Topic 14 Understanding & Satisfying Customer Needs Flashcards
Who typically opens account for children?
Their relatives
What products may be set up on behalf of a child?
- NS&I products (Premium Bonds)
- Stakeholder Pensions
What financial needs might a student between 16-20 have?
- Savings
- Borrowing to finance
1. Education
2. Purchase a car
3. Fund a holiday
What financial needs might a young adult in employment aged 20-30 have?
Savings
- Purchase house
- Rent a house
- Think about saving for retirement
What financial needs might young families (30-40) have?
- Possible mortgage needs
- Life Assurance (person & Family)
- IPI
- FIB
- CIC
- Whole of Live Cover
What financial needs might established families (40-50) have?
- Child care costs are less
- Growing family need to consider up sizing so mortgage increase
- Inheritances from parents
What financial needs might mature households (50-60) have?
More disposable income
- Mortgages paid off
- Children leave home
- Consider increasing pension provisions
What financial needs might people (60+) who have not retired have?
Turning income in lump sums for retirement
What financial needs might people (60+) who have retired have?
Produce an income from capital
What other financial needs might people (60+) want to consider?
- Cost of Health care
- Consider long term care
- Inheritance tax liabilities for their family
What is the typical savings pattern for a person?
- Cash
- Current Account
- Instant access/ short term deposit savings account
- Fixed interest investments
- Collective investment (equity based)
What is the purpose of a factfind?
To ensure that any advice to be given to the customer is suitable for them
What would an adviser look to find out from a customer?
- Financial Situation
- Exciting & Future needs
- Ability to provide for needs
- Objectives
- Knowledge & experience of investment (understanding)
What is “Robo-advice”?
Remote online advice provided by computer algorithms
What is “ Hybrid Robo-advice”?
A combination between robo advice with human interaction
These details covers what aspects of a factfind?
- Full name, addresses (postal + email), telephone number
- DOB & place of birth (domicile)
- Relationship details
- Family details
Establishing customer’s situation
Why is it important to establish family details in a factfind?
- Establish financial dependents
- Client maybe a financial beneficiary
- Client may intend to be a financial donor
- Financial opportunities for family members may arise
Who are the most important group of family member in financial advice planning?
Children
Why are children the most important group in financial advice planning?
As the need of protection of income & education needs are large
These details covers what aspects of a factfind?
- Employment Status
- Income & Benefits
- Pervious & Additional Employment
- Income & Expenditure
Customer’s financial situation
Why is it important to know a customer’s previous employment details?
They may have preserved pension scheme details from a previous employer
The following are examples of what a client may have that is important for an adviser should know
- Ownership (solely or jointly)
- Purpose of investment
- Type of investment (Property, pension etc)
- Size & date of original investment
- Current and projected value
- Type of return (capital growth or income)
- Rate of return
- Tax status of assets
- Options available/Penalties
- Sum & life assured + maturity dates
- Name of institutions providing assets
Assets owned by a customer
The following are examples of what a client may have that is important for an adviser should know
- Lender
- Amount of loan
- Outstanding balance
- Original term and term remaining
- Type of loan (secured or unsecured)
- Amount of payment and frequency
- Interst rate
- Repayment method
- Protection of capital or payments
Liabilities a customer may have
When an adviser finds out about a customer’s personal, family and financial situation these can be viewed as obtaining what type of facts?
Hard facts
When an advisor is asking a customer more probing Why? How? What do you feel? questions to gain an understanding of the customer needs and wants. These can be classed as why type of facts?
Soft facts
What are the key soft facts that a factfind would look to find out from a customer?
- How a customer feels about their current situation?
- Objectives now and in the future?
- Why they have certain goals?
- Willingness to take action?
- Likelihood of a change in their circumstances?
If an adviser asked questions like the below what would they be looking to find out?
- What are your plans for retirement? What provisions do you currently have in place?
- How do you feel about the current levels of performance from your investments?
- What savings goals do you have in place?
- What are your views on making financial gifts to your family?
A customer plans and objectives
Understanding the customer’s feelings about their situation will help the advisor how?
- Will give an indication of the level of understanding a customer has of their finances
- Determine how motivated the customer is to change their financial situation
- Customer’s views on alternative solutions will assist in forming acceptable recommendations
To find out if a customer is interested in improving their financial situation how would the adviser frame their questions to a customer?
Asking worst case scenario questions about how the customer/customers would manage financial if they were unable to work due to sickness for a period or in the event of one of their deaths
What is it important to do when making a recommendation to a customer?
Understanding the customer attitude to risk in the proposal
A few types of risk the customer should be aware of are?
- Risk to capital
- Investments may fall or not grow
- Inflation risk
How can a customer risk appetite be obtained?
Psychometric testing (questionnaire)
What is a “capacity for loss” in relation to a customer?
If a financial loss was to occur would the customer’s standard of living change
If a client wanted a certain product but the advisor had to educate the client into looking at their own situation to see if option was appropriate would be a example of the adviser exercising their what?
Duty of care
What is a Vulnerable customer?
Somebody who is especially susceptable to detriment due to personal circumstances
Firms have a responsibility to identify & deal appropriately with vulnerable customers?
True or False
True
It is the responsibility of the adviser to spot all financial needs of a customer not just the one’s the customer is aware of?
True or False
True
What are the 5 arrears of financial need?
- Protecting dependants financially due to loss of income/ meet extra outgoings due to premature death
- Protecting self & dependants financially from loss of income in the long run
- Providing a retirement income
- Increase money saved or invested
- Saving tax
When talking about priorities with a client what is the best way for this to be done?
The priorities should be discussed and agreed between the adviser and the client
Who would have overall say in the financial affairs of the a person.
Client or the adviser?
Client
When the adviser is recommending solutions what are the adviser objectives?
- Placing the right amount of money
- In the right form
- In the right hands
- At the right time
- State Benefits
- Existing arrangements
- Affordability
- Taxation
- Risk
- Timescale
- Flexibility
Are all what?
The factors that should be considered by an advisor when recommending a solution
When explaining a solution to a client what should the explanations cover?
- Purpose of product and how client needs are meet
- Benefits to the client
- Risk & limitations of the product
- Options in the product that may be appropriate to the client
- Summary of reasons a product is being recommended
What are the 2 factors that determine when to close a sale with a client?
- Client reaction
- Client’s understanding of a proposal
What is meant by “qualifying” a customers objections?
Finding out whether it is a genuine concern or masking another issue. For example a lack of understanding
To assess how important a clients objective is how can an advisor gain better understanding of the objections?
Paraphrasing the client objections in a different way
When a deal is being completed why is it important that a client should complete an application form themselves?
So they can see the effects of deliberate or reckless misrepresentation of details
What could deliberate or reckless misrepresentation on an application form lead to for a client?
- Not being protected
- Loss of Premiums
What should be provided to a client on completion of a sale?
- Key Features Document (KFD)
- Product Brochure
- Business Card
What must the adviser also do on completion of a sale?
Explain cancellation notices & right to withdraw within a defined period
It is not a regulatory requirement to keep records & demonstrate advice given?
True or False
False it is a regulatory requirement
What are the retention periods for?
- Life polices, pension contracts
- MiFID- related business
5 years
What are the retention periods for?
- Other eg mortgage related contacts
3 years
What are the retention periods for?
- Pension related choices
- Additional Voluntary Contributions (AVC’s)
Indefinite
What is after sales care?
Post sale completion of deal
What does after sales care involve?
- Regular reviews
- Keeping the client informed on any delays in a product competition
- Direct debit & policy delivery
What are the 2 types of client servicing post sale?
- Proactive Servicing
- Reactive Servicing
What is Proactive Servicing?
When an adviser contact a client to discuss any further needs
What is Reactive Servicing?
When a client contact an advisor to discuss a change of circumstance or to discuss any query they may have
