Chapter 2 Flashcards
Which financial planning phase is most time-consuming?
Analyzing data and information.
In the Client Segmentation and Financial Advisor Offer diagram, what is the starting point focused on?
Client base segmented by total assets under management.
Roberta, a senior advisor with Excelsior Financial Inc, has 250 clients under management. She is asked by a friend at a competing firm to recommend a realistic number of plans to put together in a typical week. What is Roberta most likely to recommend?
1 to 2 plans per week.
Vikram, a financial advisor with 200 clients, has recently come across the concept of re-profiling and rediscovering client relationships by segment. Which client should he begin with?
The idea is to begin with the segment that has greater impact potential and more investment assets, particularly if Vikram has innovative solutions for their needs.
Emmett is a financial advisor with 100 clients. He is thinking of reorienting his practice to high net worth clients because he feels that is where the most growth potential lies. A senior colleague at the firm tells Emmett that the “share of wallet” will be lower with high net worth clients. Why is that so?
They tend to have multiple advisors.
Charles, an advisor, is getting ready to meet with a potential client, Mary. Charles uses expertise in financial planning as a core component of his branding. How should Charles provide clarity on his branding in his meeting with Mary?
Charles should provide a simplification of the six-step financial planning process combined with a life-cycle approach.
Explain direct revenue vs. indirect revenue
Direct revenue includes fees associated with preparation of the initial plan and its immediate implementation.
Indirect revenue is the extent to which the plan encourages the client to disclose additional investment assets or financial needs that will create a broader mandate for the advisor.
In July 2016, amendments to the Client Relationship Model 2 (CRM2) came into effect. The purpose of this phase was to ensure that investors receive greater transparency around…..
The fees they pay to hold investment products.
With this compensation method, the advisor will simply embed financial plan preparation and updating costs in the annual asset management fee charged to the client.
Percentage of Assets
Explain the difference of comprehensive planning vs. modular planning
Comprehensive planning is just that, a very thorough process heavily weighted toward the analysis phase of the six-step financial planning process. It is followed by extensive analysis and report creation, including detailed budgets, cash flow statements, net worth statements, and tax summaries.
Modular or goal-based planning is a simplified approach to planning that shortens the process for both the client and the advisor. It is based on the assumption that the financial situation and goals of a client or household are subject to change over time, as clients move through different financial life cycle stages as detailed above.
This may provide a solution to offering appropriate or reasonable levels of financial planning to a growing or mature client base.
Client segmentation
_____________, as practiced by most advisors, is an attempt to align the level of service a client receives with their economic value to the practice.
Segmentation
