Skills Required To Advise Clients Flashcards by Jacques Sheppard

What is the standard approach set out by the Internation Standards Organistaion (ISO) 6

ISO 22222:2005

Establish and define relationship

Gather client data, determine goals and expectations

Analysie and evaluate clients’ financial status

Develop and present plan

Implement plan

Monitor the plan and relationship

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What needs to happen when a client is found?

Agree the terms for the relationship define the way you will work together.

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Can a previous fact find be used for a client?

Yes but the facts should still be gone over.

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What is good practice for fact finding?

Do it every time you meet a client, but at a minimum, a fact-finding document should be completed. Every time advice is given.

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What is the best form of questioning for hard and soft facts?

Hard - closed
Soft - open

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What 13 things might you find on a basic fact find? BFEILEEEWAEOA

Basic personal details
Family details
Employment status
Income and expenditure
Loans and liabilities
Existing protection polices
Existing pensions
Existing savings and investments
Wills and power of attorney
Attitude to risk
Ethical issues
Other Priorites
Any other advisors

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How much is an average emergency fund?

3-6 months

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What will a good risk conversation cover?

The clients understanding of investment risk

The ability and willingness to make investments that involve risk

The knowledge and previous experience of investment risk

The physical and psychological ability to cope with financial loss

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What basic personal details should an advisor find out?

Name
Address
Date of birth
Marital status
Residence and domicial status
Dependants

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What is included in finding out about clients family?

Dependants including elderly

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What is included in the clients employment?

Current role and employer.

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Why is it important to know a clients role and employer?

To establish things such as client risk and what employment benefits the client has.

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What is included in income and expenditure?

All sources of income, including state benefits and their expenditure. Further information may be obtained in respect of changes to these figures in the event of death, illness, or retirement.

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What is included, in fact-finding for loans and liabilities?

Current mortgages
Other loans.
The provider
Interest rates
Term
Repayments
The customers’ plans for repayment

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What is included in existing protection polices fact-finding?

Life
Income protection
Critical illness
MPPI
Accident sickness and unemployment cover.
Emergency fund

Understand the current: (to work out shortfalls)
Form
Term
Level of cover

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What is included in existing pensions fact-finding?

Current employer’s pensions
Past pensions
Any personal arrangements

Might require contacting the provider for projection of benefits or illustration of current fund size.

What is included in existing savings and investments fact-finding?

Cash deposits
Real asset investments
Is any money earmarked for a specific purpose
Is any available to be taken into consideration in establishing shortfalls for customers goals

What is included in will and attorney fact-finding?

Has the client made a will
Whether there are any powers of attorney
Is the power of attorney currently active
If active, should contact be with the attorney or not?

What is included in the attitude to risk fact-finding?

Customer’s attitude to risk.
Capacity for loss
Risk proofing tools

What is included in the ethical issues fact-finding?

ESG

Hard approach only investing in companies with an active approach to ethical issues.

Soft approach - avoiding companies that do wrong

Record all ethical considerations to be built into the recommendation.

What is included in the other priorities fact-finding?

Differs for each area of planning

Life insurance - potential beneficiaries, smoker status, required term.

Mortgage - do they require fixed term, is there need for cash back, would fees need to be added to the loan.

What is included in any other advisors fact-finding

Not integral but useful.
Has or is anyone else involved in their finances

Accountants
Other financial advisors

What should be done when analysing and evaluating a clients financial status?

Thus is where an advisor finds out what a client wants to achieve.

Their objectives should be quantified and prioritised.

This is a good time to establish a budget

How should the analysis and evaluation of the clients financial status examination take place

Identify- establish the need

Discuss - discuss the clients’ views on this. Are they concerned enough to act?

Quantify- using KYC info to agree a shortfall

Prioritise- decide what gets priority within the budget.

PIMPSI or PIPSI (Mortgages considered in savings and protection)

Customers own priority.

How does an advisor develop and present a financial plan?

Once KYC meeting is complete, take the information away and develop a plan. Some happen immediately, and a recommendation is made on one meeting, but this generally applies to simpler transctional areas of planning. More complex requires more work. Independent or restricted whole of a thorough analysis of options available to client is required. Can pick from a panel but must consider going off panel if a more appropriate product could be obtained. Solution should meet the clients' established needs, be mindful of their budget, and be consistent with their attitude to risk and ethical concerns. This will all be documented in the sutability letter.

When implementing the financial plan, should you deliver the report orally?

You can and then put the suitable report together, but it helps to have the report to hand as a track to run on.

What is the purpose of the sutability letter?

To be a clear consice record for a client to return to to what they did and why. So, there is no technical jargon. Also works as a clear picture of the clients situation to be looked into by outsiders to find out what the advisor has done and why.

What should be included in the sutability letter?

Background to recommendation - customer circumstances and nature of contact between them and the client. Any info withheld and limitations on advice because of this incomplete information. Shortfalls identified through the analysis undertaken Product recommended and why - including provider selection criteria if appropriate Features, advantages, and benefits of the product. Associated risks - this being a key part of the regulator's requirements and vital to client understanding Costs and charges Taxation consequences - from the action itself and associated consequences that might arise. Actions going forward - any action required on the part of the advisor or the client, i.e., reviews and who initiates them.

What is a feature?

Something that 'just is' in a policy

What is an advantage?

The 'which means' of a feature

What is a benefit?

The 'which means to you' of the policy.

What are the key skills required of an advisor?

Excellent questioning skills Skills of analysis Strong presentation skills Relationship building

The implementation may lead to what?

More products. These will require application forms.

If an advisor is not looking to work on a transctional basis, what should they do?

Develop long-term relationships with the client, check in with them, and aim to keep them on for the long term.