Client’s Current Circumstances - The Fact-Find

Question 1

Define Fact-Find

Answer 1

1. The FCA defines fact-finding as collecting relevant client data, with a fact-find document containing these facts.
2. Fact-finding is essential for financial advisers to understand a client’s goals and shape a suitable financial plan.
3. The process is iterative, as a client’s current financial situation may influence or change their objectives.

Question 2

What are the two types of facts covered in a fact-find document?

Answer 2

1. Hard facts
2. Soft facts.

A mix of hard and soft facts helps the adviser determine risk tolerance and create a personalised financial strategy.

Question 3

Define hard facts

Answer 3

This includes personal details
E.g. name, address, DoB, NI number, status of health, marital status, proof of identity, residence and domicile status, employment details, sources of wealth and family details

Question 4

Define soft facts

Answer 4

1. These are subjective, open-ended questions asked to the client in order to form an understanding of their preferences and aspirations.
2. This information is normally collected face-to-face.
3. It helps gauge the client’s current understanding and to determine their risk profile

Question 5

The fact finding process for hard facts also collect financial information.

What does this include?

Answer 5

1. Income, including earned income, savings income, and pensions
2. Investments and other assets.
3. Liabilities such as mortgages and credit card balances.
4. Tax.
5. Financial dependents