current and forecasted wealth along with their income and expenditure to get an overall picture of their current and future finances to help with the recommendation
Stress testing
Used in conjunction with cash flow modelling. Demonstrates effect of various factors on income e.g. market crash or living to be very old, etc.
Pound costing average
Regularly purchase units at different prices to reduce effect of market volatility
Safe withdrawal rate
Using 30yr retirement, this is the rate a client can withdraw their pension and ensure it lasts their life time
Equities
Shares in a company
With profits fund
Give annual bonuses based upon profits throughout the year
Smoothing within a with-profits fund
Holding back profits in very good year and save for a bad year to help even out bonus payments
Which operate to their NAV out of OEIC & Unit trust?
Both
Investment trust
A milk red company that invests in funds diversely
Life style pension funds
Pension that is pre-programmed to switch to lower risk investments 5 or 10yrs before retirement to around 75% GILTS & 25% cash
