| 1 | Be able to explain the UK Financial Services Regulatory system and its implications for firms and their advisors | 1.1 | Summarise the UK Regulatory system and include: - FSMA 2000, principles-based regulation and the role of the FSA - HM Treasury and the Bank of England - Cross-border legislation and MiFID - Anti-Money Laundering, Anti-Terrorism and Data Protection legislation - role of other regulating bodies such as the Competition Commission, the Office of Fair Trading, the Pensions Regulator and the Information Commissioner |
| 1.2 | Explain FSA regulation of firms and individuals and include: - principles, authorisation and approval, including the role of the investment manager - senior management systems, controls, business standards and ethics - Permitted Business and scope of advice - complaints and compensation |
| 1.3 | Identify and apply the FSA Conduct of Business Rules pertaining to the investment management process and include: - the fiduciary relationship between Advisor and Client - analysis of client circumstances and objectives, risk profile and existing arrangements - suitability and Know Your Customer rules - comparison of discretionary and non-discretionary portfolio management - Treating Customers Fairly |
| 1.4 | Evaluate the differences between rule based compliance and ethical behaviour and the resulting outcomes for consumers, advisers, firms and the industry |
| 2 | Be able to evaluate the use of cash to meet short and long term funding requirements | 2.1 | Formulate cash flow projections, establishing the objectives and principles for establishing a long-term cash management programme |
| 2.2 | Assess short and long term funding requirements: - everyday and emergency liquidity - special use accounts - use of credit and loan facilities |
| 2.3 | Determine the size of an appropriate investment reservoir and manage the efficient movement of cash from income to investments |
| 3 | Be able to evaluate the main financial needs of the retail consumer and apply suitable protection products where appropriate | 3.1 | Evaluate consumer attitudes and behaviour towards managing debt, budgeting, borrowing and house purchase considering, for example, the following trends: - health and morbidity - longevity and mortality - employment - product design and development - access to advice and or insurance cover |
| 3.2 | Evaluate the financial protection requirements for SME business |
| 3.3 | Evaluate the key features, functions, contexts and tax treatment of the following products: - Term and Whole of Life Assurance - Investment-based policies - Income protection insurance - Critical illness Cover - Private Medical Insurance - Long Term Care Plans - Annuities - General Insurance - MPPI and ASU insurance |
| 3.4 | Explain the role and limitations of State Benefits and state/local authority funded solutions for financial protection and the range and limitations of benefits and their impact on financial planning |
| 3.5 | Evaluate the consequences of inadequate protection for both individuals and SME business including outcomes such as insolvency and bankruptcy |
| 4 | Be able to evaluate and apply suitable indirect savings and investment products for a client's portfolio to meet their requirements | 4.1 | Assess the key features and functions; risk / reward profile; liquidity, cost implications and tax treatment of the following indirect savings and investment products: - Unit Trusts and OEICs - Exchange-Traded Funds - Offshore funds - Investment Trusts, warrants and asset classes - Onshore funds - Individual Savings Accounts - Insurance bonds (onshore and offshore) |
| 4.2 | Apply indirect investment products in a client's portfolio: - selecting appropriate funds - assessing suitability for the client - analysing charges - reviewing performance and management of funds |
| 5 | Be able to evaluate and apply suitable products to underpin provision for a client's retirement planning | 5.1 | Summarise the main aims and strategies for retirement planning, including for example: - post-2006 pension legislation - pensions regulator compliance requirements - pension protection schemes - tax treatment of pensions - principles and features of Defined Benefit and Defined Contribution schemes |
| 5.2 | Explain state pension benefits: - key functions and features - impact on retirement planning, including potential impact of future changes to state welfare provision and tax treatment |
| 5.3 | Evaluate Occupational, Personal, Self-invested pension schemes (SIPPS and SSASs) and Stakeholder Pensions: - key functions and features - suitability / selection criteria including expenses, tax efficiency and options for drawing retirement benefit |
| 5.4 | Review and assess key considerations regarding retirement planning and provision: - alternative investments - age/retirement date, contribution levels, investment options, flexibility, providers and charges, benefits - impact of pre- vs. post-retirement asset allocation - significance of job changes - divorce or dissolution of Civil Partnership |
| 6 | Be able to evaluate and apply direct, derivative and alternative investments in structuring private client portfolios | 6.1 | Evaluate the use of direct investment in cash, equity and fixed income investments in structuring private client portfolios: - key features and functions - risk / return profiles - asset allocation - expenses - trading and settling investment instruments in UK and overseas - taxation |
| 6.2 | Appraise the use of derivatives and structured products in structuring private client portfolios: - principles, characteristics, operation and risks of options, futures and synthetic instruments - overview of hedging applications - main regulatory aspects - trading, clearing and settling derivative instruments in the UK and overseas - taxation |
| 6.3 | Present a critical case for the use of alternative investments (Property, Hedge Funds, Private Equity, Enterprise Investment Schemes, Venture Capital Trusts, Woodland, Bloodstock, Collectibles, Commodities) in structuring private client portfolios: - the key functions and features of each - risk / return profiles - asset allocation - expenses and liquidity considerations - obtaining specialist advice |
| 7 | Be able to explore and explain the implications of ethical investment and its impact on a private client's portfolio | 7.1 | Explain the nature of ethical investment: - key features - providers of ethical funds - sources of information |
| 7.2 | Explain socially responsible investment |
| 7.3 | Analyse investment performance: - risks and returns - benchmarks - indices |
| 8 | Be able to explain the scope for private clients to engage in philanthropy effectively | 8.1 | Evaluate philanthropic objectives and strategy, including: - the scope of philanthropic investment - sources of information on philanthropic investment - the extent of client involvement in scheme |
| 8.2 | Consider means to channel money efficiently and measure performance |
| 9 | Be able to apply the main asset allocation and risk management tools and techniques in managing a client's portfolio | 9.1 | Evaluate the use of derivatives, CFDs, equity options and futures in achieving diversification, risk control and leverage |
| 9.2 | Apply leverage strategies using futures and options, stocks and debt |
| 9.3 | Appraise the risks and benefits of diversification across: - asset classes - industries - geographical / regional sectors - fund managers |
| 9.4 | Evaluate methods of protecting a portfolio against inflation |
| 9.5 | Evaluate hedging strategies to protect the value of a portfolio |
| 10 | Be able to apply the core principles of investment planning to constructing and managing a private client portfolio | 10.1 | Apply the financial planning process in the planning, construction, measurement, review and maintenance of a client's investment portfolio |
| 10.2 | Elicit and evaluate client information including: - current and future client circumstances: personal and family employment and other sources of wealth; financial details; protection; attitudes to risk and investment - purpose of investment, the client's financial objectives - utilising client information in the selection of suitable investments |
| 10.3 | Appraise client objectives and rank them, taking account of: - associated risk tolerances - ethical preferences |
| 10.4 | Develop and implement a plan to meet client objectives, including: - recommendations to meet client objectives and priorities - purpose of investment (ie for growth or income) - time horizons - impact of taxation - comparison of charges - diversification and correlation of risk and returns - use of debt and credit - protection against inflation - hedging market volatility - cash management - asset allocation - suitability of financial products / stocks - suitability of recommendations in light of KYC, customer understanding, affordability and accessibility - construction / revision of the portfolio to meet the client's requirements |
| 10.5 | Appraise currency management and the handling of associated risks through the use of: - Forwards - Options - Futures |
| 10.6 | Evaluate investment performance of the portfolio using benchmarks and indices |
| 10.7 | In conjunction with the client, regularly review and revise the portfolio, evaluating - changes in investor circumstances - changes in the environment: economic, regulatory, market - changes in the investment products and stocks |
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