Understanding And Satisfying Customer Needs

Question 1

Which of the following would normally be a priority need need for a client taking out their first mortgage:

A) an emergency fund

B) income protection

C) medium-term investments

D) pension planning

Answer 1

B) income protection

Question 2

Why is it important to establish a clients place of birth as part of the fact find?

Answer 2

To establish domicile for tax purposes and it may affect underwriting matters

Question 3

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 sticks and shares ISA

D) a pension plan

Answer 3

B) an emergency fund

Question 4

When completing a fact find for a client in relation to investment advice, which of the following should always be taken into account?

A) levels of indebtedness

B) employment details

C) attitude to risk

D) mortgage arrangements

Answer 4

C) attitude to risk

Question 5

Whoch of the following ought to be the highest financial priority for a retired couple:

A) pension accumilation

B) protection advice

C) generating income

D) mortgage advice

Answer 5

C) generating income

Question 6

What is meant by capacity for loss abd why is it important?

Answer 6

Capacity for loss

Is the extent a customer would be adversly affected by a loss on their investments. This must be taken into consideration when assessing attitude to risk

Question 7

List the factors an advisor might takeninto account when deciding on an appropriate solution for a client?

Answer 7

Eligibility for state benefits

Existing arrangements

Affordability

Taxation

Attitude to risk

Capacity for loss

Anticipated changes in circumstances

Timescale

Flexibility

Question 8

List the five points that should included when presenting a recommendation to a client?

Answer 8

The purpose of the product and the needs it will address

The benefits to the client

Risks and limitations inherent in the product

Any product options that might be appropriate

A summary of reasons for recommending that product

Question 9

For how long must records relating to pension transfers be retained?

Answer 9

Indefinitely

Question 10

What is the difference between proactive and reactive servicing

Answer 10

Proactive servicing is instigated by the advisor, perhaps on the basis of information obtained during the factfind about a forthcoming promotion or inheritance.

Reactive servicing is instigated by the client in order to address a need, or by the clients representative, e.g. the executors of a will.