R06 :) Flashcards
Fact finding
Gaining further or missing information
Think source
Who do I need to ask to get the info, client, provider or both
If specifies source have to go down that route
Factors to consider
Issues that you know that need discussing and explaining why they are relevant
Example transfering dB to DC scheme, if low ATR and only 7 years to retirement won’t match risk profile and meet shortfall if is one
Recommend and justify
Tell client what to do and back it up with why
Don’t say could do… Tel them what to do, be brave and make recommendation
Benefits / drawbacks or advantage / disadvantages
Don’t say opposite of advantages
Short to the point
List, state, identify - all same
Just tell - no need to explain
Say any qualifying stipulations
Explain / describe / outline
All same thing - technical question with detail needed - think textbook
Calculation
Normally iht - show all steps in workings out even if don’t know
Comment on
Summarise info already have, make comments on any shortfalls in the area of focus from the question
E.g. protection - have protection in place, not enough sum assured, not long enough…
Keep high level and don’t ask any questions or make recommendations
When protection is in the read it carefully to decide what it recommendation they are looking for
If personal or family it is not mortgage related
If mortgage it is linked to lending
If death it is life assurance
If serious Illness it is crucial illness insurance
If long term illness it is income protection insurance
Relate the answer to the client
Don’t talk generic for example tax banks - apply it to Hrtp if hrtp
Tax years in exam - don’t just say this year - say this tax year
Tax relief
Don’t just say tax relief say what tax relief they would get
Eg CGT or income tax relief…
The financial planning process
Step 1 - establish and define the client and personal financial planner relationship (scope of service, qualifications, conformity to ISO22222, info about client, terms of engagement, remuneration, known conflicts interest)
Step 2 - gather client data and determination goals and expectations (cash flow, asserts/liability, insurances, contacts, statements, legal docs, needs goal timeframes, assumptions, ATR, CFL, ESG)
Step 3 - analyse and evaluate the clients financial status (use steps 1 & 2 to evaluate strengths and weaknesses Inc currently faced and in future
Step 4 - develop and present plan (use steps 1-3 present and review in line with client to see if still correct or any misinterpretation or any changes, plan should be articulated explaining why, practical recommendations)
Step 5 - implement the financial plan recommendations (based on step 4 implement plan in line with terms of engagement, documentation produced recording extend client has accepted recommendations)
Step 6 - monitor financial plan and relationship (continue to review, implement and update as needed)
The benefits of using a financial planner
Identifying problems and goals
Identifying financial strategies
Setting priorities
Researching the market for best products
Getting the planning done
Provide piece of mind
Avoiding common financial mistakes
Backed by FCA
Considers tax implications
Advice specific to you
Cash flow modelling
The investment advice process
Step 1 - establish the client goals and expectations - find out how much investment risk the client is prepared to take by ATR & CFL. Then consider risk tolerance - how much can take: degree of volatility. Then consider income, wealth, expenditure needs, investment timescales, need for liquidity, health, experience, personality
Step 2 - understand the clients status - tax position, size of portfolio, ISA, pension
Step 3 - drawing up statement of clients investment aims - a statement which the client agrees to set out. 1) purpose of investment, 2) income or growth objectives, 3) statement about risk
Step 4 - recommend appropriate asset Allocation - dependant on risk profile - 4 assets classes or more and % split
Step 5 - making fund (or stock) selection recommendations - different types of funds, in house, management service, discretionary investment manager
Step 6 - implement and monitor the plan - once accepted funds be bought, monitor, review, rebalance in line with strategy
