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Intro to FP > Financial Planning Practice Standards > Flashcards

Financial Planning Practice Standards Flashcards

1
Q

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

A

At the time of engagement and ANNUALLY unless certain exceptions apply

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2
Q

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

A

If you’re receiving compensation from the referral

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3
Q

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

A

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

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4
Q

Who does the CFP board have authority over?

A

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

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5
Q

Are CFP standards meant to supercede state and local law?

A

No

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6
Q

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

A

All of the above.

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7
Q

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

A

Referring to and Coordinating with other Professionals

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8
Q

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

A

One or more.

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9
Q

Mutually defining the scope of engagement serves to what

A

Set realistic expectations for client and you

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10
Q

Does the scope of engagement need to be in writing?

A

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

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11
Q

You and client mutually decide scope of engagement when

A

BEFORE any financial planning service is provided

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12
Q

When do you gather client data?

A

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

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13
Q

Gathering client data

A

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

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14
Q

What is gathering client data essentially?

A

Mutually define clients personal and financial goals, needs and priorities

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15
Q

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

A

values, attitudes, expectations and time horizons

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16
Q

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

A

Gathering client data

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17
Q

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

A

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

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18
Q

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

A

accuracy and completeness

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19
Q

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

A

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

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20
Q

Analyzing and evaluating the clients financial status defined as

A

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

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21
Q

When might you consider personal and economic assumptions?

A

Analyzing and Evaluating clients financial status

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22
Q

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

A

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

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23
Q

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

A

inflation rates, tax rates, investment returns

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24
Q

First step in Developing and Presenting Recommendations

A

Identifying and evaluating ALTERNATIVES

25
Q

Second step in Developing and Presenting Recommendations

A

Develop the financial planning recommendations

26
Q

Third step in Developing and Presenting Recommendations

A

Presenting the recommendations

27
Q

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

A

identify and evaluate alternatives to their current course of action

28
Q

Implementing the financial planning recommendations involves what

A

-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

29
Q

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

A

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

30
Q

Financial Planning Process

A

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

31
Q

What is step one of the process

A

Establish and define the relationship

32
Q

What is step 2 of the process

A

Gathering client data

33
Q

What is step 3 of the process

A

Analyzing and evaluating clients financial status

34
Q

What is step 4 of the process

A

Developing and presenting financial planning recommendations

35
Q

What is step 5 of the process

A

Implementing the recommendations

36
Q

What is step 6 of the process

A

Monitoring

37
Q

Monitoring is what step of the process

A

Step 6 the last step

38
Q

Implementing the recommendations is what step of the process

A

Step 5

39
Q

Developing and presenting recommendations is what step of the process

A

Step 4

40
Q

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

A

Step 3

41
Q

Gathering client data is what step of the process

A

Step 2

42
Q

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

A

Step 1

43
Q

What question to ask when analyzing current course of action?

A

Does it maximize the clients financial potential

44
Q

When developing recs, consider 4 things

A
  • 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
45
Q

What to consider re:monitoring

A

-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

46
Q

When must you monitor client progress? How Often?

A

At appropriate intervals

47
Q

When would you update goals/recs/implementing decisions?

A

when you have responsibility, and circumstances warrant

48
Q

Who could you potentially borrow or lend money to?

A

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

49
Q

When referring someone, what factors into the referral?

A

The other persons reputation, experience and qualifications

50
Q

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

A

No

51
Q

Is having discretionary authority over clients financial assets considered advice?

A

Yes

52
Q

Is providing brokerage services or insurance product providing advice?

A

No

53
Q

Clients responsibility to inform of changes in qualitative/quantitative info

A

Establish monitoring and updating responsibilities

54
Q

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

A

If circumstances warrant changes update according to practice standards

55
Q

When would monitoring cease?

A

If you have responsibility, when the engagement is terminated

56
Q

Where would clients responsibility to inform you of changes fall?

A

Establish monitoring and updating responsibilities

57
Q

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

A

Implementing the recs

58
Q

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

A

Implementing the recommmedations

Intro to FP (14 decks)

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