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RO6 Random Advice Questions > Acronyms > Flashcards

Acronyms Flashcards

1
Q

What is the acronym for additional information?

A

BANTTERR

Budget and income
Alternatives and assets
Need
Timescale
Tax and efficiency
Expenditure
Risk and investments
Regulation and state provision

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2
Q

What is the acronym for protection policies?

A

PASTETWIG

Product
Assured person
Sum assured
Term
Extras:

Travel and trust
Waiver
Indexation
Gurantee

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3
Q

What is the acronym for recommend and justify?

A

What recommendation
Who for
Amount (cover/contribution)
Time/term
Specify what it does
Options/other
Now tell me why

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4
Q

What is the acronym for death in service benefits

A

Before you die in service ACT on theses PROs as it will rise with your pay

Additional financial security
Cost effective
Tax free payout
Put in trust
Rises with pay increases
nO medical underwriting

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5
Q

What is the acronym for how to handle a vulnerable client?

A

PATIENT

Present with trusted friend
Allow time
Tailored flexability (changing needs)
Information recording
Explain in writing
No jargon
Trusted confidentiality

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6
Q

What is the acronym for the advice process?

A

R-FRED-DAR

Relationship - cost/scope of practice

Fact-find (goals/objectives)
Risk and capacity for loss
Evaluate current/future finances
Develop and research plan

Discuss plan and documentation (KID/sutability)
Agree and implement
Review

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7
Q

Advantages of advice

A

It’s good to advise on your ABCs

Access Attitude for risk and capacity for loss
Advise against bad practice
Budget and cash flow modelling
Benefit from advisors research
Circumstances of client shape recommendations
Determine sutability of existing arrangements
Explain clearly
Find an effective tax plan
onGoing service
Higher consumer protection
Identify goals

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8
Q

How do we remember the specifics of a fund?

A

Diversification
Asset allocation
Income
Risk
Fund specifics
Client specifics

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9
Q

What is the acronym for DIS cons?

A

You should worry about these liabilities, the CLOSER you get to death

Control out of Kabirs hands
Lost on new employment
Only death no CIC or IPI
Salary sacrifice may lower cover
Employer withdraw cover
Reduction in hours could lower cover

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10
Q

Pros of limited company?

A

Can becoming limited put me in the LEAD-PLS

Legal entity
Employee
Aquire protection
Deductible contributions for business made to pension

Paid dividends
Low NIC
Salary sacrifice

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11
Q

Limitations of asset allocation modelling

A

WARMER

Wrappers - wrappers and tax position not taken into account/recommended
Assumptions- assumptions change/based on historic data
Relevant - Queations asked are not always relevant
Models - different models produce different results
Excludes- charges
Review- needs reviewing/only relevant at a specific time

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12
Q

Describe stochastic modelling

A

CLAP-FH for a profiling questionnaire

Chance- stochastic meanschance of random event
Leading company - Tower Watson for the UK
Asset allocation - Technique uses asset allocation
Profiling - Requires a profiling questionnaire
Forwcast - Forecast a range of possibilities
Helps client - choose appropriate portfolios from a range of possibilities

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13
Q

Requirements of a loan

A

ATE

Arangment in place and reported
Taxable interest
Executors can demand payment/write off

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14
Q

Advantages of an investment bond

A

Invesment bonds are GASH-LINT

Growth potential
Attitude for risk and capacity for loss can be matched
Segments can be assigned
Hold jointly
Long-term care is not considered
Investment choices are wide
Non-chargable event on assignment
Tax on liability passes onto assignee

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15
Q

Advantages of cash flow modelling

A

SWIG-V

SWIGing down Very good cashflow

Shortfalls in current/future cashflow
Withdrawl testing
Inflation stress testing
Give required returns to supplement income
View a range of growth models based on risk

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16
Q

Limitations of cashflow modeling

A

FACT-R in cashflow limitations

Figures estimated and requires review
Assumptions can turn out to be wrong
Circumstances/objectives may change
Tax conditions and wrappers may change
Risk liquidity/market not taken into account

17
Q

Reasons for review

A

CLICR

Cicumstances change (finacial/death/ATR/objectives)
Legislation/economy/tax
Investment performance monitoring
Costs/charges/cheaper products
Rebalance/change funds

18
Q

What is the core to most tax efficiency/retirement questions?

A

WICT PPP

Wills/LPAs/State benefits
Investment/savings
Cashflow
Tax efficient investing/fund choice/allowances
Pension contributions
Pension nominations
Protection and trusts

19
Q

Benefits of ESG?

A

FIL yourself with ESG to remain longstanding and forward looking

Forward thinking
Investment in Promising areas
Long-standing funds are not better or worse.

20
Q

Disadvantages of ESG

A

If you DRIVE Poor you be environmentally unsound and pay more charges

Difficult to screen
Restricted fund choice
Investment charges higher (actively managed)
Volatile (small/ medium-sized companies)
Expect less dividends

Poorer performance

21
Q

Drawbacks of limited company

A

Limited limitations won’t make you HAPPY-D

Higher ongoing costs
Ability to borrow could be affected
ension contributions
Privacy diminished (accounts in public)
offPayroling rules
You’ll be expected to do more administration/reporting
Dividends can’t pay pension contributions

22
Q

Benefits of diversification

A

MAN-GAP Divesify for a manly sized gap from risk

Match ATR
Avoids over exposure to a single asset
Non-corrolation of assets
Growth potential
Allows rebalance
Protection against inflation

23
Q

Factors that affect risk tolerance

A

FACTORS-HI
A high number of factors affect risk

Finacial objectives
Age
Capacity for loss
Time horizon
Obligations
Risk attitude
Stability
Health
Investment experience

24
Q

Benefits of pension sharing?

A

CLEANED and TIPD

Clean break
Lumpsum allowances kept separate
Enhancement for LSA/LSDBA can be applied for. (Hannah)
Any tax for Hannah at her marginal rate and avoids IHT in pension
No tax implications for Kabir
Entitled to remarry with no effect
Death of Kabir has no effect

Transfer or become a member of the scheme (Hannah)
Irrevocably passed on. No rights revert.
Percentage passed may be less than the attachment
Devides pension on divorce immediately

25
Q

Pension sharing process

A

Best practice CASIM because losing his pension could kill him

Court order made
Award pension credit to Hannah
Send order to Kabirs scheme
Implement credit within 4 months
Member or transfer

26
Q

Benefits of interest only mortage

A

If you want to allow growth and repay early TEAR up paying interest for tax and reduced outgoings

Tax efficient investments available
Early repayment possible
Allows growth on investments
Reduced outgoings

27
Q

Disadvantages of interest only mortagage

A

Interest only has HARD Interest risk and is hard to remortgage because there isn’t much choice, so you better have advice and a savings vehicle.

Hard to remortgage
Advice required for monitoring and charges
Requires savings vehicle and temptation could lead to early withdrawal
Doesn’t have much choice on the market
Interest risk

28
Q

Benefits of repayment mortages

A

MISC Benefits of repayment mortgage are micilanious

Market timing issues not a problem
Investment risk not a problem
Shortfall risk not a problem
Cheaper interest as time goes

29
Q

AIM shares

A

AIM shares are HIGH RISC especially for regulatory and event

High risk
IHT free after 2 years
Growth potential high
High number of small companies

Regualtory risk and event risk (low regulation and reporting)
Income and dividends are possible
Some liquidity but might be low
Can be used in an ISA

30
Q

Fund based trail fees advantages

A

PIE FAD
Fund based is easy as PIE but could be a FAD

Pros
Product provider pays
Incentivises planner to make assets grow
Easy to understand and value for client

Disadvantages
Fees don’t reflect admin costs/time
Additional charges for tax/insurance recommendations
Difficult to quantify charge over years/transparency

31
Q

Time based fees

A

FISTPLAM

Pros
Familiar and comparable as same as other professionals
Increases in charges not connected to fund value as independent of product sale
Standard that is easy to understand and value
Takes into account work and complexity to decided price

Cons
Personally funded by client
Lacks incentives can be inefficient
Adds VAT charge (20%)
May avoid contact due to cost

RO6 Random Advice Questions (3 decks)

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