Internal Analysis (L5)

Question 1

Internal Analysis

Answer 1

• The INTERNAL Environment = the way people…
  ○ Work
  ○ Spend
  ○ Save
  ○ Think

Question 2

Focus on the clients Strengths and Weaknesses

Answer 2

• Strengths
  ○ Age
  ○ Income
  ○ Amount of emergency fund
  ○ Amount of savings
  ○ Savings rate
• Weaknesses
  ○ Deficiencies in insurance coverage
  ○ Too low of an emergency fund
  ○ Poor asset allocation
  ○ No estate plan

Question 3

Life Cycle Position

Answer 3

Life Cycle may be important in a case question when determining a clients goals, needs, strengths and weaknesses
* Age
* Marital Status
* Dependents
* Income and Net Worth

Question 4

Attitudes and Beliefs

Answer 4

A Planner should gather data on:

• A client’s risk tolerance levels:
  ○ Perception vs. reality
• Savings and consumption habits:
  ○ Does the client have a propensity to consume today
  rather than save for tomorrow?
• Attitudes and Beliefs
  ○ Clients view on retirement and employment
  ○ Clients attitude regarding taxation

Question 5

Crisis Events with Severe Consequences

Answer 5

• Unpredictable, but likely to experience one or more crisis events in lifetime
• Client will have emotional reactions to events making it difficult to make accurate, rational decisions at times
• Depending on the severity of the Crisis, the entire financial planning process may need to be revisited and revised to adapt

Question 6

Comprehensive Planning

Answer 6

Question 7

Best Practices for Financial Planners

Answer 7

helps demonstrate reliability and competency

• Check Lists for Caregivers
• Job Loss Check List
  ○ File for unemployment
  ○ Begin looking for work
  ○ Determine what benefits can continue (COBRA)
  § 60 days to elect COBRA
  ○ Which can roll to an individual plan (life insurance, retirement
  plans, etc.)
  § 60 days to rollover a 401k
  § 90 days to exercise options or restricted stocks

Question 8

Special Needs

Answer 8

• Government Benefits
  ○ Identifying
  ○ Obtaining
  ○ Preserving benefits
• Family and support factors
  ○ Family values, careers, siblings, extended family, and
  community resources
• Emotional Factors
  ○ Dealing with positive/negative emotions of the
  dependent, siblings and parents

Question 9

Key Current Programs - SPECIAL NEEDS

Answer 9

• Federal
  ○ Special Education Programs
  ○ Social Security Benefits
  ○ Benefits for Disabled Veterans
• State and Local
  ○ Residential services
  ○ Transportation services
  ○ Respite Care services
  ○ Family Support services
  ○ Day Program Services Employment services