Suitability & reviews

Question 1

List 3 main functions of the financial plan report..

Answer 1

1. Set out a clear financial statement of client’s current position.
2. Quantify (in both monetary terms & timescales), financial objectives.
3. Analyse a range of options & make recommendations on how to make changes & achieve objectives.

Question 2

Name 4 useful tips on how to prepare the report to ensure the advice is effective.

Answer 2

• limit the length of main report by making use of appendices (e.g. calcs)
• have clear introduction & conclusion
• limit the use of technical jargon
• use short sentences and paragraphs
• include diagrams and graphs
• use headings & reference numbers
• include an index if report > 4 pages

Question 3

Name 2 FCA requirements in the report.

Answer 3

• evidence of compliance
• disclosure of costs

Question 4

What must be included in the report when making recommendations of pensions & ISAs?

Answer 4

Key Feature Documents for those pensions & ISAs

Question 5

Name 2 things an adviser will be interested in during ARs.

Answer 5

• whether client’s financial objectives have changed
• whether client’s circumstances have changed (maybe afford more cont.s?)

Question 6

What must an adviser provide the client with during an AR?

And what would it ideally include?

Answer 6

• A summary of the current value of their savings plan
• A section on asset allocation

Question 7

What should good benchmarking allow the client & adviser to see?

Answer 7

If the out or under performance of their portfolio was a function of either asset allocation or fund selection or a combination of both.

Question 8

Name 3 factors to consider when implementing asset allocation re-balancing.

Answer 8

• costs & charges
• potential tax liabilities
• market timing and the possible need to phase the disinvestments & reinvestments