Topic 14 (Understanding and satisfying customer needs) Flashcards
What is the order of the Financial life cycle?
> Children > Students (16-20) > Young adults in employment (20-30) > Young families (30-40) > Established families (40-50) > Mature households (50-60) > Retirement (60+)
What is the pattern where most savers and investors build up and hold their assets?
- Cash
- Short-term savings - fixed rate bonds
- Secure/short term investment (bank/building society accounts)
- Greater long term potential
(shares/unit trusts)
What is a Fact-find?
To offer advice, the advisor will complete a fact-find of the customer which includes their circumstances, experience, needs and objectives
What Personal/family details are needed for a fact-find?
- name and address
- date and place at birth
- marital status
- family details
- children
What finance information is needed in a fact-find?
- employment details
- income/expenditure
- assets
- liabilities
- plans and objectives
What details are required in a fact-find in terms of Assets?
- ownership
- purpose of investment
- type of investment
- values
- rate of return
- tax status
- sum assured/ lives assured
What information is obtained in a fact-find in terms of Liabilities?
- the lender
- the amount of loan
- balance outstanding
- type of loan
- rate of interest
- payment method
What are ‘soft facts’?
A discovery of clients feelings about what they have/want to do financially
(aims to find out why?how?do you feel that?)
Why will knowing the clients feelings help build an understanding?
- Shows how’s much they know
- Indicates their motivation
- Helps construct recommendationsreccomendations
The client must understand risks involved, what explanations are given by advisors?
> is there risk to the capital invested
the value of investment may rise/fall
the amount of capital income/growth isn’t guaranteed
What is Capacity for loss?
Where the clients ability to absorb falls in the value of their investment
What are the 5 categories when identifying needs and objectives?
- Protecting dependants in the event of death
- Protection against the financial effects of being unable to work
- Providing an income in retirement
- Protecting and/or increasing the value of money invested
- Saving tax
What is the Advisor’s role?
- To define the clients needs and objectives accurately and recommend a priority order of action
What factors can have consequences when creating an order of priority?
> Savings and Investments > Tax planning > Income Protection > Pension provision > Life assurance protection
How does an advisor HELP a client?
Put the right amount of money
In the right form
In the right hands
At the right time
What areas are addressed when recommending a solution?
- state benefits
- existing arrangements
- affordability
- taxation
- risk
- timescale
- flexibility
What are the points to explain when representing a recommendation?
- the benefits
- risks/limitations
- product options
- summary of reasons for the recommendation
What should a client have when completing a recommendation/sale?
- A key features document and a key features illustration
2. A product brochure explaining product details/features in full
What product types and their retention periods are needed once an agreement is in place?
> Life policies/Pension contracts = 5 years
Pension transfers, opt outs, FSAVC’s = Indefinite
MiFID-related business = 5 years
Other = 3 years
What are the 2 categories for client servicing?
- Proactive
2. Reactive
What is Proactive servicing?
The advisor will instigate action by contracting the client to discuss further needs and identify any changes in the clients circumstances
What is Reactive servicing?
Involves the advisor acting as a result of a request by the client. The clients circumstances might change unexpectedly resulting in a request for advice.
