Chapter 26 - Working with the Retail Client (Done) Flashcards
What are the key objectives of a financial plan?
Achievable, accommodative of lifestyle and income changes, realistic, and providing for necessities and rewards.
What are the six steps in the financial planning process?
Establish client-advisor relationship, collect data, analyze data, recommend strategies, implement recommendations, conduct periodic review.
How do you establish the client-advisor relationship?
Interview the client, discuss the financial planning process, mention alternative strategies, specialist expertise, and disclose potential conflicts of interest.
What data and information should be collected from the client?
Current financial and personal status, investment goals, risk tolerance, personal data, net worth, family budget, and client’s psychology regarding risk.
What is involved in analyzing data and information?
Analyze collected data to understand the client’s financial situation and goals, prepare investment objectives and constraints.
How should you recommend strategies to meet client goals?
Create a plan based on analyzed data, review the plan with the client, ensuring understanding of each product, risks, and rewards.
How do you implement recommendations?
Put recommended ideas and strategies into motion, ensuring the client considers the recommendations carefully.
Why is periodic review and follow-up important?
Regularly review and update financial plans to reflect changes in the client’s situation, adjust recommendations as needed, and rebalance asset allocation.
What is the Life Cycle Hypothesis?
Outlines five life stages: Early Earning Years (18-35), Family Commitment Years (25-50), Mature Earning Years (45-60), Nearing Retirement (55-70), Retired (60+).
What are the five primary values for ethical decision-making?
Duty of Care, Integrity, Professionalism, Compliance, Confidentiality.
