Serving The Retail Customer Flashcards
What is a flexible WOL policy?
A client chooses between a minimum and maximum level of life cover. The policy holder chooses between the min and max cover. This type of cover needs to be regularly reviewed to ensure it is always suitable for the client
How often is the state pension age expected to be reviewed?
6 years
What is a defined benefit pension scheme?
An occupational scheme which is related to the clients earnings at retirement
What is the main difference between a gilt and a corporate bond?
Gilts are loans to the government whereas bonds are loans to companies
What is an actively managed fund?
Actively managed funds are mutual funds or exchange-traded funds in which the portfolio managers make investment decisions they aim to outperform
What is a passive managed fund?
Fund tracks the market in which they operate (eg FTSE 500)
What are the main differences between a compulsory purchase life annuity and a purchased life annuity?
Only the income element from PLA is taxable whereas the whole CPLA is taxable.
PLAs generally offer better rates as CPLA have to be purchased so theres no need for competition on the market
What is the current NRB?
£325,000
What is disposable income?
Difference between expenditure and income
Expenditure should consider:
Essential spending
Everyday spending
Occasional or non-essential spending
When is a debt management plan suitable?
When a client has surplus income and unsecured debts - consolidates all debts into single affordable repayment
What is debt consolidation?
When new loans are negotiated to re pay existing loans. Usually to get cheaper monthly payments however, can be more expensive in the long run as the term will be significantly more
What is a second charge mortgage?
Equity in home is used as security against another loan
What are the two types of mortgages?
Capital and interest and interest only
What is equity release?
Allows older clients to release equity in their house for a lump sum payout. They are allowed to remain in the house until death or move into long term care
Which mortgage is not regulated by the FCA?
Business buy to let mortgages
What are the two types of loans?
Structured and unstructured
What is a defined contribution pension?
Monthly contributions made from employee or employer or both
Why was a stakeholder pension introduced?
To give self employed or lower earners a chance to save for retirement
What is the eligibility for an auto enrolment pension?
Must be over 22 years old and earning above £10,000
What is the residence NRB?
£175,000 reduced £1 for every £2 of net estate over £2m
What is meant by a no negative equity guarantee?
The lender guarantees the lender will not have to pay more than the value of their home
Who is support for mortgage interest normally paid to?
Paid directly to the lender
Who can claim savings credit?
Those who have reached SPA prior to 6 April 2016
What are the factors which affect retirement planning ?
Age
income
Dependants
Any pension arrangements
State pension age
How many qualifying years must a person accrue to receive a full new state pension?
35
Name the types of deposit accounts:
Savings
Cash ISA
Notice
Fixed-rate bond
High interest regular savings
What are the benefits of pooled investments?
Professional expertise
Spreading the risk
Reducing dealing costs
Less administration
Greater choice of funds
What is the transferable NRB?
Any unused NRB is transferable to spouses
What is a pooled investment?
A pooled investment is where investors money is pooled together into a fund which is then invested in one or more assets classes by a fund manager
What is a fixed repayment lifetime mortgage?
A lump sum payment and do not have to pay interest. Instead when their house is sold they will have to pay an agreed sum that is higher than they amount borrowed.
What is the current SPA?
68
What is the current NRB and RNRB?
NRB - £325,000
RNRB - £175,000
What are the standard timeframes used when discussing investment objectives?
5 years = short term
5 - 15 years = medium term
15 years = long term
What is a derivative?
A right or obligation to buy or sell another type of asset as a deoxidised date and time
How frequently is universal credit paid?
Monthly to help with budgeting and to reflect the workplace
