Client Profile & Data Gathering
The financial and nonfinancial facts every recommendation must rest on.
What is Client Profile & Data Gathering?
Financial facts: goals, cash flow, balance sheet, existing investments, tax situation, Social Security and pensions. Nonfinancial facts: risk tolerance, time horizon, investment experience, values (ESG or religious criteria), life stage and life events, and behavioral tendencies. Gathered through questionnaires and interviews, and updated as circumstances change. A recommendation without a current profile cannot be suitable, let alone in the client's best interest.
Client Profile & Data Gathering: a worked example
A client's recent divorce changes their cash flow, time horizon, and beneficiaries - the profile must be updated.
More terms in Clients, Strategy & Tax
Sole Proprietorship
A business owned by one person with no legal separation from the owner.
General Partnership
Co-owners share management and unlimited liability; income passes through.
Limited Liability Company (LLC)
Limited liability for owners with pass-through taxation by default.
C Corporation
A separate taxpayer - profits taxed at the corporate level, then again as dividends.
S Corporation
A corporation that passes income through to shareholders, avoiding double tax.
Trust & Estate Accounts
Accounts run by a fiduciary - a trustee or an executor - under a governing document.
Foundations & Charities
Tax-exempt organizations investing for a mission, often in perpetuity.
Investment Objectives
Preservation of capital, income, growth, growth and income, speculation.