Reviews

Question 1

Identify eight key events relevant to Dan and Tara’s circumstances, other than
the annual review, that would trigger an immediate review of their financial
affairs.

Answer 1

 Change in personal circumstance, e.g. marriage/death/relationship
breakdown/ill-health of Dan or Tara, or a change in their objectives
 The birth of a further child
 Tax year end and the use of annual allowances, e.g. ISA, JISA, PA,
PSA, DA
 Changes in income or tax status
 Changes in the couple’s individual attitudes to risk as they get older
 Investment performance review and pension review
 Changes to tax / legislation
 Economic / market changes / new products

Question 2

Why is it important to carry out regular reviews of Dan and Tara’s pension
arrangements?

Answer 2

 Changes in personal / financial circumstances / objectives/ATR
 Monitor performance / identify underperforming funds
 Rebalance / change funds
 Increase pension contributions / carry forward
 Costs / charges / cheaper products
 LTA/AA issues / protection available / tapering
 Economic / legislative / tax changes

Question 3

State the factors an adviser should take into consideration when reviewing Dan
and Tara’s pension arrangements at their next annual review.

Answer 3

 Fund performance against benchmark;
 Whether rebalancing is necessary;
 Volatility of the funds;
 Any changes to their intended retirement date;
 Any new funds received or due which could be earmarked for this
purpose;
 Any changes in willingness or capacity to make further contributions;
 Changes to allocation;
 New products available;
 Any changes to their residence/ domicile;
 Any changes to taxation rules/legislation/regulation;
 Any significant economic changes/changes to market conditions;
 Change in attitude to risk/ capacity for loss;
 Continued suitability of the current arrangements;
 Change in personal circumstances/health;
 Death benefit nominations;
 Cashflow analysis & stress testing;

Question 4

Identify what should be covered in a review relating to Dan and Tara’s
investments.

Answer 4

 Investment performance
 Suitability of investments bearing in mind their objectives
 Asset allocation given their risk profile outcomes (rebalance?)
 Asset allocation given performance of investments (rebalance?)
 Whether the couple should continue to hold accumulation units
 Fund charges
 Changes in economy / market conditions
 Changes in tax/legislation

Question 5

Identify six key benefits Dan and Tara will derive from having regular reviews
and contact with their financial adviser.

Answer 5

 Changes in personal circumstances can be taken into account
 Changes in financial circumstances can be taken into account
 Ensure ongoing suitability of advice
 Builds long term relationship
 Ensures use of tax allowances and takes into account new products
 Review performance / rebalancing / ATR

Question 6

Identify the factors that should be taken into account at future reviews for the
couple’s protection cover.

Answer 6

 Earnings / affordability / expenditure
 Change in employment status
 Change in State benefits
 Deferred period (income protection)
 Change in retirement date
 Change in personal circumstances
 Change in age at which children become independent

Question 7

Give reasons why Dan and Tara should make their wills as soon as possible.

Answer 7

 To protect the survivor on first death
 So that their sole assets do not go directly to the twins on 1st death
 To avoid the additional time and administration associated with the laws
of intestacy
 So their estate is left to the correct person on 1st and 2nd death
 To minimise IHT payable on their estate / to facilitate IHT planning
 To appoint legal guardians for the twins

Question 8

State 7 financial planning issues to discuss with Dan and Tara at the next
meeting bearing in mind their particular set of circumstances.

Answer 8

 Did they get married?
 Have they made their wills?
 How did they draw money from their business?
 Did the company provide additional life and health protection benefits?
 Have they moved significant funds out of cash and where to?
 Is the school fees planning on target?
 Ongoing suitability of key person insurance.