Fact Find Flashcards
Areas to probe for Financial security on death/illness/disability (11)
-Protection covering mortgage (sufficient, pay out at correct time
-Investments relative to ATR
-what cover pays out for LT illness/disabled?
-Death benefits-eg lump sum from employer
-IP, ASU covering long term sick
-DWP benefits-what do they qualify for?
-Investment-how much are they relied on?Purpose? Liquidity?
-Critical Illness-pay out if event occurs
-Family-anyone to help with childcare
-Inheritances due?
-Loan outstanding?
Questions to ask regarding pension (15)
-employee/employer contribution
-amount
-Funds invested/other fund choices
-Opportunity to raise contribution?
-Salary sacrifice-bring down gross earnings
-State benefits -br19
-other pensions
-current/projected value
-Fees/charges
-funds with options
-scheme retirement age
-charges for early retirment
-PCLS protected
-Transitional protection
-Satisfied?
How do you measure ATR in relation to each task?
-Use efficient frontier (questionnaire-prioritiez/timescales/cfl) maximum return for given level of risk
-feed into computer (produces score)
What is standard deviation?
Measures volatility against its mean average
How do you approach ATR profiling
-Identify task eg save for school fees
-Use questionnaire (priorities, CFL, time scales, computer (produces score), the results
-Allocate assets based on outcome in line with efficient frontier
How would you measure ATR (willingness)
How would you measure capasity for loss? ability
How would you measure tolerance of risk? need
-Questionnaire and computer, see if it matches up with their perception of their risk and agree suitable ATR for that area
-Income v outgoings
-questionnaire covering timeline and goals (the need to take risk)
How do you plot the efficient frontier for an asset (3)
(Helps investors understand the potential risk and returns for a given asset)
-Take the return of the asset
-work out the standard deviation of each asset (how much it could sway)
-Go in the middle
Disadvantages of ATR profiling (6)
-Different programmes
-Close questions only
-Could misinterpret
-Discounts NEED/tolerance and ability CFL
-Different profile for each financial aim
-Each outcome should be discussed
How to Budget for financial aims (3)
-Are the willing reallocate assets/invests that they’re not happy with to help with aim?
-Are they willing to use deposits to help with aim
-How much can they afford
What is the order for Prioritising needs
Budget+ debt
Life and CI
IP/ASU
Pension income
Savings (from income)
Tax planning
Estate planning
What if a client wants to set different priorities?(3)
-Go with them
-Note in fact find the reason
-Document what advice was given and why not taken
Pros (3) and cons (5) of using earned income to fill GAPS in plan?
-Liquid
-Regular
-May increase
-Pound cost averaging (money may buy you more or less dependant on when put in-due to market conditions)
-Must be employed
-Lowers standard of living
-Must keep up payments
-Come after tax/NI/sl
Pros (3) and cons (2) of using investment income to fills GAPS
Unlikely to be missed
You don’t rely on employment
Sustainable long term
Potentially taxable
Unpredictable
Pros (3) and cons (3) of using existing investments to fill GAPS
-Simply realigns to meet current needs
-In clients control-can be reinvested
-Easily transferred to other investments
-Tax (eg cgt on transfer)
-Bad timing to encash
-Recycles existing capital, not new
Pros (4) and cons (2) of using anticipated capital for GAPS
-No tax
-Can plan ahead
-Doesnt impact lifestyle
-Doesn’t rely on employment
-Not totally reliable
-Exists in the future-no time to invest/grow now
