02 - Lecture 2 The Client/Adviser Relationship BM Ch 1, 2;...

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1 Lecture 2 – The Client/Adviser Relationship BM Ch 1, 2; TJHM Ch 2; Day et al Ch 1 2 Financial Planning • Process driven – six steps, holistic • Requires proper management of financial resources • Must take into account socio-economic environment, legal issues, client personality and financial status • Total client position must be evaluated (objectives, needs, risk profile, etc.) • Make recommendations to client, discuss and implement recommendations 3 Why Have a Financial Plan (SoA)? • Snapshot of the current situation • Set goals for future financial health • Tax considerations • Information overload • Technical expertise • Financial independence in retirement • Etc.
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4 Types of Financial Plans • There are two types of financial plans (written advice) that advisers are expected to provide: – a comprehensive plan (SOA) – limited advice • Advisers can be asked to execute particular transactions without advice 5 Client - Adviser Relationship • Must develop a climate of trust from the outset • Good communication is essential • “Know your client” and “Know your product” provides adviser with a reasonable basis for making recommendations (CCH 8-130) • Adviser’s duty assures all recommendations are appropriate to investment objectives, risk profile, financial position and client’s needs • Fiduciary duty – must be objective and in the best interests of client; honest, efficient and fair (CCH 8-120) 6 • Adviser assists client to: – identify goals – make informed decisions re money and assets – use and protect assets to best advantage – choose products that suit their needs and circumstances – determine where client is now, where they want to go, how to get there – consider relevant time frames relating to goals • Requires client to provide information, usually via a questionnaire and risk profile assessment Client - Adviser Relationship continued
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7 Financial Planning Process – Six Steps 1. Data gathering
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02 - Lecture 2 The Client/Adviser Relationship BM Ch 1, 2;...

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