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CHANGE UNIT
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Financial Profile - TABLET OF CONTENTS
- A financial profile should include an assessment of the client's:
- Current expenditures
- Debt obligations
- Tax status
- Income sources
- Family's Balance sheet containing client's assets
- Any cash, bank accounts, securities instruments/holding, retirement accounts, real estate, life insurance(except term)
- personal items such as rings
- Any debt or loans
- Family's income statement
- Dividends
- Mortgage interest
- NEW CLIENT
- Information Gathering is the first step with a new client, then you explain risks of investing
- OPENING A NEW ACCOUNT
- Before opening an investment account
- Client should have an emergency funds, life insurance and a set of goals
- Must have their age, annual income and investment experience
- CAPITAL NEEDS ANALYSIS LIFE INSURANCE
- Factors needed
- Client's projected earnings
- Projected inflation rate
- Client's age
- Never requires or considers Market Volatility
- Nonfinancial Considerations - TABLET OF CONTENTS
- Includes
- Age
- Marital status
- Investment Experience
- Attitudes and values. "ESG" investing
- Number and age of dependents
- Employment stability
- Employment of family members
- Where client lives
- Current and future family educational and health care needs
- Behavioral finance(Rational or irrational investors when it comes to making decisions)
- Risk Tolerance - TABLET OF CONTENTS
- The attitude toward risk and safety, is an important part of a client's profile
- The customer's motivation to invest and risk tolerance should shape the portfolio, not their financial status
- Often characterized as either aggressive, moderate or conservative.
- Selection of specific types of investments depend on several factors
- Client's objectives
- Amount available for investing
- Client's aversion to risk
- To under customer's risk tolerance, an advisor should know following
- How much of a loss the investor can tolerate(5%,10%, etc
- The liquidity requirements for investments
- Importance of tax considerations
- Investment time horizon, either short or long term
- Investment Experience
- Current investment holdings
- Expectation regarding investment returns
- Investment temperament(client bored with stable investments or anxious with volatile ones?
- Level of tolerance for market fluctuations
- Aggressive investors
- Willing to risk greater amount and withstand market volatility in exchange for substantial returns.
- Willing to sustain losses of 10,20 or even 50%.
- Moderate Investors
- Can tolerate some loss but nearly at the level as an aggressive investor
- Conservative Investors
- Want safety of guaranteed income with low risk to loss of principal.
- Very conservative investors are unwilling to sustain even modest losses.
- INVESTOR PORTFOLIO TABLE
- Aggressive; Has the majority in stocks with little in bonds/cash
- Modest; Has majority in stocks but even more in bonds then aggressive
- Conservative;
- Investment Recommendations, Objectives and Investment Constraints - TABLET OF CONTENTS
- Recommendations
- Client's risk tolerance and investment needs/objectives determine what recommendations you should make
- Suitability considerations
- Retirement Needs
- Objectives
- Constraints
SOCIAL SECURITY BENEFITS
- How to earn full benefits