9 - The investment advice process Flashcards
Why is using a structured process good?
Gives dicipline for advisors, template and documentation
What is the investment advice process
Determine client requirements
Analyse financial position
Formulate strategy to meet objective
Produce recommendations and implement
Revist investments
- repeat
Where is the investment advice found
FCA conduct of business sourcebook (CBOS)
FCA consumer duty key areas
4
Products and services
Price and value
Consumer understanding
Consumer support
What is a major challenge to consumer duty
Provide documentation and information understandable to clients
How can AI help with consumer duty misunderstanding
Faster reports
Convert reading age
Efficiency
What is the main purpose of client agreement?
So client understand:
Frequencing of reviewing investment
Amount of report on investment
Adviser alert client on changes to planning
What is initial factfind usually consist of
Online questionaire
What should advisors do when clients have unrealistic goals
Make client aware
Negotaite more relisatic wones
How should a client accept risk profile
In writing
What should the risk profile consist of
Attitude to risk
Tolerence of risk
Capacity of lost
What is mental accounting
Where objectives and plans to meet them are kept separate - different risk in respect to eeach objective
Framework for responsible investment firms
Stewardship
ESG integration
Exclusions
Framework for fund level responsible
Sustainability
Impact investment
Who is responsible for framework for responsible investment
IA
Where are tax wrappers held
On platforms
Where are recommendations best placed on
Reports
Where income is not required what should be specified in recommendations
That it is avaiblable for reinvestment within porfolio
How often should periodic assessment of suitability be done minimal
Annually
What is used as a comparance of performance of portfolio
MSCI Personal investment management
Finacial advice perivate investor indices
When should periodic reporting to investment be carried out as a miniumum
every 6 months
What are the main client objectives concerned with
Return requirements
Risk tolerance
What are the two types of investment solutions
Investments for maximise returns
Investment designed to match future liabilities
What are some constraints that impact investments
Time
Liquidity
Tax
regulatory
