This question is designed to understand the liability situation of the client. By having assets (in Q2) – liabilities, FP will have a good gauge of the client’s net-worth.
FP should be sensitive to client’s “contingent liabilities”, and assist client in making provision for such liabilities by using tools and techniques to isolate or eliminate such threats away from client’s wealth as much as possible.
FP should also be sensitive to detect whether there is an over-concentration of liabilities in one or two financial institutions. Under Singapore’s situation, banks have the right to off-set client’s assets to pay off debts. On this basis, FP should advice client on the importance of separating holding companies for assets and liabilities.
(This input will be shown as “risk capacity” in the IPS)
FP should be sensitive to client’s “contingent liabilities”, and assist client in making provision for such liabilities by using tools and techniques to isolate or eliminate such threats away from client’s wealth as much as possible.
FP should also be sensitive to detect whether there is an over-concentration of liabilities in one or two financial institutions. Under Singapore’s situation, banks have the right to off-set client’s assets to pay off debts. On this basis, FP should advice client on the importance of separating holding companies for assets and liabilities.
(This input will be shown as “risk capacity” in the IPS)
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