R01 Assessing needs, risk, affordability and suitability: free practice questions
5 free questions on Assessing needs, risk, affordability and suitability, part of learning outcome 8 (Client advising skills). Pick an answer to check it, or open the answer to see why each option is right or wrong.
Question 1 of 5
In the PIPSI mnemonic, what is the generally accepted priority order of client needs?
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The answer is D: Protection, income protection, pensions, savings, investment
PIPSI: Protection, Income protection, Pensions, Savings, Investment.
Why the other options are wrong
A
Savings and investment come last.
B
Protection comes first, not pensions.
C
Protection comes before income protection.
Question 2 of 5
Mr and Mrs Grey can't afford to meet all their needs. What should the adviser do?
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The answer is A: Prioritise their needs with them and meet them in that order
The adviser should prioritise needs in consultation with the clients and recommend in order of priority. If they choose a different order, it should be documented.
Why the other options are wrong
B
Unaffordable plans are likely to lapse.
C
Recommendations must follow needs, not profitability.
D
Prioritised, affordable advice is the right approach.
Question 3 of 5
What's the difference between 'hard' and 'soft' facts in a fact-find?
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The answer is C: Hard facts are names, dates and amounts; soft facts are views
Hard facts are objective details such as names, dates and amounts. Soft facts are feelings, views and opinions, often captured in a questionnaire towards the end of the fact-find.
Why the other options are wrong
A
The split isn't by topic like that.
B
Soft facts are the client's genuine views, not guesses.
D
The distinction is useful in structuring the fact-find.
Question 4 of 5
What does 'capacity for loss' refer to?
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The answer is C: Their ability to absorb losses without real hardship
Capacity for loss is the ability to absorb falls in investment value. If losses would materially harm the client's standard of living, this limits the risk they can take.
Why the other options are wrong
A
Credit limits aren't capacity for loss.
B
FSCS limits are a separate matter.
D
Enjoyment of risk is attitude to risk, not capacity.
Question 5 of 5
Where affordability is tight but cover is essential, what option might be discussed, and what limitation does it usually have?
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The answer is B: Waiver of premium, usually with a waiting period and extra cost
Waiver of premium can keep cover going if the client can't work through illness or accident, but usually has a six-month waiting period and costs extra.
Why the other options are wrong
A
Increasable cover increases costs rather than protecting premiums.
C
Premium holidays aren't free and freely available in this way.
D
Surrender ends the cover.
Practise all 10 Assessing needs, risk, affordability and suitability questions
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