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Question 1

Independent financial advisers - provide what advice (2), if focused? And factors to meet independence (7)

Answer 1

May provide broad and general advice or specialist and specific advice (focused). If focused, must make it clear that independence relates to a specific advice area.

To meet independence requirement;

• certain FCA mandated products may be excluded (some unreg CI schemes and traded life policy investments)
• certain multi-manager investment fund recommendations may be inadequate.
• firms using product panels must also allow the use of off-panel recommendations.
• using a single platform may be insufficient
• model portfolios must still cater for clients individual circumstances
• do not have to offer pensions transfer or long term care advice
• discretionary investment services recommendations not included.

Question 2

Adviser renumeration - how they charge, rules, examples (4), rates, disclosure, reflect and facilitation

Answer 2

Advisers now set their own charging structures based on level of service they provide and cannot receive commission. No rules on what structure should look like. Examples included hourly rates, fixed fee, % charges or combo.
Should not charge different rates for different providers.

Adviser charges must be disclosed upfront and ongoing charges taken when ongoing service given. Fees should reflect level of service provided and be disclosed in monetary terms.

Facilitation - adviser fees can be deducted by provider in form of charges and passed back to the advisory firm.

Question 3

Stakeholder products and basic advice - product and terms, explain what + give what, first contact must (3), kyc + qs (4)

Answer 3

Short term deposits, med term collective or life stakeholder product and long term stakeholder pension scheme.

Must explain why chose stakeholder product and give client list of products and providers on offer if client asks for them.

On first contact, must give initial disclosure information, an explanation of how the advice will be paid for and any commission will be disclosed.

No requirement to know your customer for stakeholder products so fact find is not completed. Instead questions asked around debt levels, investment objectives, tolerance of risk and pension rights. Only has to be suitable not most suitable.