Chapter Nine: Client Advising Skills

Question 1

What key information must be given to a client to help them decide if the service is right for them?

Answer 1

Details of the service offered and whether the firm provides financial advice.
Information about the cost of the services on offer.

Question 2

What is the information sheet provided by all mortgage lenders to its customers?

Answer 2

ESIS - European Standardised Information Sheet

Question 3

What policy information should a customer expect to receive if they have been recommended a General Insurance product?

Answer 3

1. What the policy covers
2. Any exclusions
3. Limits and restrictions
4. Any other important features

Question 4

What product information should a customer expect to receive if they have been recommended an Investment Product?

Answer 4

1. The aim of the investment
2. The clients commitment
3. How the payments are invested
4. The main risks
5. The tax position
6. Fees and charges

Question 5

What criteria should communications with clients meet?

Answer 5

Serve their purpose, be fair, clear and not mis-leading

Question 6

What might details of a clients assets indicate to an adviser?

Answer 6

The clients attitude to risk in terms of how they have previously invested and their requirement for savings - short and long term

Question 7

What information does part one of the Fact Find contain?

Answer 7

Personal information including:

1. Basic details
2. Family and employment details

Question 8

What information does part two of the Fact Find contain?

Answer 8

Financial information including:

1. Assets
2. Liabilities
3. Life insurance and other regulated savings
4. Pension arrangements
5. Monthly income and expenditure

Question 9

What information does part three of the Fact Find contain?

Answer 9

1. Planning and objectives
2. Existing arrangements (including and known changes)
3. Financial objectives
4. Other professionals such as accountants and solicitors

Question 10

If a customer chooses not to acknowledge that there is a need or does not wish to take action to deal with it, what should an adviser do?

Answer 10

The adviser should document the need and make sure it is documented within the written recommendation.

Question 11

What are the four considerations to discuss with clients when evaluating attitude to risk?

Answer 11

1. Understanding of investment risk
2. Ability and willingness to make risk investments
3. Understanding, knowledge and experience of investment types
4. Capacity for loss

Question 12

What does the mnemonic ‘PIPSI’ stand for?

Answer 12

1. Protection
2. Income Protection
3. Pension
4. Savings
5. Investment

It is the hierarchy of needs for client financial planning.

Question 13

What elements would be considered when discussing the suitability of a product?

Answer 13

Tax
State benefits
Client demands and needs
Client objectives
Affordability
Term
Investment risk
Ethical Preferences
Risk warnings

Question 14

If an adviser is providing independent advice, what must they do in addition to due diligence on the product?

Answer 14

Make an adequate comparison of product providers

across the market and retain sufficient evidence of the research conducted.

Question 15

Following the oral presentation of recommendations, a written report must be provided. What are the general guidelines in terms of what it must contain?

Answer 15

1. No jargon
2. Short, clear paragraphs
3. Logical sections
4. Balanced view - advantages and disadvantages

Question 16

What actions should be taken to ensure that a recommended course of action is affordable?

Answer 16

Refer back to the income and expenditure sections and ensure any surplus income will be available to fund the commitments required