Session 15 Client Profile Flashcards
A family ________ ________ only includes assets and liabilities, not income, like salary, dividends or interest, or amounts paid for expenses
Family Balance Sheet
Investor ________ ________ is the attitude toward risk and safety. It is an important part of the client profile.
Risk Tolerance
A client who wants capital preservation with no risk of loss would need _______ as the security.
Bank Insured Certificates of Deposit (CDs)
Investors seeking _________ ________ will normally focus on individual securities or mutual funds that invest in fixed-income investments such as:
Government Bonds and Notes and Agency Bonds;
Corporate Bonds and Notes;
Preferred Stock; and
Utility Company Stocks
Current Income
_______ _______ - stock investments generally provide a means to preserve and increase the buying power of an investor’s money over and above the inflation rate. Although subject to short-term volatility, the equity market tends to provide higher investment returns over time.
Capital Growth
Large cap stock funds that invest in some of the largest and most respected companies. These funds may be a better choice for older investors, who may need to liquidate the investment in 3-5 years, or investors who are more comfortable knowing they have invested in a fund that is less risky.
\_\_\_\_\_\_\_ investments offer the opportunity to earn substantial returns but carry a commensurate amount of risk. These investments may include: Highly Volatile Stocks; High-Yield (junk) Bonds; Options on Stocks or Stock Indexes; and Commodity Futures
Speculative
Investors planning for college tuition often invest in ________ bonds
Zero-coupon bonds
Younger people with children are better off purchasing _____ insurance because the lower premiums allow significantly more protection. For those age 60 or older, the rates are generally prohibitive.
term insurance
In those cases where the estate does have ______ assets (such as stocks and bonds), life insurance still may serve a valuable need in that these income producing assets will not have to be sold to cover the estate tax liability or other financial expenses
Liquid assets
The _____ ______ analysis is used to determine how much life insurance is necessary to meet future needs. At minimum, life insurance coverage should provide for:
- Payoff of the client’s mortgage and other debts;
- Income for the survivor(s) for a reasonable time;
- College tuition; and
- Estate taxes
Capital Needs Analysis
An application for disability insurance coverage can be denied in the case of a ________ occupation.
Hazardous occupation
Taxes may be reduced by using the following 3 strategies:
1) ______ and income shifting
2) tax deferral
3) _____-______ income
Asset and income shifting - such as to a trust
Tax deferral - contributions to qualified retirement plans or tax-sheltered annuities
Tax-free income - like municipal bonds
The longer the time horizon, the _____ market risk the account can accept
The MORE market risk
The difference between the individual’s assets and the individual’s liabilities is the individual’s ______ ______
Net Worth
An 83-year-old widower explains to you that he is risk adverse and wishes to find an investment that will provide him with preservation of capital. Which of the following might you recommend: A) An index fund B) Bank-insured CDs C) Long-term U.S. government bonds D) Preferred stock
B) Bank-Insured CDs
