Chapter 1

Question 1

What is Financial Planning?

Answer 1

A process of making provision for financial needs that may arise in the future

Question 2

What are the two events Financial Planning could be categorised in?

Answer 2

Predictable and Unpredictable

Question 3

What are the stages of the Personal Financial Lifecycle?

Answer 3

Childhood
Young Unmarried
Young Married
Young Married with Children
Married with Older Children
Post Family/ Pre-retirement
Retirement (55-70)
Later Life (70+)

Question 4

What are the stages of the Simplified Personal Financial Lifecycle?

Answer 4

Vulnerable Years
Relaxed Years
Anxious Years

Question 5

What are the Factors affecting financial circumstances?

Answer 5

Government Policies,
Entitlement to state benefits,
Employment Status,
Whether they are a UK Resident/ UK Domicile

Question 6

What are the limitations of the Personal Financial Lifecycle?

Answer 6

a. It doesn’t consider death and divorce which may require a different type of financial need.
b. Not everybody’s lifestyle will fit the pattern therefore it is not relatable to the whole population.

Question 7

What are the different types of taxes that individuals and businesses in the UK may pay?

Answer 7

Capital Gains Tax,
National Insurance Tax,
Income Tax,
Inheritance Tax,
Stamp Duty Land Tax,
Stamp Duty Reserve Tax,
Stamp Duty,
Corporation Tax,
Value Added Tax,

Question 8

What is the priority order for multiple sources of income?

Answer 8

Non- Savings Income > Savings Income > Dividends