R01 Presenting recommendations and reports: free practice questions
5 free questions on Presenting recommendations and reports, 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
What does research and due diligence by an advisory firm involve assessing?
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The answer is D: The investment, its risks and benefits, and the provider
Research and due diligence assess the nature of the investment, its risks and benefits, and the provider. Poor due diligence is one of three root causes of poor consumer outcomes.
Why the other options are wrong
A
Personal preference isn't due diligence.
B
Past performance alone isn't enough.
C
Marketing material shouldn't be relied on for opinions such as risk level.
Question 2 of 5
When carrying out due diligence, what can a firm rely on from a product provider's materials?
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The answer is A: Factual information like asset allocation, not opinions
Firms can rely on factual information from other regulated firms, such as asset allocation, but shouldn't rely on the provider's opinions, such as its view of the risk level.
Why the other options are wrong
B
Factual information can be relied on.
C
Marketing opinions shouldn't be taken at face value.
D
Opinions such as risk level shouldn't be relied on.
Question 3 of 5
What is the main purpose of open questions, such as 'How do you feel about the proposals?'
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The answer is D: To let the client express their own views and feelings
Open questions (how, why, what) let clients express views and feelings. Closed questions (when, where, who) gather specific facts. Both have a place.
Why the other options are wrong
A
Answers should be recorded.
B
Open questions encourage discussion rather than ending it.
C
Specific facts are gathered with closed questions.
Question 4 of 5
Why should a suitability report start by setting out the client's circumstances as the adviser understands them?
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The answer is C: So the client can correct any misunderstandings
Starting with the adviser's understanding of the client's situation lets the client correct any misconceptions, which would otherwise undermine the recommendation.
Why the other options are wrong
A
Credit history isn't the point.
B
A full fact-find copy isn't required, and should be avoided.
D
Length isn't the aim.
Question 5 of 5
The recommendation replaces a client's existing policy with a new one. What does the report need to explain particularly carefully?
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The answer is B: Why the new plan is better than the existing one
The report should explain the choice of provider, and where a policy is being replaced, the commercial considerations and why the new plan is more suitable than the former one.
Why the other options are wrong
A
Costs must be shown, but the key point is why the replacement is better.
C
Staff turnover isn't relevant.
D
Replacements need particular justification.
Practise all 9 Presenting recommendations and reports questions
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