Unit 17: Client Profile

Question 1

Financial Profile

Answer 1

Current expenses, Debt, Tax status, Income, Balance sheet, Liabilities
-Family Balance sheet and Income statement

Question 2

Nonfinancial considerations

Answer 2

Age, marital status, investment experience/attitudes, dependents, employment, demographics, current and future family needs.

Question 3

Risk tolerance

Answer 3

two components- investor’s attitude towards risk, and their financial ability to sustain losses.
conservative, moderate, or aggressive

Question 4

Investment goals, examples

Answer 4

saving for college, retirement, home, philanthropy, starting a business, legacy.

Question 5

Investment objectives

Answer 5

capital preservation, income, growth

Question 6

Best investment for capital preservation

Answer 6

bank-insured CD
-no interest rate risk, FDIC insured

Question 7

Current Income recommendations

Answer 7

conservative= Treasuries/IG Corporates for risk averse
moderate= preferred stock/public utility for moderate
aggressive= junk bonds for those who want risk

Question 8

Growth

Answer 8

common stock. growth stocks if long time horizon, large cap stocks if a little older.

Question 9

Speculation

Answer 9

Large risk, but also potential for substantial returns.
-options, commodity futures, some junk bonds/stocks

Question 10

OASDI (Social Security)

Answer 10

full benefits=40 quarters of employment
age 70=8% annual step-up, considered worth it if in good health

Question 11

Social security for ex-wife

Answer 11

can get full benefits if:
-were married for 10+ years
-unmarried at time eligible to place a claim
-paid benefits will not affect current spouse (if applicable)

Question 12

Medicare and SS

Answer 12

IRMAA has four tiers based on SS income amounts

Question 13

Three options for disability

Answer 13

-Workers comp, if applicable
-SSD, must not be able to engage is SGA due to terminal injury, or one that will last over 12 months
-Disability insurance, can be denied if occupation is hazardous

Question 14

Three tax strategies

Answer 14

-asset/income shifting, gifting to parents you’re caring for
-tax deferral, qualified retirement plans/TSA
-tax-free income, muni-bonds from resident state, and roth/529/coverdell

Question 15

eligible adults under NASAA Model to Protect Vulnerable Adults

Answer 15

those 65+ who would be subject to adult protective services statute

Question 16

Authority to delay disbursement

Answer 16

up to 15 days (and another 10 if investigated) if financial professional reasonably believes it would result in financial exploitation.

Question 17

Asset is liquid if

Answer 17

you can get the current market value quickly. does not mean principal protection

Question 18

Preferences

Answer 18

ESG. Tobacco company/parent died of lung cancer

Question 19

Investment Constraints (TTLLU)

Answer 19

Time horizon
Taxes
Liquidity
Laws
Unique
(risk tolerance is an objective, not constraint)