Common exam questions

Question 1

Outline factors that would be considered at an annual review (Max 12)

Answer 1

• Change in needs/objectives/circumstance/income & expenditure.
• Change in health/marital status/dependents/vulnerability.
• Value of industrial unit/other assets/emergency fund.
• Liabilities.
• Any gains/use of CGT annual exemption/ISA allowance/ AA/DA/PSA availability.
• Changes in legislation/Budget/taxation.
• Performance against benchmark/target.
• On-going suitability.
• AtR/CfL.
• ESG/ethical considerations.
• Level of service/advice proposition/adviser charges.
• Market/economic outlook.
• Any additional capital/money to invest/inheritances.

Question 2

What are the benefits of holding assets via a platform?

Answer 2

• Consolidated valuations
• Less admin
• Income flexibility
• Cash account
• Access to institutional share classes
• Access to tools
• Discounted fund charges

Question 3

What are the drawbacks of holding assets via a platform?

Answer 3

• Potential exit charges
• Additional platform charges
• Unnecessary functionality
• Risk of platform failure
• Unable to hold alternative income products

Question 4

State the actions that could be taken to mitigate CFL.

Answer 4

• Reduce portfolio risk
• Hold sufficient cash in case of loss
• Invest only what client can afford to lose
• Agree CFL with client in advance
• Establish ACTUAL risk client is willing to take
• Avoid overreliance on tools