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CeMAP Unit 1 > Topic 14 Understanding & Satisfying Customer Needs > Flashcards

Topic 14 Understanding & Satisfying Customer Needs Flashcards

1
Q

Who typically opens account for children?

A

Their relatives

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2
Q

What products may be set up on behalf of a child?

A
  • NS&I products (Premium Bonds)
  • Stakeholder Pensions
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3
Q

What financial needs might a student between 16-20 have?

A
  • Savings
  • Borrowing to finance
    1. Education
    2. Purchase a car
    3. Fund a holiday
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4
Q

What financial needs might a young adult in employment aged 20-30 have?

A

Savings

  • Purchase house
  • Rent a house
  • Think about saving for retirement
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5
Q

What financial needs might young families (30-40) have?

A
  • Possible mortgage needs
  • Life Assurance (person & Family)
  • IPI
  • FIB
  • CIC
  • Whole of Live Cover
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6
Q

What financial needs might established families (40-50) have?

A
  • Child care costs are less
  • Growing family need to consider up sizing so mortgage increase
  • Inheritances from parents
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7
Q

What financial needs might mature households (50-60) have?

A

More disposable income

  • Mortgages paid off
  • Children leave home
  • Consider increasing pension provisions
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8
Q

What financial needs might people (60+) who have not retired have?

A

Turning income in lump sums for retirement

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9
Q

What financial needs might people (60+) who have retired have?

A

Produce an income from capital

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10
Q

What other financial needs might people (60+) want to consider?

A
  • Cost of Health care
  • Consider long term care
  • Inheritance tax liabilities for their family
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11
Q

What is the typical savings pattern for a person?

A
  1. Cash
  2. Current Account
  3. Instant access/ short term deposit savings account
  4. Fixed interest investments
  5. Collective investment (equity based)
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12
Q

What is the purpose of a factfind?

A

To ensure that any advice to be given to the customer is suitable for them

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13
Q

What would an adviser look to find out from a customer?

A
  • Financial Situation
  • Exciting & Future needs
  • Ability to provide for needs
  • Objectives
  • Knowledge & experience of investment (understanding)
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14
Q

What is “Robo-advice”?

A

Remote online advice provided by computer algorithms

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15
Q

What is “ Hybrid Robo-advice”?

A

A combination between robo advice with human interaction

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16
Q

These details covers what aspects of a factfind?

  • Full name, addresses (postal + email), telephone number
  • DOB & place of birth (domicile)
  • Relationship details
  • Family details
A

Establishing customer’s situation

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17
Q

Why is it important to establish family details in a factfind?

A
  • Establish financial dependents
  • Client maybe a financial beneficiary
  • Client may intend to be a financial donor
  • Financial opportunities for family members may arise
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18
Q

Who are the most important group of family member in financial advice planning?

A

Children

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19
Q

Why are children the most important group in financial advice planning?

A

As the need of protection of income & education needs are large

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20
Q

These details covers what aspects of a factfind?

  • Employment Status
  • Income & Benefits
  • Pervious & Additional Employment
  • Income & Expenditure
A

Customer’s financial situation

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21
Q

Why is it important to know a customer’s previous employment details?

A

They may have preserved pension scheme details from a previous employer

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22
Q

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
A

Assets owned by a customer

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23
Q

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
A

Liabilities a customer may have

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24
Q

When an adviser finds out about a customer’s personal, family and financial situation these can be viewed as obtaining what type of facts?

A

Hard facts

25
Q

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?

A

Soft facts

26
Q

What are the key soft facts that a factfind would look to find out from a customer?

A
  • 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?
27
Q

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

A customer plans and objectives

28
Q

Understanding the customer’s feelings about their situation will help the advisor how?

A
  • 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
29
Q

To find out if a customer is interested in improving their financial situation how would the adviser frame their questions to a customer?

A

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

30
Q

What is it important to do when making a recommendation to a customer?

A

Understanding the customer attitude to risk in the proposal

31
Q

A few types of risk the customer should be aware of are?

A
  • Risk to capital
  • Investments may fall or not grow
  • Inflation risk
32
Q

How can a customer risk appetite be obtained?

A

Psychometric testing (questionnaire)

33
Q

What is a “capacity for loss” in relation to a customer?

A

If a financial loss was to occur would the customer’s standard of living change

34
Q

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?

A

Duty of care

35
Q

What is a Vulnerable customer?

A

Somebody who is especially susceptable to detriment due to personal circumstances

36
Q

Firms have a responsibility to identify & deal appropriately with vulnerable customers?

True or False

A

True

37
Q

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

A

True

38
Q

What are the 5 arrears of financial need?

A
  1. Protecting dependants financially due to loss of income/ meet extra outgoings due to premature death
  2. Protecting self & dependants financially from loss of income in the long run
  3. Providing a retirement income
  4. Increase money saved or invested
  5. Saving tax
39
Q

When talking about priorities with a client what is the best way for this to be done?

A

The priorities should be discussed and agreed between the adviser and the client

40
Q

Who would have overall say in the financial affairs of the a person.

Client or the adviser?

A

Client

41
Q

When the adviser is recommending solutions what are the adviser objectives?

A
  1. Placing the right amount of money
  2. In the right form
  3. In the right hands
  4. At the right time
42
Q
  • State Benefits
  • Existing arrangements
  • Affordability
  • Taxation
  • Risk
  • Timescale
  • Flexibility

Are all what?

A

The factors that should be considered by an advisor when recommending a solution

43
Q

When explaining a solution to a client what should the explanations cover?

A
  1. Purpose of product and how client needs are meet
  2. Benefits to the client
  3. Risk & limitations of the product
  4. Options in the product that may be appropriate to the client
  5. Summary of reasons a product is being recommended
44
Q

What are the 2 factors that determine when to close a sale with a client?

A
  1. Client reaction
  2. Client’s understanding of a proposal
45
Q

What is meant by “qualifying” a customers objections?

A

Finding out whether it is a genuine concern or masking another issue. For example a lack of understanding

46
Q

To assess how important a clients objective is how can an advisor gain better understanding of the objections?

A

Paraphrasing the client objections in a different way

47
Q

When a deal is being completed why is it important that a client should complete an application form themselves?

A

So they can see the effects of deliberate or reckless misrepresentation of details

48
Q

What could deliberate or reckless misrepresentation on an application form lead to for a client?

A
  • Not being protected
  • Loss of Premiums
49
Q

What should be provided to a client on completion of a sale?

A
  • Key Features Document (KFD)
  • Product Brochure
  • Business Card
50
Q

What must the adviser also do on completion of a sale?

A

Explain cancellation notices & right to withdraw within a defined period

51
Q

It is not a regulatory requirement to keep records & demonstrate advice given?

True or False

A

False it is a regulatory requirement

52
Q

What are the retention periods for?

  • Life polices, pension contracts
  • MiFID- related business
A

5 years

53
Q

What are the retention periods for?

  • Other eg mortgage related contacts
A

3 years

54
Q

What are the retention periods for?

  • Pension related choices
  • Additional Voluntary Contributions (AVC’s)
A

Indefinite

55
Q

What is after sales care?

A

Post sale completion of deal

56
Q

What does after sales care involve?

A
  • Regular reviews
  • Keeping the client informed on any delays in a product competition
  • Direct debit & policy delivery
57
Q

What are the 2 types of client servicing post sale?

A
  1. Proactive Servicing
  2. Reactive Servicing
58
Q

What is Proactive Servicing?

A

When an adviser contact a client to discuss any further needs

59
Q

What is Reactive Servicing?

A

When a client contact an advisor to discuss a change of circumstance or to discuss any query they may have

CeMAP Unit 1 (18 decks)

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