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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

While preparing a comprehensive financial plan for a new client, an investment adviser has completed the client's goal identification and collected data on income, expenses, assets and liabilities. Which step should the adviser take next in the standard financial planning process?

After goals and data are collected, the adviser should analyse the client's financial position and risk profile against the goals. Only then can suitable recommendations be developed, implemented and later monitored. Recommending products first skips the analysis needed to establish suitability.

  1. ARecommend specific mutual fund schemes immediately
  2. BAnalyse the client's financial position and risk profile against the goalsCorrect
  3. CClose the engagement and send the invoice
  4. DBegin monitoring the plan for deviations

Explanation

The planning process runs from establishing the relationship, gathering data and goals, analysing the financial status and risk profile, developing and presenting recommendations, implementing and then monitoring. After data collection comes analysis. Recommending products before analysis would ignore suitability, and monitoring comes only after implementation.

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