University of Strathclyde LIBF Unit 2 || Get it Correct.
1.1 Outline the need for financial planning. correct answers Make better financial decisions
Avoid unnecessary debt
Help make decisions on savings, spending and progress in reaching goals
Helps show what you have to do to get to where you want to be
1.2 Explain the personal factors which influence financial planning. correct answers Factors
influenced by stage in life cycle
Attitude to risk
Attitude to Risk correct answers a. Risk tolerance - how does the individual feel about the
possibility of losing money?
b. Capacity for loss - how much money can the individual afford to lose?
Stages in life cycle correct answers Childhood 0-12
Teenage 13-19
Young Adult 18-25
Mature Adult 26-40
Middle Age 41-54
Late Middle Age 55-65
Old Age 65+
Each of the stages has its own typical opportunities, challenges and needs.
1.3 Identify sources of financial planning information and advice. correct answers Advisory
services (CAB, Money Advice Service, charities, financial advisers)
Financial service providers (banks, building societies, credit unions)
Citizens Advice Bureau correct answers Citizens Advice provides free, confidential and
independent advice to help people make the right choices, including help to deal with debt
problems, how to avoid losing their home and how to get their finances back into shape.
Money Advice Service correct answers Free and impartial money advice, set up by government.
Offers advice and guides to help improve finances. Tools and calculators to help keep track and
plan ahead. Support over the phone and online
, The Money Charity correct answers empower people across the UK to build the skills,
knowledge, attitudes and behaviours, to make the most of their money throughout their lives
Financial Advisers correct answers Independent financial advisers (IFAs) must recommend
products and solutions from the whole of the market
Restricted advisers can offer products from one
company or a limited number of companies
Short-term planning correct answers a period of between one week and 12 months
Medium-term planning correct answers a period of between one year and five years
Long-term planning correct answers a period of five years or more
a need correct answers something that we should - or must - have as part of our life e.g. food,
shelter and clothes.
a want correct answers something that a person would like or would aspire to, rather than
something that they absolutely need e.g. the latest smartphone
personal objectives correct answers what the individual needs or wants
financial objectives correct answers how much money a person needs to achieve what they want
and how best to get there
Prudential Regulation Authority (PRU) correct answers the UK regulator responsible for making
sure that financial firms are authorised to operate in the UK and are financially sound
Financial Conduct Authority (FCA) correct answers the UK regulator responsible for the way in
which financial firms market and sell their products
Financial Services Compensation Scheme (FSCS) correct answers protects savers' money up to
£85,000 per person
1.5 Describe the need to review and adjust financial plans linked to the various stages of the
personal life cycle. correct answers Priorities change when moving from one stage of life cycle
to another
Anticipating foreseen and unforeseen events Emergency fund Plan should be fluid
Emergency Fund correct answers a pot of money that can be used to cover
emergencies, such as unexpected spending, loss of income or other unexpected financial
problems
1.1 Outline the need for financial planning. correct answers Make better financial decisions
Avoid unnecessary debt
Help make decisions on savings, spending and progress in reaching goals
Helps show what you have to do to get to where you want to be
1.2 Explain the personal factors which influence financial planning. correct answers Factors
influenced by stage in life cycle
Attitude to risk
Attitude to Risk correct answers a. Risk tolerance - how does the individual feel about the
possibility of losing money?
b. Capacity for loss - how much money can the individual afford to lose?
Stages in life cycle correct answers Childhood 0-12
Teenage 13-19
Young Adult 18-25
Mature Adult 26-40
Middle Age 41-54
Late Middle Age 55-65
Old Age 65+
Each of the stages has its own typical opportunities, challenges and needs.
1.3 Identify sources of financial planning information and advice. correct answers Advisory
services (CAB, Money Advice Service, charities, financial advisers)
Financial service providers (banks, building societies, credit unions)
Citizens Advice Bureau correct answers Citizens Advice provides free, confidential and
independent advice to help people make the right choices, including help to deal with debt
problems, how to avoid losing their home and how to get their finances back into shape.
Money Advice Service correct answers Free and impartial money advice, set up by government.
Offers advice and guides to help improve finances. Tools and calculators to help keep track and
plan ahead. Support over the phone and online
, The Money Charity correct answers empower people across the UK to build the skills,
knowledge, attitudes and behaviours, to make the most of their money throughout their lives
Financial Advisers correct answers Independent financial advisers (IFAs) must recommend
products and solutions from the whole of the market
Restricted advisers can offer products from one
company or a limited number of companies
Short-term planning correct answers a period of between one week and 12 months
Medium-term planning correct answers a period of between one year and five years
Long-term planning correct answers a period of five years or more
a need correct answers something that we should - or must - have as part of our life e.g. food,
shelter and clothes.
a want correct answers something that a person would like or would aspire to, rather than
something that they absolutely need e.g. the latest smartphone
personal objectives correct answers what the individual needs or wants
financial objectives correct answers how much money a person needs to achieve what they want
and how best to get there
Prudential Regulation Authority (PRU) correct answers the UK regulator responsible for making
sure that financial firms are authorised to operate in the UK and are financially sound
Financial Conduct Authority (FCA) correct answers the UK regulator responsible for the way in
which financial firms market and sell their products
Financial Services Compensation Scheme (FSCS) correct answers protects savers' money up to
£85,000 per person
1.5 Describe the need to review and adjust financial plans linked to the various stages of the
personal life cycle. correct answers Priorities change when moving from one stage of life cycle
to another
Anticipating foreseen and unforeseen events Emergency fund Plan should be fluid
Emergency Fund correct answers a pot of money that can be used to cover
emergencies, such as unexpected spending, loss of income or other unexpected financial
problems
