Providing financial advise Flashcards
(50 cards)
What is the 6 steps of ISO 22222?
-establish relationship
-establish goals/objectives
-assess financial status
-develop plan
-implement plan
-review plan
Under establishing the relationship with a client what would you complete/discuss/disclose? (8 answers)
-Fact find
-Know your customer
-Business card offered
-Disclosure (who the regulator is, complaints procedure, firm, service, remu)
-SCDD services and cost disclosure document
-client agreement
-letter of authority
-Fees-allows them to make informed decision
-services offered
-level of relationship-know someone is keeping tabs
What would you do to set goals/objectives (4)
-Highlight goals
-Highlight shortfalls
-establish ATR/CFL so know investment mix is correct
-Client agreement
How would you analyse the clients financial status? (5)
-Assess existing assets/investments etc
-pension statement
-investment statements
-Cash flow modelling-see peaks and troughs
-Assess suitability-link ATR to goals
What are the five steps in developing and presenting the plan?(5)
-highlight what the plan is to meet objectives
-budgeting and prioritising to find money for needs
-establish what tax wrappers utilised
-establish what tax allowances utilised
-establish tax savings utilised
What would the adviser do under implementing recommendations? (2)
-arrange paperwork for client (reduce admin errors)
-highlight the consumer/investor protection if things go wrong (the higher the level of advice the more protection afforded)
What would you do under analysing the clients financial status
-Get clients existing investment statements
-Pension statements
-Calculations obtained (cash flow etc)
-Valuations obtained (worth of an asset)
What documents would be given once a client commits to the plan? (6)
-client commits to plan
-Suitability report provided
-Illustrations/projections
-KFD provided
-Principles & practises of financial management (with profits)
-policy documents given
-cooling off /cancellation notices given
When implementing the plan what is done? (4 steps)
-Set up the plan
-monies allocation
-fees/premiums paid
-referrals
What are the three types of charging?
-Time based charging
-Fixed fee
-Fund based
What is the advantages(5)disadvantage (3)of time based charging?
-easy to understand
-no product bias-paid on time
-less admin
-cost comparisons are easily done across advisers
May reward inefficiency
Final cost hard to determine
Paid from client pocket-not fund
Adv/disadvantages of fixed fee (3 each)
-Simple
-total cost known
-encourages communication as no extra fee
-Could be poor value
-Negotiating fixed fee down is hard
-Adviser could cut corners
Adv/disavan of fund based charging (3,3)
-there is an incentive for the adviser to get the fund to grow (profit share)
-Paid via provider (not client)
-more negotiation with fund based
-may not reflect work involved
-extra services=extra charge
-investment is reduced by the fund based charge
What is discretionary fund management and what benefit/cons does it bring? As form of ongoing fund management (5)
-Where a clients buy and sell decisions are made by a portfolion manager
-Adviser makes changes without input from client
-React quicker to market to maximise returns
-Fees/costs are involved
-investments returns are not guaranteed
Advantages/disadvantages of discretionary fund management 4/4)
-More personalised
-Respond quicker
-More regular reporting
-parameters can be put in place. Risks can be limited to what is originally agreed
-Higher costs
-Higher minimum investment
-Needs client trust
-no guarantees
Advan/disadvan of advisory fund management (6)
-Less transactions=lower cost compared to discretionary
-larger range of products (lower minimum spend compared to disc)
-Lower min invest=lower costs
-Less specialist/bespoke
-Missed opportunities as have to check with client
-one size fits all
What is advisory fund management
-Advisor checks with client when changing portfolio
-Greater day to day control of funds by client
What is contained within the client agreement? (9 answers)
-date of commencement
-regulator status
-investment objectives
-fees/charges
-details of service provided
-adviser investment restrictions
-complaints/FOS
-FSCS
-Conflicts of interest (eg another IFA for example)
What are the two fees relevant to ongoing monitoring?
-Trail fees-a small % of fund. Provider deducts and pays to adviser
-Retainers-monthly DD often
-encourages adviser to be pro-active with legilsation and products etc
What are the features of robo advice (6h
-Online survey that uses data to auto invest/offer advice
-algorithm driven
-low costs
-lower minimum fund
-available 24/7
-less human interaction
What impacts fees? (4)
-who does the work
-qualifications
-how service delivered eg.f2f
-location of offices
What are the six steps of the complaints process?
Complaint received (must be eligible, assessed by handler)
Complaint acknowledged (written acknowledgment, internal complaints process explained)
Client kept informed (regular update/max 4 weeks)
Final decision (8 weeks from receipt, FOS referral explained, accepted/not, compensation. Kept for 3-5 or forever based on product)
Third party view
FOS-max £335k plus extra costs/interest-complainant has 6 months from final decision
What is the FSCS? (5)
-Default of business
-100% capped at £85k
-Covers deposits, investments,mortgage and home, insurance
-90% cap if intermediary
-per person, per firm, per marketing group
-Direct investment not covered
What must the ff be/what are the regulatory requirement for the know your customer/fact find stage? (5)
-no jargon
-legible/understood by everyone
-no space/gaps/stuff left out
-soft and hard facts
-consistent data-errors/inconsistencies spotted
