Unit 2 - UK FS & Consumer Relations (4 of 80)

Question 1

6 Stages of people’s lifecycle?

Answer 1

1) Childhood

2) Single Young Adulthood - low income & no savings

3) Young Couple No Children - 2 incomes & no kids (saving for deposit)

4) Parents with Dependent Children - disposable income falling due to family needs

5) Empty-Nesters - more disposable income & lower/no mortgate (high disposable)

6) Retired - generating income for retirement & long term care

Question 2

What are Stakeholder Pensions?

Answer 2

Personal pensions which meet certain requirements, eg, in terms of low charges and accessible minimum contributions

Question 3

Income Tax Personal Allowance?

Answer 3

£12,570

Question 4

Income Tax Rates?

Answer 4

20% - £12,571 to £50,270

40% - £50,271 to £125,140

45% - over £125,141 (no personal allowance)

Question 5

How does acting as agent change for independent vs. restricted financial advisers?

Answer 5

If IFA then agent of customer

If resticted then agent of provider

Question 6

Direct vs Indirect investments?

Answer 6

Direct = include securities such as bonds and shares & NS&I products

Indirect = include vehicles such as unit trusts, open-ended investment companies (OEICs) and investment trust companies.

Question 7

Specialist Investments?

Answer 7

property, timber, antiques, fine wines, venture capital/private equity

Question 8

Flexible mortgages?

Answer 8

allow the borrower to pay the mortgage off early, or in some cases late. & the borrower may also be able to make early payments, take payment holidays and even borrow back some of the home loan.

Question 9

Automatic Enrollment contributions?

Answer 9

Minimum 8% (Employer 3% minimum)

Question 10

What are SIPPs & Stakeholder PPs?

Answer 10

SIPPs & stakeholder pension plan are types of personal pension plan and have tax wrappers, allowing tax rebates on contributions in exchange for limits on accessibility. They also allow for a greater range of investments notably equities and property.

Question 11

3 categories of financial adviser?

Answer 11

1) Whole-of-market advisers - provide advice on products from across the whole market.

2) Multi-tied advisers - recommend products from a limited range of providers (the panel).

3) Single-tied advisers - recommend products from one provider only.