Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

R06 CII June > Providing financial advise > Flashcards

Providing financial advise Flashcards

1
Q

What is the 6 steps of ISO 22222?

A

-establish relationship
-establish goals/objectives
-assess financial status
-develop plan
-implement plan
-review plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Under establishing the relationship with a client what would you complete/discuss/disclose? (8 answers)

A

-Fact find
-Know your customer
-Business card offered
-Disclosure (who the regulator is, complaints procedure, firm, service, remu)
-SCDD services and cost disclosure document
-client agreement
-letter of authority
-Fees-allows them to make informed decision
-services offered
-level of relationship-know someone is keeping tabs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What would you do to set goals/objectives (4)

A

-Highlight goals
-Highlight shortfalls
-establish ATR/CFL so know investment mix is correct
-Client agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How would you analyse the clients financial status? (5)

A

-Assess existing assets/investments etc
-pension statement
-investment statements
-Cash flow modelling-see peaks and troughs
-Assess suitability-link ATR to goals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the five steps in developing and presenting the plan?(5)

A

-highlight what the plan is to meet objectives
-budgeting and prioritising to find money for needs
-establish what tax wrappers utilised
-establish what tax allowances utilised
-establish tax savings utilised

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What would the adviser do under implementing recommendations? (2)

A

-arrange paperwork for client (reduce admin errors)
-highlight the consumer/investor protection if things go wrong (the higher the level of advice the more protection afforded)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What would you do under analysing the clients financial status

A

-Get clients existing investment statements
-Pension statements
-Calculations obtained (cash flow etc)
-Valuations obtained (worth of an asset)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What documents would be given once a client commits to the plan? (6)

A

-client commits to plan
-Suitability report provided
-Illustrations/projections
-KFD provided
-Principles & practises of financial management (with profits)
-policy documents given
-cooling off /cancellation notices given

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

When implementing the plan what is done? (4 steps)

A

-Set up the plan
-monies allocation
-fees/premiums paid
-referrals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the three types of charging?

A

-Time based charging

-Fixed fee

-Fund based

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the advantages(5)disadvantage (3)of time based charging?

A

-easy to understand
-no product bias-paid on time
-less admin
-cost comparisons are easily done across advisers

May reward inefficiency
Final cost hard to determine
Paid from client pocket-not fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Adv/disadvantages of fixed fee (3 each)

A

-Simple
-total cost known
-encourages communication as no extra fee

-Could be poor value
-Negotiating fixed fee down is hard
-Adviser could cut corners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Adv/disavan of fund based charging (3,3)

A

-there is an incentive for the adviser to get the fund to grow (profit share)
-Paid via provider (not client)
-more negotiation with fund based

-may not reflect work involved
-extra services=extra charge
-investment is reduced by the fund based charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is discretionary fund management and what benefit/cons does it bring? As form of ongoing fund management (5)

A

-Where a clients buy and sell decisions are made by a portfolion manager
-Adviser makes changes without input from client
-React quicker to market to maximise returns
-Fees/costs are involved
-investments returns are not guaranteed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Advantages/disadvantages of discretionary fund management 4/4)

A

-More personalised
-Respond quicker
-More regular reporting
-parameters can be put in place. Risks can be limited to what is originally agreed

-Higher costs
-Higher minimum investment
-Needs client trust
-no guarantees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Advan/disadvan of advisory fund management (6)

A

-Less transactions=lower cost compared to discretionary
-larger range of products (lower minimum spend compared to disc)
-Lower min invest=lower costs

-Less specialist/bespoke
-Missed opportunities as have to check with client
-one size fits all

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is advisory fund management

A

-Advisor checks with client when changing portfolio
-Greater day to day control of funds by client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is contained within the client agreement? (9 answers)

A

-date of commencement
-regulator status
-investment objectives
-fees/charges
-details of service provided
-adviser investment restrictions

-complaints/FOS
-FSCS
-Conflicts of interest (eg another IFA for example)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the two fees relevant to ongoing monitoring?

A

-Trail fees-a small % of fund. Provider deducts and pays to adviser
-Retainers-monthly DD often

-encourages adviser to be pro-active with legilsation and products etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the features of robo advice (6h

A

-Online survey that uses data to auto invest/offer advice
-algorithm driven
-low costs
-lower minimum fund
-available 24/7
-less human interaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What impacts fees? (4)

A

-who does the work
-qualifications
-how service delivered eg.f2f
-location of offices

22
Q

What are the six steps of the complaints process?

A

Complaint received (must be eligible, assessed by handler)
Complaint acknowledged (written acknowledgment, internal complaints process explained)
Client kept informed (regular update/max 4 weeks)
Final decision (8 weeks from receipt, FOS referral explained, accepted/not, compensation. Kept for 3-5 or forever based on product)
Third party view
FOS-max £335k plus extra costs/interest-complainant has 6 months from final decision

23
Q

What is the FSCS? (5)

A

-Default of business
-100% capped at £85k
-Covers deposits, investments,mortgage and home, insurance
-90% cap if intermediary
-per person, per firm, per marketing group
-Direct investment not covered

24
Q

What must the ff be/what are the regulatory requirement for the know your customer/fact find stage? (5)

A

-no jargon
-legible/understood by everyone
-no space/gaps/stuff left out
-soft and hard facts
-consistent data-errors/inconsistencies spotted

25
Q

What are soft/hard facts and why should you capture both in the suitability report/fact find?

A

-Soft facts help tell the story and from a regulatory perspective show the advice is suitable
-Hard facts are evidence that is definitely true

26
Q

What should you capture in the fact find? (8)

A

-Personal details
-Income and expenditure
-Assets and liabilities
-DWP eligibility
-Existing policies
-Taxation
-Estate planning
-Risk atr etc

27
Q

How would you break down expenditure in the fact find process?

A

-Essential
-Every day
-Non-essential

Surplus/shortfall from this is affordability for solutions

28
Q

How would you review/determine/categorise income during the fact find process? (4)

A

-Consider from all sources
-Relate to tax allowance
-is it guaranteed (reliable and long term)
-Is it variable (eg self employed)

29
Q

Where does money for financial solutions come from?

A

-The surplus in money in v money out

30
Q

How can you free up client cash for solutions?

A

-Find debt/utility bills where savings can be made
-Set priorities in expenditure

31
Q

What does the adviser need to check regarding the clients assets in the fact find? (2)

A

-Are they fit for purpose? Eg life cover for mortgage
-Are they aligned with current aims?

32
Q

Questions to ask around plans/policies? (11)

A

-Why take it out?
-why product/provider choice?
-When did it start/when end?
-when is lump sum required?
-current surrender/transfer/sum assured value
-End date surrender value etc
-How are the funds invested
-are there early penalites
-on what lives assured
-amount paid in/contributions
-Is it fit for purpose?
-ATR in this need are

33
Q

Why might a client need referring and what does the adviser need to do in the referral process?

A

-Client needs product/service not offered
-Adviser isn’t authorised to offer

-Clients agreement to refer
-Include costs/fees

34
Q

What must a suitability report be to protect the customer (3)

A

Fair, clear, not misleading
Jargon free
Simple

35
Q

What activities take place at end fo tax year review? (4)

A

Isa
Pension
Cgt
Iht
Allowances

36
Q

What activities take place at start of tax year?

A

New isa
Amending plans w/budget changes/allowance changes

37
Q

What events could impact frequency of review

A

Complexity of product
Tax year
Size of investment-to reassure
Change of circumstance-retirement, school feees, maturity date
Level of service requested /prompts
Annual

38
Q

What triggers client reviews (18)

A

Change of job
Divorse/marriage
Birth of chold
Moving to new house
Lottery win
Health issue
Retirement
Chnage of obj
Inheritance
Legilslation changes
Change in market returns
New product
Economic news
Provider defaults
Change in gov
Global events
Change to atr
Policy maturing

39
Q

What areas might you review if change of job (6)

A

Change to tax position
Income levels
Additional expenses required for job
Prev v new pension scheme
Employer benefits
Existing protection polciies-still appropriate

40
Q

Shoild you check ff is still valid at review?

A

Yes, and update and sign if changed

41
Q

What should you suggest if client requires more income (5)

A

Startegy on expensiture costs to increase disposable
Switch income to lower paying tax payer
5% inv bond withdrawals
Higher yiedling investments
Part crystallise pension (if over55)

42
Q

What should suggest to client if more cash is needed? (4)

A

Pcls
5% withdrawal/surrender segments
Realise gains and use allowance
Taking secured loan on life policy

43
Q

What should you consider for a client if there is a change to atr (3)

A

Switch within funds

Balance and use AA

Transfer to spouse

44
Q

What to do if client wants to invest more funds (5)

A

Top up existing
Put in pension checking carry forward
Check new product innovation
Check tax year timing-better to wait?
Check holder-is spouse better doing it?

45
Q

What is adjusted net income

A

Taxable income minus tax relief, losses, pension contributions, charity,

INCLUDE PERSONAL ALLOWANCE

46
Q

What is the FSCS temporary high balance protection?

A

FSCS protects temporary high balances in your bank account, building society account or credit union account of up to £1million for 6 months

On mortgages, inheritance, divorse, claim for dismissal

47
Q

What is the steps to establishing a savings/investments strategy?(10)

A

-Establish relationship/provide initial disclosure
-Fact find
-Establish ATR/CFL/tolerance
-Establish affordability
-Analyse current savings and investments
-Research/formulate recommendations
-Make recommendations
-Suitability report
-Implementation
-Review

48
Q

What is a vulnerable customer and what are the four key drivers

A

All customers are at risk of becoming vulnerable and this risk is increased by characteristics of vulnerability related to 4 key drivers

Resilience-low ability to withstand financial emotional shocks
Capability-low knowledge/confidence in financial matters
Health – health conditions or illnesses that affect ability to carry out day-to-day tasks.
Life events – life events such as bereavement, job loss or relationship breakdown

49
Q

Issues to deal with at next review (8)

A

Rebalancing
Health/change in capasity
Change in income/expenditure/tax status/salary increases
Atr/cfl/tolerance
Use of allowances
Charges
Changes in legilsation
Personal ones to their case study

50
Q

How should you treat a vulnerable client and what are the four categories (8)

A

Health, life events, resilience, capability

Invite family friend to meeting
No jargon explanation
Provide written explanations for mile
Additional/longer meetings if required
Additional time to consider decisions
Flexible outcomes
No undue influence
Note on their file they Are treated as vulnerable customer/all staff informed

R06 CII June (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions