This question is designed to further educate client on the impact of liabilities can cut-short the time horizon of the portfolio pre-maturely. The wording is similar to Q20.
Guarantor: If client is a business owner, this situation is common. FP needs to be sensitive to this.
Creditor Situation: Depending on the degree of the situation, an investment into an irrevocable trust fund would be more appropriate.
Margin Call: This situation arises when client pledge his shares to a bank for a credit facility, usually for further investment. If the value of the pledged shares fall to an undesirable value, the bank would demand client to top-up the difference, otherwise the shares would be force sell, and bank would claim the difference from client. This situation usually happens to HNWI.
Guarantor: If client is a business owner, this situation is common. FP needs to be sensitive to this.
Creditor Situation: Depending on the degree of the situation, an investment into an irrevocable trust fund would be more appropriate.
Margin Call: This situation arises when client pledge his shares to a bank for a credit facility, usually for further investment. If the value of the pledged shares fall to an undesirable value, the bank would demand client to top-up the difference, otherwise the shares would be force sell, and bank would claim the difference from client. This situation usually happens to HNWI.
This question (& Q20) will assist FP to link investment planning to other parts of financial planning.
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