Client Recommendations Flashcards
Mnemonics for client recommendations?
PASTE (Policy, assured, sum assured, term, extras)
TWIG (Trust, waiver of premium, index linked, guaranteed/MC premium)
Features Premiums Benefits
Why review investments at least annually? (7 answers)
Change in ATR-realignment of fund
Change in CFL-change to portfolio
Performance/rebalancing-to ensure in line with clients risk profile
Change in obj-alterned need for capital from investments
Change in tax regime-tax wrappers/allowances/tax benefits
New product/fund innovations-check if advantageous to client and make transfers
Legislation/market changes-chancellor makes significant changes ie lta.
Factors to consider at annual review(8)
-Objectives/personal circumstances
-State of health
-Use of allowances
-Economic/market changes
-Legislation changes
-New products launched
-Any inheritances
-Use of nomination forms (pensions pass tax free)
-Change in tax status (reliefs)
-Investment performance of schemes
What are main performance reporting items used for investments? (Annual statement/summary) (3)
-Transaction-whats been bought/sold in portfolio//summary of income
-Valuations- Broken down by fund//income and capital growth seperate
-Market commentary-overall coverage of market that may change strategy
What does the valuation part of the performance report include? (4)
-Value of fund at last review
-Deposits/withdrawals
-Appreciation/depreciation of fund
-Value at current review
Factors for Isa at next review (9)
-performance/rebalancing
-fees/charges
-any inheritance
-ATR/CFL tolerance to risk
-use of allowances
-any legislative changes
-changes in asset allocation/switching
-ESG requirements
-market conditions
What factors should you consider for IHT/estate planning at next review? (14)
-Health
-Change in personal circumstances
-Situation with Wills, new ones/update existing
-Lasting power of attorney requirement
-Investment valuations
-Situation with pensions/plan for retirement
-Change in income levels
-New products available that might be more tax efficient
-Legislation changes
-ATR/CFL/tolerance of risk
-Current IHT liability
-Use of tax allowances
-Use of IHT exemptions/annual/small gifts
-Economic/market changes
Events that would trigger the need for a review (10)
-Change in health
-Death/illness
-Change in mental capasity
-changes in legislation
-new products
-market changes
-when gilts redeemed
-any changes relating to kids/grandchildren
-grandchildren to go uni
-any changes in estate value
Improving tax efficiency of investments and savings (7)
-Maximise current ISA allowances
-Gradually transfer monies into stocks and shares ISA from unit trusts for example, and top up to maximum of £20k. Bed & Isa
-No capital gains/income tax on their isa’s so more tax efficiency
-Shares of higher earner into lower earning spouse (div rates @33.75% compared to 8.75% liability)
-Transfer would also mean a 10% CGT compared to 20%
-utilise CGT allowance on transfers
-utilise PSA at £1000 where can
Questions you ask to fund university costs (10)
-How much are annual fees?
-when starting/when ending
-additional costs? Accom, trips, books etc?
-will costs need to increase year on year or decrease?
-what interest rate are you comfortable with in which case?
-any inheritances
-when want to pay premiums-monthly/annually lumps sum
-affordability
-atr/cfl/tolerance to risk
-any existing assets-shares, depsots etcs available
Changes happen as people get older. What 4 things do you need to keep an eye on for older couples?
-tax status
-increase in estate value
-social security benefits
-annuity/pension drawdown rates
When is a cash flow modeller used? (2)
In analysis stage
Part of presentation
(To show how recommendations can help)
What key info does the cash flow modeller show? (11)
Current income needs/current expenditure
Further income needs/future capital expenditur
Inflation assumptions
Growth assumptions
Timeframe/longevity
Atr/cfl
Current assets/income from all sources
Downsizing/inheritance
Charges
Use of tax wrapper
Income changes on first death
What are the point of sales documents? (5)
KPD (arctc)
Illustration/projection/quote
PPFM if wp
Application form
Suitability report
