If you provide financial advice to retail clients, it's important to assess each customer's needs before making recommendations. We explain what you should consider.
Customer information
When you make a personal recommendation to a customer, you must get all the necessary information you need to understand the essential facts about them that are relevant to the nature and extent of the service being provided.
As well as the basic customer details, you should consider the following:
- Financial situation – do you gather details of their income/expenditure, assets and liabilities and savings or investments?
- Investment objectives – do you assess their risk profile and establish the purposes of the investment and period for which they wish to hold it?
- Knowledge and experience – do you gather information on the types and frequency of any previous transactions they have made and assess whether they understand the complexity and risks of your intended recommendation?
- Impact of your advice – do you gather information on their tax status and entitlement to state benefits and consider the impact of the advice on these?
Assessing needs and objectives
When you assess a customer’s needs before making a recommendation, you should consider the following:
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