9. Advice Process And Adviser Skills Flashcards
What are the 3 main objectives of a fact find?
Establish needs/wants/priorities
What they have already & shortfalls
How much can they afford to pay
What are the 11 Know Your Customer requirements?
Personal information
Employment status
Income level & sources
Personal & household expenditure
Assets; purpose & returns
Liabilities; level, terms, rates
Objectives/attitudes
Current provisions / existing products
Knowledge & experience of investment
Attitude to risk
Any wills in place (recommend if not)
What are the 5 categories of risk attitudes?
None / risk averse
Low / cautious; very small if necessary
Medium / balanced; some but controlled
Medium-high; happy to gamble and accept potential losses
High / adventurous / speculative
What 7 factors should be considered when recommending a solution?
State benefits (impact on existing or new ones identified)
Existing arrangements
Affordability
Tax impact
Risk
Timescale
Flexibility
Which 4 kinds of products require a suitability report and when should it be sent?
Long term life insurance incl annuities (not pure protection)
Personal pensions
Unit trusts, investment trusts, OEICs
Pension transfers/opt-outs
Sent before contact is concluded or before end of cooling off period
Distance communications - ASAP after transaction executed
What is covered in the presentation meeting? (6)
Summarise situation, needs & objectives
Analysis incl gaps identified
Issues not covered yet
Recommended solution(s) & detail
Technical info - charges, penalties, tax
Recommended action for issues not solved eg arrange future meeting
What are the record keeping requirements for:
Life policies & pensions
Pension transfers, opt-outs, additional voluntary contributions
MiFID related investments
Other eg mortgages
Life policies & pensions - 5 years
Pension transfers, opt-outs, additional voluntary contributions - indefinitely
MiFID related investments - 5 years
Other eg mortgages - 3 years
What are the requirements for an execution-only / non-advised sale? (3)
No requirement for KYC, fact find or suitability report
Customer is responsible for their decisions
Must still provide full product info
What is the appropriateness test?
Complex investments on execution-only / non-advised
Need to assess if customer has knowledge/experience to understand risks
All records should be kept incl warnings ignored
What is the definition of an insistent client? (3) and what must the firm provide? (3)
- Firm has given personal recommendation
- Client enters into transaction different from the recommendation
- Client wishes firm to facilitate the transaction
Must provide info:
- transaction was not recommended
- why it wasn’t recommended
- risks of transaction
