Topic 9

Question 1

What are the 4 basic stages of giving advice?

Answer 1

1) Gathering information (factfind) both financial and personal
2) Analysis of needs, wants and objectives
3) Identifying appropriate solutions and preparing recommendations.
4) Presenting recommendations to the customer and gaining agreement
Gather, Analyze, Identify, Presenting

Question 2

What are the key points that would be covered when presenting a product recommendation?

Answer 2

• the purpose of the product and the customer’s needs that it will address;
• the benefits that the customer will enjoy;
• the risks and limitations inherent in the product;
• the costs and charges applicable to the product;
• any options that exist within the product that may be appropriate to the customer;
• a summary of reasons why the product is being recommended.

Question 3

What is the purpose of the product information documents and illustrations that must be presented prior to a sale?

Answer 3

Product information documents and illustrations are important documents
to ensure that the customer understands the product and how it will meet
their needs.

Question 4

Youve just signed an application for a unit trust investment, when should you send a suitability report?

Answer 4

The suitability report should be sent as soon as possible before the
transaction is concluded.

Question 5

Detailed records to show suitability must be kept, how long must they be kept? Complete the table:
Product:
pension contracts =
pension transfers/opt outs =
Life policies =
MiFID business =
Other business =

Answer 5

Product:
pension contracts = 5 years
pension transfers/opt outs = indefinitely
Life policies = 5 years
MiFID business = 5 years
Other business = 3 years

Question 6

What is body language useful for?

Answer 6

Although body language is very useful for seeing unspoken signs
that indicate another person’s feelings, it can also be used to influence the
way other people feel about us and what we are saying.

Question 7

Define insistent client

Answer 7

The FCA defines an insistent client (COBS 9.5A.2 G) as one where:
1) the firm has given the client a personal recommendation;
2) the client decides to enter into a transaction which is different from that
recommended by the firm in the personal recommendation; and
3) the client wishes the firm to facilitate that transaction.

Question 8

What is the purpose of suitability reports?

Answer 8

to explain why the adviser recommended a solution as suitable for the customers needs, typical content would include:
- what was discussed
- overview of customers situation
- the customers needs, objectives and priorities as discussed
- the product recommended
- why the product is suitable

Question 9

The advisers aim should be to:

Answer 9

help the customer to:
- put the right amount of money;
- in the right form;
- in the right hands;
- at the right time.

Question 10

What should you look for in a fact find? 11

Answer 10

Personal info (address age DOB marital status, kids etc)
Employment status
income source and salary, inc pensions/savings etc
personal and household expenditure
types of asset
liabilities
objectives and importance of them in life
provision for existing and future needs
current knowledge and experience
attitude to risk
wills

Question 11

Describe the advice process in 4 stages:

Answer 11

Factfind -> analysis of needs, wants and objectives -> identifying solutions
and preparing recommendations -> presenting recommendations and gaining agreement.