Chapter 2 Flashcards
What are the different forms of marketing
Direct marketing - low cost /no response rate
Telemarketing - easy to track costs / generates revenue
E-Marketing - cheaper - feedback in real time
Key information documents (KIDs)
explain to customers the main features of any financial products that they are considering buying in a format that is easy to follow.
Factsheets
provides specific details about the investment fund is invested, investment performance and how the investment is managed
Minimum regulatory requirements for the key information
document
outline of the product
aims of the product
commitment of the customer
risk associated with the product
complaints and compensation
cancellation rights
product questions & answers
It is a regulatory requirement to provide KIDs
to customers when
selling and/or advising on products.
MoneyHelper
free, impartial, government service, funded by levies
Pension wise is a service from MoneyHelper. who can use these services?
Anyone over the age of 50, with a defined pension contribution
- pension benefits cant normally be accessed until the age of 55
What is Guidance?
Providing information on a product to
make an informed choice
what are the who guidance categories
Provider guidance: product information supplied by one of the provider’s customer
representatives directly to the customer
Generic guidance: generic information given to an individual on a type of product, as
opposed to a specific product from a provider.
who is responsible if the guidance given was unsuitable
the individual
Moneyhelper service can provide an understanding of
the right things to think about when considering your choices. For example, your plans to continue working.
- the different options for accessing your pension pot(s), advantages/ disadvantages
- the tax implications of each choice
what are non-advised sales
Products sold without an opinion or personalised recommendation.
understanding customer goals to provide education to put the customer in a more informed position
signposting products and services without giving recommendations
what are advised sales
combination of product information and specific details captured from the customer to recommend a specific solution and meets their needs
what do you need to provide advice
authorised/regulated by the FCA and subscribe to a code of ethics
What do firms need to give at the onset when giving advice on retail investment products
must inform them verbally and in writing of its regulatory status
Firms who provide advice on the products of another firm are known as
intermediaries
What do the seven ‘Ps’ of marketing refer to?
product, price, promotion, place, people, process and physical evidence
what principle is most related to marketing and why
Principle 7: Communications with customers
firms must communicate information to customer in a way which is clear, fair and not
misleading.
Retail client
Someone who has no particular specialist knowledge of financial products or investments.
Most protection
Professional client
A government, government body or another authorised firm.
Eligible counterparty
A government, government body or another authorised firm if it is dealing on its own account, i.e. the eligible counterparty business is being transacted.
least protection - most knowledge
objective of the advice process
to identify and obtain the customer’s agreement to a series of recommendations that meet their key requirements
Letter of authority
customer gives the adviser the authority to contact third
party providers on their behalf for details of the arrangements they hold.
Fact-find sections required for advice
Personal information
Goals
Hard facts
Needs
Risk profile analysis
Planning considerations
Asset classes
Cash deposits - no risk to the capital /inflation can reduce the value
Bonds - loans to governments and companies which provide a fixed income and a redemption value / wide choice of risk and exposure to capital gain/loss.
Equities - shares of a company, offers the potential capital growth over a longer term / perform badly in times of slow economic growth/ rising interest rates
Property - reasonable protection against inflation over the long term. property market tends to follow a different pattern to
the equity markets.
what is a Suitability report?
A key written document used when giving advice. their content is covered by the Conduct of Business rules.
What is included in a Suitability report?
the report should give all relevant details of the recommendation - comprehensive information and customer friendly language;
* the language should be simple without the use of jargon
* where it is not possible to avoid technical terms, they should be accompanied by a clear explanation;
* sentences and paragraphs should be reasonably short, so that the customer can read quickly and with minimum effort
* explaining the key features and
benefits of the recommendation with its costs and risk warnings.
What is a service level agreement (SLA)
is a contract between the firm and the customer. It defines the services that the firm will provide and the required level or standard for
those services.
Customer service levels
Initial/ongoing product support
Ongoing guidance
Transactional advice
Annual review service
Quarterly/six monthly review
Consumer Duty focuses on 4 key area’s
- products and services;
- price and value;
- consumer understanding; and
- consumer support.
Advice process
- Determine client’s requirements
- Analyse client’s financial position
- Formulate a strategy to meet objectives
- Produce recommendations
and implement - Revisit recommendations,
objectives and strategy
Terms of Business
Agreement (TOBA)
firm must give retail clients a client agreement
It must include information on the:
* type and level of service being provided;
* costs of the service;
* duties of the service provider to the client;
* access to the FOS in the event of a complaint; and
* access to the FSCS in the event of the firm becoming insolvent.
Client acceptance includes
Client definitions
Client categorisation
Terms of Business
Agreement (TOBA),
Companies measure quality of their services through
retention and referral
what are shares in a company called?
equities
