Chapter 2 Flashcards
In the ____ process, the advisor tries to uncover the client’s reasons for putting money aside, leading to th client’s emotional buy-in to the accumulation plan.
discovery
What are the 2 important components to the value based approach?
- Focus on the clients values
2. Discovery (the wealth advisor tries to understand the client’s accumulation stage and potential life transitions).
The _____ planning approach is a discovery method that helps builds bond of trust between the advisor and the client.
Value-based planning approach
The ____ planning approach is structured and is conducted systematically and professionally.
Value based
There are 2 kinds of questions that advisors can use to get the information that they are looking for. These are:
- Current state questions
2. Future state questions
List in order Maslow’s Hierarchy of Needs
- Survival
- Safety
- Sense of Belonging
- Self-Esteem
- Self-Actualization
The ____ stage approach is a hybrid of two methods (age-specific method and life stages).
accumulation stage approach
The ____ or ____ Formation Stage is focused on creating stability in their lives. This stage lasts from the early twenties through to the mid-forties. It has accumulation needs:
- Pay for housing
- Put money aside for capital purchases such as appliances and transportation
- Fund lifestyle, such as vacations, clothing and entertainment
- Look after children’s needs, such as clothing, care costs and medical expenses
Life build or Seed Money Formation Stage
The following important longer-term accumulation needs are apart of what stage?
Home purchase Children's education Emergency savings RRSP purchases Non-registered savings Paying off debts such as student loans and credit cards
Life-Build/Seed Money Formation Stage
Individuals start to turn attention to saving for retirement during the ____ stage.
Mid-Life or Pre-Retirement Stage
Name the stage that involves the following accumulation issues:
Topping up funding for children's education. Adding to retirement savings Reducing debt Upgrading home Purchasing vacation home Supporting parents or children
Mid-Life or Pre-retirement Stage
Name 3 popular methods for periodic cash flow
- An itemized list of all expected expenses
- Net income adjusted for Pre-retirement expenses
- An estimated percentages of Pre-retirement income
This method is a three step process that involves:
- Add up the current after-tax income for both spouses
- Add up expenses that may vanish after retirement (such as RRSP, mortgage, lunches, etc)
- Deduct the Pre-retirement expenses from current after-tax income to calculate after-tax income to calculate after-tax living expenses. Estimate the income taxes for this amount of net income. Gross up living expenses to arrive at pre-tax retirement living expenses (RLE).
Net income, adjusted for Pre-retirement expenses
An itemized list of all expected expenses is all called ____
Square One Approach.
This method of predicting cash flow required during retirement takes a percentage of pre-retirement income as an estimate of needs for retirement. It is the easiest but most inaccurate method.
An estimated percentage of pre-retirement income.
