Advice Flashcards
What is KYC?
KYC is know your customer and it is a requirement of the COB that a financial adviser has sufficient information about their customer.
Most firms use a fact find document.
What does a fact find cover?
Personal details Employment details Income and expenditure Assets and liabilities Existing provision Attitude to risk
Customer needs
In order to formulate a recommendation, an adviser must always identify and analyse the client’s needs
Property or move house? Time span for investments - short term or long term How accessible must funds be Income or growth Any personal involvement Any ethical views or preferences
Current and future tax position
Prioritising objectives
Attitude to risk
Advisers must make sure clients fully understand the nature of any risk they are taking
Recommendations must meet risk
Risk is the biggest cause of FOS complaints
Investment risk
Low risk investments offer low returns but low probability of loss
High risk investments offer the possibility of high returns and a high probability of loss
Low risk - bank and building society deposits, cash ISAs and annuities
Medium risk - unit-linked management funds, unit trusts, investment trusts and commercial property
High risk - unlisted shares, warrants, futures and options (speculatory) and venture capital trusts
Relaying information back to customer along with documents
Ensure client understands the recommendation
Summarise points from previous issues
Deliver recommended solutions with illustration and technical details
Business card Fee agreement Key features Client specific illustration Product brochure
