Salesmen are obliged to draw up a factfile for all their customers before they begin to sell any financial products, and independent financial advisers are obliged to do the same before they even start to give any financial advice.
They go into your financial circumstances in some detail and can take anything from half an hour to two hours to carry out properly, depending on how complicated your circumstances are. But the sales people and advisers are not being nosey or wasting your time.
The intention is that if anything goes wrong and you, the customer, complain that you were sold an unsuitable product or given the wrong advice, the factfile is available to allow an independent arbitrator to decide whether the salesman or adviser did his or her homework and established your financial circumstances before deciding what financial products would be most suitable.
The factfile is not, of course, a guarantee that the product you buy or the advice you receive will be the best you could have had, or even that it will be a good investment or advice. Investments and advice don't work like that. But it will establish whether in the circumstances at the time the sales person or adviser took reasonable precautions to get you something suitable.
Factfiles establish what you own and what you owe, what you earn and what your prospects are, what you spend on essentials and what you can afford to save or invest. Factfiles also establish whether you are a cautious investor who would not sleep at night if you thought you could lose money even temporarily, or whether you would be comfortable taking a degree of risk in order to achieve a better long-term reward. Last but not least, they try to establish what would happen to your family if you died or suffered an accident or illness that prevented you from earning a living.
Once the facts have been established, the factfile helps to decide what your priorities are. If you are young and single but not very rich, you might want a savings plan to build up a deposit for a house; if you are married with a family, life assurance and income protection as well as a mortgage come into the frame; and of course it's never too soon to start a pension plan, preferably a flexible one you can grow as you prosper.
If you are a struggling artist or actor, the factfile may show that, regretfully, you cannot afford some of the goodies on offer, but if you are in secure employment and well-placed on the career ladder with good prospects and a generous company pension, company car and a healthcare plan that the company pays, for your priorities will be very different.
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