Chapter 5 - Financial Planning Recommendations

Question 1

What is the top priority for clients with surplus income?

Answer 1

Protection

Question 2

What are the procedures for developing recommendations?

Answer 2

1. Identify objectives
2. Identify alternative products, investments or strategies to achieve the objective.
3. Evaluate each alternative
4. Select the most appropriate alternatives

Question 3

What is the next priority after protection for clients with surplus income?

Answer 3

Pension

Question 4

What does implementing financial recommendations involve?

Answer 4

communicating and justifying the recommendations within the financial plan to the client in a clear and understandable manner

Question 5

What is the minimum content for a suitability report?

Answer 5

• specifying the client’s demands and needs (objectives)
• explaining why the recommended transaction is suitable having regard to the information provided by the client, and
• explaining any possible disadvantages of the transaction for the client.

Question 6

A Key Features Document should be provided for what type of investment products?

Answer 6

• non-packaged retail and insurance-based investment products (non-PRIIPs),
• cashdeposit individual savings accounts (ISAs) and
• cash-only lifetime ISAs (LISAs)

Question 7

A Key Information Document should be provided for what type of investment products?

Answer 7

where a firm sells a PRIIP

Question 8

A Key Features illustration should be provided for what type of investment products?

Answer 8

Firms must prepare a key features illustration (KFI) for each non-PRIIP packaged product they produce

Question 9

What are the 4 purposes of a FP review?

Answer 9

1. establish whether the client’s situation has changed
2. review the plan to assess progress in meeting objectives
3. assess whether recommendations are still valid, and
4. agree any necessary modifications or revisions to the financial plan.