Financial Planning Practice Standards

Question 1

When during the client relationship must you disclose how you handle NPPI?

Answer 1

At the time of engagement and ANNUALLY unless certain exceptions apply

Question 2

If you refer a client to someone else, what is important to disclose?

Answer 2

If you’re receiving compensation from the referral

Question 3

Can you use multiple written documents to disclose information to clients?

Answer 3

Yes it doesn’t have to be all in one document

Question 4

Who does the CFP board have authority over?

Answer 4

Just the CFP not the broker dealer or hedge fund etc.

Question 5

Are CFP standards meant to supercede state and local law?

Answer 5

No

Question 6

Implementing the plan involves which of the following:
Identifying activities necessary for imp.
Selecting Products and Services
Referring to Other Professional
Coordinating with Other Professionals

Answer 6

All of the above.

Question 7

What is a part of the implementation step you may forget?

Answer 7

Referring to and Coordinating with other Professionals

Question 8

How many financial planning subject areas included in the scope of engagement?

Answer 8

One or more.

Question 9

Mutually defining the scope of engagement serves to what

Answer 9

Set realistic expectations for client and you

Question 10

Does the scope of engagement need to be in writing?

Answer 10

No - but there may be certain disclosures that need to be in writing

Question 11

You and client mutually decide scope of engagement when

Answer 11

BEFORE any financial planning service is provided

Question 12

When do you gather client data?

Answer 12

AFTER defining the scope of the engagement and BEFORE analyze and evaluate client financial status

Question 13

Gathering client data

Answer 13

You and the client will mutually define clients personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented

Question 14

What is gathering client data essentially?

Answer 14

Mutually define clients personal and financial goals, needs and priorities

Question 15

Financial goals, needs and priorities are affected by the clients what

Answer 15

values, attitudes, expectations and time horizons

Question 16

Where would obtaining quantitative information and documents fall in the planning process?

Answer 16

Gathering client data

Question 17

What are some ways you can gather quantitative information and documents?

Answer 17

From the client directly or other sources such as interviews, questionnaires, and client records and documents

Question 18

While gathering client information/documents, what is important to communicate to the client?

Answer 18

accuracy and completeness

Question 19

If you cannot obtain sufficient and relevant quantitative information/documents, what are your 2 options

Answer 19

1.restrict the scope of the engagement to the matters you do have documents for
2. terminate the engagement

Question 20

Analyzing and evaluating the clients financial status defined as

Answer 20

ANALYZE the information to gain an understanding of the clients situation THEN
EVALUATE to what extent the clients goals can be met by the clients resources and current course of action

Question 21

When might you consider personal and economic assumptions?

Answer 21

Analyzing and Evaluating clients financial status

Question 22

What are some personal assumptions you might consider when analyzing and evaluating a clients financial status

Answer 22

retirement age, life expectancy, income needs, risk factors, time horizon, and special needs

Question 23

What are some economic assumptions you might consider when analyzing and evaluating a clients financial status 3 things

Answer 23

inflation rates, tax rates, investment returns

Question 24

First step in Developing and Presenting Recommendations

Answer 24

Identifying and evaluating ALTERNATIVES

Question 25

Second step in Developing and Presenting Recommendations

Answer 25

Develop the financial planning recommendations

Question 26

Third step in Developing and Presenting Recommendations

Answer 26

Presenting the recommendations

Question 27

Before you develop the financial planning recommendations you need to do what

Answer 27

identify and evaluate alternatives to their current course of action

Question 28

Implementing the financial planning recommendations involves what

Answer 28

-IDENTIFY activities necessary for implementation -DETERMINE division of activities between you and client -REFER to other professionals -COORDINATE with other professionals -SHARING information as authorized -SELECTING and securing products and services

Question 29

When you're presenting recs (step 4), what are some factors you should communicate? (what would effect the recs?)

Answer 29

-personal and economic assumptions -interdependence of recommendations -advantages and disadvantages -risks -time sensistivity

Question 30

Financial Planning Process

Answer 30

Establish and define the relationship Gathering client data Analyzing and Evaluating client financial status Developing and Presenting recs Implementing the recs Monitoring

Question 31

What is step one of the process

Answer 31

Establish and define the relationship

Question 32

What is step 2 of the process

Answer 32

Gathering client data

Question 33

What is step 3 of the process

Answer 33

Analyzing and evaluating clients financial status

Question 34

What is step 4 of the process

Answer 34

Developing and presenting financial planning recommendations

Question 35

What is step 5 of the process

Answer 35

Implementing the recommendations

Question 36

What is step 6 of the process

Answer 36

Monitoring

Question 37

Monitoring is what step of the process

Answer 37

Step 6 the last step

Question 38

Implementing the recommendations is what step of the process

Answer 38

Step 5

Question 39

Developing and presenting recommendations is what step of the process

Answer 39

Step 4

Question 40

Analyzing and Evaluating client financial status is what step of the process

Answer 40

Step 3

Question 41

Gathering client data is what step of the process

Answer 41

Step 2

Question 42

Defining the scope of the engagement is what step of the process

Answer 42

Step 1

Question 43

What question to ask when analyzing current course of action?

Answer 43

Does it maximize the clients financial potential

Question 44

When developing recs, consider 4 things

Answer 44

- assumptions and estimates used -basis for making the rec and anticipated effects on the client -timing and priority of the rec - is the rec independent or implemented with other recs

Question 45

What to consider re:monitoring

Answer 45

-which actions/products are OUTSIDE THE SCOPE of monitoring - how and WHEN monitoring takes place -client will inform if MATERIAL CHANGES take place - CFPs responsibility to update and HOW/WHEN updates take place

Question 46

When must you monitor client progress? How Often?

Answer 46

At appropriate intervals

Question 47

When would you update goals/recs/implementing decisions?

Answer 47

when you have responsibility, and circumstances warrant

Question 48

Who could you potentially borrow or lend money to?

Answer 48

-if the client is a family member -if the lender is a business in the business of lending

Question 49

When referring someone, what factors into the referral?

Answer 49

The other persons reputation, experience and qualifications

Question 50

Do you have to have written consent to a conflict of interest?

Answer 50

No

Question 51

Is having discretionary authority over clients financial assets considered advice?

Answer 51

Yes

Question 52

Is providing brokerage services or insurance product providing advice?

Answer 52

No

Question 53

Clients responsibility to inform of changes in qualitative/quantitative info

Answer 53

Establish monitoring and updating responsibilities

Question 54

If you have responsibility, when must you update goals, recs, implementing decisions

Answer 54

If circumstances warrant changes update according to practice standards

Question 55

When would monitoring cease?

Answer 55

If you have responsibility, when the engagement is terminated

Question 56

Where would clients responsibility to inform you of changes fall?

Answer 56

Establish monitoring and updating responsibilities

Question 57

When would you discuss any selection that deviates from your recommendation?

Answer 57

Implementing the recs

Question 58

When would you discuss with the client the basis for selecting product, timing and priority, and describe and COI

Answer 58

Implementing the recommmedations