Chapter 8 Qs Flashcards
What is the purpose behind ‘part 1: personal details’ of an adviser’s fact-find?
A. To gather general information about a client and their circumstances
B. To allow the adviser to ask straightforward questions to help build rapport
C. To understand if the client is able to proceed with the meeting
D. To establish whether the client is suitable for the intermediary
A. To gather general information about a client and their circumstances
How do you calculate a client’s net worth?
A. Deduct the client’s total liabilities from their total assets
B. Value of house less mortgage
C. Total expenditure deducted from total income
D. Value of non-essential expenditure
A. Deduct the client’s total liabilities from their total assets
Which of the following does not fall into one of the five key demands and needs broadly related to key life stages?
A. Protection and income protection
B. Investment
C. Estate planning
D. Pensions and savings
C. Estate planning
There are five key ‘demands and needs’ these are Protection, Income Protection, Pensions, Savings and Investments (PIPSI). Estate planning is an important requirement for those with potential IHT issues but is not one of the five key demands related to key life stages.
Which of the following would you not expect to find in a client’s suitability report?
A. A full reproduction of the fact-find
B. The client’s needs and demands which are not being met
C. Reasons why a particular investment/provider was selected
D. The process used to determine any asset allocation
A. a full reproduction of the fact-find
A full reproduction of initial fact-find is not normally required. Answers b), c) and d) would normally appear in a suitability report, as they all relate to why a particular recommendation is suitable.
What is the primary purpose of a fact-find?
A. To establish relevant data to allow an adviser to determine a client’s needs in
order for the adviser to make suitable recommendations
B. To accurately record client information as it will be relied upon in the event of a
complaint
C. To assist an adviser in methodically working through the required client
information
D. To act as a prompt to ensure no area of client information is forgotten
A. To establish relevant data to allow an adviser to determine a client’s needs in
order for the adviser to make suitable recommendations
The primary purpose of the fact-find is to gather information to help the adviser understand the client and make the most suitable recommendation. A fact-find may possibly be used for the reasons outlined in answers b), c) and d); however, these are not its primary purpose.
Within the suitability report it is recommended that the reasons why a product provider has been selected are documented. What would you not expect to find here?
A. Quality of service offered by the provider
B. Commission levels offered by the provider
C. Financial strength of the provider
D. Provider’s history
B. Commission levels offered by the provider
The section of the suitability report which outlines why a specific provider has been chosen should include details such as quality of service of the provider, their history and financial strength. Commission levels cannot be used as a reason why a product has been selected.
A financial adviser discovers during a fact-find interview that her client is unable to recall the details of his current remuneration. The correct course of action for the financial adviser to take is to
A) Terminate the interview with intermediate effect
B) Continue the interview to its conclusion and then decide to offer the client any advice
C) Make an estimate of the missing information and base any recommendation on the estimate
D) Continue the interview and agree to collect the information at a later date
D) Continue the interview and agree to collect the information at a later date (8:1)
A financial adviser discovers during a fact-find interview that her client is willing to expand on his future hopes and aspirations. She decides to adapt her line of questioning to make
A) Direct questions
B) open-ended questions
C) Scripted questions
D) Leading questions
B) open-ended questions
Typically, how should a financial adviser gather hard facts during the fact find process
A) By asking open ended questions
B) By asking closed questions
C) By writing to the companies with whom the client already has financial arrangements
D) By seeking written responses from the client only
B) By asking closed questions
A financial adviser is specifcally discussing issues relating to best in class and engagement with his client. This is most likely to be because the client
A) Is risk averse
B) Is seeking capital growth rather than income
C) Wishes to maximise her investment returns
D) Wishes to take an ethical approach
D) Wishes to take an ethical approach
