Topic 14 Flashcards
When advising a self-employed customer, it is important to establish their:
Question 1 options:
a)
regular overtime.
b)
net profits.
c)
commission earnings.
d)
basic salary.
B
The FCA prescribes the format of the factfind and the information required.
Question 2 options:
a) True
b) False
B
What should an adviser treat as the first priority when addressing a customer’s financial situation?
Question 3 options:
a)
Tax efficiency of their savings and investments.
b)
Financial protection for dependants in the event of their death.
c)
Providing an income for them in retirement.
d)
Build up investments to increase their value.
B
There is a well‑established pattern to the way in which most savers and investors build up and hold their assets. Which of the following is usually the last part of that pattern?
Question 4 options:
a)
Current account.
b)
Fixed-term bonds.
c)
Equity-based products.
d)
Short-notice deposits.
C
Which of the following best describes a customer’s capacity for loss?
Question 5 options:
a)
How well they could cope financially with investment losses.
b)
Their feelings about taking investment risks.
c)
How they would cope with unemployment.
d)
How much they have in emergency funds.
a
It is important to ensure that the customer agrees with the adviser’s assessment of their priorities.
Question 6 options:
a) True
b) False
B
Deciding a plan of action and agreeing its priority order is the customer’s decision, assisted by input from the adviser.
Short-term accessible savings accounts are the most likely choice for which of the following?
Question 7 options:
a)
Mature households.
b)
Retired people.
c)
Established families.
d)
Young, employed adults.
D
For which product must a firm keep records of the advice given indefinitely?
Question 8 options:
a)
Pension opt-outs.
b)
Life policies.
c)
Investments.
d)
Personal pensions.
A
Which of the following is least likely to cause a firm to treat a customer as ‘vulnerable’?
Question 9 options:
a)
Marital status.
b)
Disability.
c)
Health.
d)
Bereavement.
A
Which of the following is not a soft fact?
Question 10 options:
a)
Potential changes in the customer’s circumstances.
b)
The customer’s current employment and salary.
c)
The customer’s thoughts on their current arrangements.
d)
The customer’s objectives
B
Which of the following would usually be a priority need for a
client taking out their first mortgage?
a) An emergency fund.
b) Income protection.
c) Medium‑term investments.
d) Pension planning
b) Income protection, to ensure that they can continue to make their
mortgage repayments if they are unable to earn an income. An
emergency fund would be useful but, at least at the beginning, would
be unlikely to be big enough to cover mortgage repayments except in
the very short term
Why is it important to establish a client’s place of birth as part
of the factfind?
It is important to establish the client’s domicile for tax purposes and it
may be a factor in underwriting decisions
Which of the following would normally be regarded as the
priority financial need for a client who has surplus cash for
the first time?
a) A unit trust.
b) An emergency fund.
c) A stocks and shares ISA.
d) A pension plan
b) An emergency fund. Once people have enough cash to cover their
day‑to‑day needs, the usual approach is to build up savings in an
easy‑access deposit account
When completing a factfind for a client in relation to investment
advice, which of the following should always be taken into
account?
The client’s:
a) levels of indebtedness.
b) employment details.
c) attitude to risk.
d) mortgage arrangements
c) Attitude to risk
Which of the following ought to be the highest financial priority
for a retired couple?
a) Pension accumulation.
b) Protection advice.
c) Generating income.
d) Mortgage advice
c) Generating income. It is not a) pension accumulation as this would take
place before retirement
