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Investment Environment > client objectives and advice > Flashcards

client objectives and advice Flashcards

1
Q

sequence of financial planning process

A
  1. identify and quantify finacnial objectives
  2. collect data
  3. analyse options to meet shortcomings
  4. prepare report and meeting
  5. implement plan
  6. monitor and review
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2
Q

fact find

A
  • basic information
  • current financial situation
  • current income and outgoings
  • expected income and outgoings (soft fact)
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3
Q

investment policy statement

A
  • risk objective
  • return objective
  • liquidity needed
  • time horizon
  • tax
  • regulatory issues
  • other unique circumstances
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4
Q

aspirations and goals

A
  • matching client needs with solutions (soft fact)
  • prioritizing the needs e.g. protecting the breadwinner, legal requirements (soft fact)
  • prioritizing real future goals vs pure daydreams (soft fact)
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5
Q

ability and willingness to take risk

A
  • ability
    (existing wealth, time horizon and liquidity requirements, existing and future commitments, age and family circumstances)
  • willingness
    (views, feelings and preferences, response to a questionnaire, previous investment experience)
  • assess overall risk tolerance
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6
Q

real assets

A

tangible

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7
Q

financial assets

A

a legal claim on future financial benefits

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8
Q

investments ranked according to risk-return profile

A
  1. gilts
  2. deposits
  3. investment grade bonds
  4. high yield bonds
  5. preference shares
  6. ordinary shares
  7. derivatives
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9
Q

ownership and tile documents

A
  • registered securities (legal title on register)
  • bearer securities (legal title determined by holder)
  • nominee accounts
  • joint ownership : joint tenancy (each owns 100%), tenants in common (each owns a percentage share, on death share passed)
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10
Q

beneficial ownership have the

A

right to share proceeds of sale

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11
Q

beneficial owners have the

A

power to control sale of land or buildings

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12
Q

discharge of contract types

A
  • by agreement
  • by performance (terms met in full)
  • by frustration (external events prevent fullfilment)
  • by breach
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13
Q

powers of attorney include (time bound)

A
  • sign documents
  • make purchases
  • make disposals of property
  • handle financial affairs
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14
Q

lasting power of attorney - Mental capacity act 2005 (replaced enduring powers of attorney in 2007)

A
  • made when a person is in a sound mind but can become incapable
  • registered with the Office of the public guardian
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15
Q

types of lasting power of attorney

A
  • property and affairs : financial affairs
  • personal welfare : healthcare, residence etc.
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16
Q

insolvency can lead to

A

bankruptcy
receivership (appoint receiver to take control of company’s assets and arrange distribution to creditors)
liquidation

17
Q

wills

A

executors are granted probate (establish ownership of the estate before assets are distributed)
national intestacy rules (attempt to distribute to family members)

18
Q

types of trust

A
  • discretionary trust (discretion for trustee to distribute income to beneficiaries)
  • interest in possession / life interest trust- (life tenant -income from the trust)( remainderman (reversionary interest) -received capital when life interest ends)
  • bare trusts (obeys instructions of beneficiaries, trustee is a nominee only)
19
Q

charitable trusts benefit from tax advantages

A

relief of poverty
advancement of religion
advancement of education purposes and community

20
Q

trustee act 2000

A

-trust deed does not specify trustee’s specific investment powers
-cannot invest in occupational pension schemes, authorized unit trusts, companies or certain schemes under Charities Act 1993

21
Q

trustee act 2000 allows to invest

A

General Investment Powers : any ordinary security (such as equities and bonds)
Specific Investment Powers : invest in freehold or leasehold land in the UK

22
Q

rates for:
BoE base
mortgage rates
unsecured loans
credit cards
store cards

A

0.5%
2.5%-6% (additional fees)
7%-15%
15-20%
20-35%

23
Q

Global investment performance standards

A

apply to investment management firms standardise communication method for performance for existing and potential clients

24
Q

partnerships do or do not have a distinct legal entity

A

do not thus partners are individually liable for partnership debts

25
Q

principal gives to agent

A

legal power to be bound by their

26
Q

real property refers to

A

land, buildings, rights over property
=> immovable property

27
Q

personal property

A

moveable property

28
Q

trust

A

legal arrangement covered by trust deed

29
Q

for contracts to be applicable/enforceable must involve

A
  • consideration of both parties (gain)
  • intention
  • terms and conditions
  • types of contract : oral / written
  • capacity to contract
30
Q

discharge of contract

A

discharge by:
- agreement
- performance
- frustration
- breach

31
Q

a void and voidable contract are different

A

void - contract is unenforceable
voidable - one party declares it void and decides not to be bound by it

32
Q

bearer instruments

A

gold, diamonds, money etc
registered in the name of issuer not legal owner

33
Q

bearer documents

A

eurobond
depositary receipts
bank notes

34
Q

administrators

A
  • carry out administration when there is no will
35
Q

probate

A

agreement from tax authorities for executors to release estate to beneficiaries

36
Q

charities tax benefits:

A

no capital gains tax , income tax, inheritance tax or stamp duty
BUT liable to VAT on purchase

Investment Environment (10 decks)

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