Gathering Client data/setting goals and Expectations Flashcards
What checks must be done to know your customer? (3)
Identify the customer
Verify their identity
Assess the purpose and nature of the relationship/transaction
When obtained client info, what is good to find out and explain to client
-Needs/wants
-aims/objectives
-priorities
-Values (ESG ETC)
-Risk profile-explain what it means in simple terms
-The different types of financial risk and how it applies
When synthesizing the clients info what are you looking out for (4)
-inconsistencies
-subjective factors
-indicators
-where additional information is needed
What is cash flow modelling? (4)
-A look at the clients Liabilities v assets
-Income v expenditure
Uses assumed growth projections
-Considers income, inflation, wages rises, interest rates
-Helps devise strategy to reach goals
What is in the suitability
Report? (4)
Whats been recommended
Why been recommended
How it meets clients demands and needs
Summary of the consequences and risks of taking out
What is the priority order for clients aims? (8)
Debts and budget
Protection (life and CI)
Income protection
Pension income
Savings
Investments
Tax planning
Estate and IHT
LIPS
What are soft facts?
Relates to feelings, wants, desires, aspiriations
Eg how important is this, what consequences if not met
How commited are you to thi
8 stages of the fact find
-Personal details
-income/expenditure
-assets/liabilities
-DWP eligibility
-existing policies
-taxation
-estate planning
-ATR
What follows the fact find?
Prioritisation (lips)
What three areas is risk based on?
-ATR-willingness to take risk//each financial aim will be different-more cautious on st needs/higher for longer term
-Ability (capacity for loss)-ability to absorb inv loss//impact on standard of living
-Need (to take risk)-to meet client financial needs. Higher the need/more risk accepted
What is attitude to risk ATR (2)
What acceptable for client
Their subjective translation of cautious or risk taker
What is tolerance to risk? (2)
Subjective view of how much variance you will stand eg.10k risk
Can be swayed based on fomo
What is capasity for loss (3)
-OBJECTIVE amount one can take before impacts on life
-Income v outgoings-can they absorb loss
-attitude to risk can be impacted by loss
What are the three ATR risk profiles?
Low: conservative/modest/stable returns for small amount of risk//short period of fluctuation acceptable
Medium: Balanced//dont seek or avoid risky inv//accept frequent fluctuations
High: v. Comfortbale with risk, aim for long terms returns, dont care about short/medium term fluctuations
What is the purpose of the cash flow modeller?
Shows how much gap there is between now and objective so shows what needs to be saved or gained
Current and forecasted wealth
Considers assets, investments, debts, mortgage, income/expenditure
