Ch2 - Case Studies And Live Clients Flashcards
There are strengths and limitations of financial planning case studies. What are the pros and cons to using a written case studies?
Pros
a) ______
b) ______
c) ______
Cons
a) ______
b) ______
Pros
a) applying concepts to client scenarios
b) integrating multiple topics
c) preparing for exams
Cons
a) real clients are dynamic
b) goals, priorities, and situations shift
STRENGHTS and WEAKNESSES to using a fact finder.
STRENGHTS
a) _______
b) _______
WEAKNESSES
a) _______
b) _______
STRENGHTS
a) client feels included
b) builds sense of ownership
WEAKNESSES
a) relies on client input
b) can feel impersonal
Interviewing a client in person, on the phone, or online is great for _______ and _______.
qualitative information and to discuss goals
What are the THREE primary forms of structured communication?
counseling (helping clients)
interviewing (between two people for gathering information)
advising (providing suggestions and guidance)
directive interview vs. non-directive interview
directive interview = advisor directs and controls the interview
non-directive interview = the client directs and controls the interview
What is the distinction between financial advice verses a financial advisor?
financial advice - the actual suggestions and recommendations that anyone can give
financial advisor - a professional who works with clients to achieve their goals
How can ethical behavior improve communication between a client and advisor?
Earning trust and making ethical decisions can break down communication barriers.
What is the purpose of a financial advisor structuring communication with clients?
It determines the format, frequency, and subject matter of each interaction so the client is clear of the purpose for the interaction.
Structured communication should be…
succinct and NOT cumbersome
How should you manage emotions during a client interaction?
Talk about anxieties the client may have
Focus on feelings when they emerge because ignoring them is unproductive
Appropriately addressing feelings can build rapport with the client
How can an advisor create an environment that promotes openness?
alleviating the concerns of clients
responding to the social style of clients
communicating effectively with clients
structuring communications with clients
What are the FIVE barriers that can create tension between an advisor and client(s) in the financial planning process?
distrust of salespeople (fear of being talked into buying something)
fear of making a decision (that is, buyer’s remorse)
need for stability (people are complacent and prefer familiarity)
time constraints (reluctant to commit the time)
fear of fraud (identity theft, and investment firm failure)
What are some tips to help alleviate client concerns during the financial planning process? (7)
Do not impose on clients
Be aware of verbal pace (calm, unhurried pace)
Listen carefully
Watch for nonverbal behaviors
Encourage clients to talk
Control one’s own anxiety
Be transparent (disclose compensation and fully explain product details)
FOUR types of social styles.
expressive
amiable
driving
analytical
People are like thermostats and seek to reach a state of equilibrium through…
social situations that reinforce their behavior and avoid situations that cause discomfort.
An advisor should help the client feel at home by finding the proper balance of ______ and ______.
tension and stress.
Consumers have a(n) ______ amount of resources (income & wealth) and time.
finite
How do consumers decide to allocate their time?
work in the marketplace
create goods and services for the household
enjoy leisure time
How must qualitative goals (intangible elements) be handled?
Broken out into quantitative goals (specific and measurable outcomes) to help clients to be more specific.
- general = retire in the next 5 years*
- specific = retire in 2023, withdrawing $50,000 each year*
Because the future is uncertain and unknown, assumptions need to be…(2)
legally defensible
based on historical and future projections
The Consumer Price Index (CPI) is a term used to describe what TWO separate inflation index measures?
A = ________
B = ________
A = CPI-U (87% urban consumers)
B = CPI-W (10% wage earners and clerical workers)
This is the average change in prices for market basket of commonly used goods and services.
Consumer Price Index (CPI)
Why should advisors be thoughtful and cautious in deterring appropriate assumptions?
Because over or under-estimating assumptions can greatly impact outcomes.
What is the distinction between personal planning and business planning?
personal = lifetime and estate planning for clients and family members
business = strategic and operational planning for business owners
How should an advisor address personal and business planning? separately or together?
BOTH
What is the purpose of a preliminary outline and a master outline?
preliminary: a template for the different areas of comprehensive planning and ensures certain areas are not overlooked.
master: written for the client to highlight the material facts of the case with emphases on recommendations.
