Question

From ISBN 978-93-860-4285-9

Describe the three stages of a typical client’s life cycle.

Answer 1

The three stages of a typical clent's life cycle are

• Accumulation
• Acceleration
• Preservation

Accumulation begins at the start of the investors financial life. During this stage During this stage the investor preoccupied with a) protecting family from a potential financial disaster due to death or disability. b) providing for children's education and c) accumulating basic such as home and furnishings.

The acceleration stage is ushered in when the investor enters the peak earning years and feels secure about the families basic needs and emergency situations. During this cycle the investor usually changes from being a risk averse person to a risk taker, now the investor has time and resources to recover from potential investment losses.

The preservation cycle begins when the investor starts preparing for retirement. During this cycle the major objective is the preservation of capital accumulated during the previous cycles so the maximum amount of capital would be available for generating current income as regular sources of earned income disappear.