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

What the policy covers
Exclusions
Limits and restrictions
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

The aim of the investment
The clients commitment
How the payments are invested
The main risks
The tax position
Fees and charges

Question 5

What criteria should communications with clients meet?

Answer 5

service their purpose and 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
Their requirement for savings - short and long term

Question 7

What information does part one of the factfind contain?

Answer 7

Personal information

Basic details
Family and employment details

Question 8

What information does part two of the factfind contain?

Answer 8

Financial information

Assets
Liabilities
Life insurance and other regulated savings
pension arrangements
monthly income and expenditure

Question 9

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 9

Document as part of the advice process as protection for the adviser

Question 10

What information does part three of the factfind contain?

Answer 10

Planning and objectives
Existing arrangements (including and known changes)
Financial objectives
Other advisers

Question 11

What is the process that should be followed to that each need is explored fully?

Answer 11

Indentified
Discussed
Quantified
Prioritised

Question 12

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

Answer 12

Understanding of investment risk
Ability and willingness to make risk investments
Understanding, knowledge and experience of investment types
Capacity for loss

Question 13

What are the main financial demands and needs and what is the mnemonic used to remember them in order?

Answer 13

PIPSI

Question 14

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

Answer 14

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

Question 15

Mr and Mrs grey have a number of financial demands and needs but cannot afford to satisfy them all. They as you to advise them, what should you do?

Answer 15

Prioritise demands and needs in consultation with them and recommend products in order of priority

Question 16

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

Answer 16

Make an adequate comparison of product providers
across the market
Retail sufficient evidence of the research conducted

Question 17

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 17

No jargon
Short, clear paragraphs
Logical sections
Balanced view - advantages and disadvantages

Question 18

What is the structure of the suitability report?

Answer 18

1. Names and particular aspects noted as to the clients current situation understood from the factfind
2. Specify the demands and needs
3. Any need identified that has not been resolved by the recommendation and why
4. Formal recommendations - including cost, commission, fees, tax treatment of contribtions and benefits
5. Why the investment/insurance company has been recommended - including history, financial strength, product range, quality of service (commercial considerations)
6. Risks explained, risk profle of asset allocation
7. Summary of recommendation & any next stepts

Question 19

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

Answer 19

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