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Unit 2: Advanced Financial Advice (AFA)

Unit aims

AFA is the second unit of the Diploma for Financial Advisers and follows the initial Financial Services, Regulation and Ethics unit. The AFA unit concentrates on products, services and legislation that inform the financial planning and advice process. The unit focuses on the principles and theories that underpin investment, retirement planning and protection and considers the interrelationships of these topic areas. The unit also develops the learners’ understanding of the importance of consumer oriented communication and ethical behaviours through the practical application of financial planning knowledge and skills through the advice process.

Learning outcomes

On completion of the unit, the learner will understand:

  1. understand the UK taxation system in relation to individuals and trusts
  2. understand taxation of investments in relation to individuals and trusts
  3. understand the role and relevance of taxation in the financial affairs of individuals and trusts
  4. understand personal taxation in relation to investment advice
  5. understand macro-economic environment and its impact on asset classes
  6. understand the main characteristics and behaviours of asset classes
  7. understand the merits and limitations of the main investment theories
  8. understand the principles of the time value of money
  9. understand the nature and impact of the main types of risk on investment performance
  10. understand the characteristics and behaviours of investment products
  11. understand the principles of investment planning
  12. understand the investment advice process
  13. understand the performance of investments
  14. understand the areas of need for financial protection planning
  15. understand the consumer and retail market factors and trends relevant to financial protection
  16. understand the main sources of financial protection
  17. understand the role and limitations of State benefits for financial protection
  18. understand the range and application of life assurance policies to meet financial protection needs
  19. understand taxation treatment of life assurance and pension-based policies
  20. understand the range and application of income protection insurance
  21. understand the range and application of critical illness insurance
  22. understand the range and application of long term care insurance
  23. understand the main features of other insurance based protection policies
  24. understand the needs and priorities in selecting appropriate financial protection solutions
  25. understand the political, economic and social environmental factors which provide the context for pensions planning
  26. understand how the HMRC taxation regime applies to pensions planning
  27. understand the relevant aspects of pensions law and regulation to pensions planning
  28. understand the structure, relevance and application of the State schemes to an individual’s pension planning
  29. understand the structure, characteristics and application of Defined Benefit (DB) schemes to an individual’s pension planning
  30. understand the range of Defined Contribution (DC) scheme options as they apply to an individual’s pension planning
  31. understand the options and factors to consider for drawing pension benefits
  32. understand the aims and objectives of retirement planning including the investment issues
  33. understand the process of gathering client information for holistic financial planning
  34. formulate and communicate holistic financial advice
  35. create, implement and maintain financial plans.