Determining Customer Objectives - Client Income Statement
A potential client's financial situation should be the first item you consider. The client's income should be adequate to meet his or her needs before any investment program is launched. Once you have established that this is the case, life insurance should be the first investment considered. The payout should typically be seven to 10 times annual salary. Not only does life and disability insurance protect the client's loved ones from hardship in the case of her untimely death or incapacity, it also has a value that can be cashed in after retirement.
At this point, you will need to draw up an individual income statement for your prospective client. Consider the following example:
|Individual Income Statement for Year Ended 31 DEC 20xx|
|Royalties, other passive income||$1,000|
|Total current income||$114,000|
|Mortgage, property tax, mortgage insurance||$25,000|
|Household budget (food, clothes, fuel, etc.)||$18,000|
|Employee savings plan/401(k)||$12,000|
|Life, disability and health insurance||$5,000|
|Total current expense||$102,000|
|Net Spendable Income Available for Investment||(Total current income minus total current expense)||$12,000|
In this case, the prospective client appears to have about $12,000 to invest after meeting all current expenses - so far, so good.
BrokersIndependent broker-dealers are a great choice for experienced, self-starter planners who have established practices.
Personal FinanceRIAs and brokers are held to different standards when providing investment advice. Here's how they differ.
Trading Systems & SoftwareLaunching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
ProfessionalsLearn how to answer option questions on the Series 7 exam. Pass your Series 7 exam with the help of these tips.
ProfessionalsFINRA Series 55 Exam Guide
ProfessionalsFINRA Series 62 Exam Guide
ProfessionalsFINRA/NASAA Series 99 Exam Guide
ProfessionalsFINRA/NASAA Series 65 Exam Guide
ProfessionalsFINRA Series 6 Exam Guide
ProfessionalsFINRA/NASAA Series 66 Exam Guide
- No results found.
The exact nature of a financial advisor's job responsibilities determines whether he must have a Series 7 license. If a financial ... Read Full Answer >>
Financial advisors must possess various securities licenses in order to sell investment products. The specific products an ... Read Full Answer >>
The Financial Industry Regulatory Authority (FINRA) offers a variety of licenses that must be obtained before conducting ... Read Full Answer >>