Fundamentals of Financial Planning Flashcards
(39 cards)
Duties owed to client
Fiduciary duty
Integrity
Competence
Diligence
Disclose and manage conflicts of interest
Sound and objective professional judgement
Professionalism
Comply with the law
Confidentiality and privacy
Provide Information to client
Communicating with client
Duties when representing compensation
Recommending/engaging/working w/ add. persons
Selecting and using technology
Don’t borrow/lend/commingle with client funds
For questions see page 2
Reporting requirement: Felony/relevant misdemeanor Failure to comply with laws or regs Findings Arbitration Civil action License suspension/revocation Termination Customer complaint over violations, etc
Written notice within 30 days to CFP board
(Should report initial charge/investigation as well as outcome)
Exceptions are claims of less than 5k or violations settled of less than 15k.
Even rebuttable claims should be reported.
CFP definition of a Felony
Punishable by one year or more in jail or a fine of more than 1,000
What type of consent for material conflicts?
Verbal, documented. Written not needed.
Communication timeframes with CFP Board
Reporting Response to allegation Answer to formal complaint from DEC Response to order to show cause Order of suspension issued
30 days
30 days, extra 20 before admission assumed
20 days, 30 days to appeal
20 days
30 days to prove you have ceased use of the marks
Forms of Discipline
Private Censure
Public Letter of Admonition
Suspension
Revocation
Suspension
If less than 1 year, reinstatement is automatic
If more than one year, then certificant must petition for reinstatement
-if denied, must wait for 2 years to petition again. Second chance is the final
Always Barred from being a CFP
Felony conviction for theft, embezzlement or other financially based crimes.
Felony conviction for tax fraud or other tax related crimes.
Revocation of a financial professional license, unless the revocation is administrative in nature.
Felony conviction for any degree of murder or rape.
Felony conviction for any other violent crime within the last five years.
Presumed Barred from being a CFP
Two or more personal or business bankruptcies.
Revocation or suspension of a non financial professional license, unless revocation is administrative in nature.
Suspension of a financial professional license, unless the suspension is administrative in nature.
Felony conviction for non-violent crimes (including perjury) within the last five years.
Felony convictions for violent crimes other than murder or rape that occurred more than five years ago.
VIPs are SaFE from EXEMPTIOMS
Venture capital Insurance companies Private funds less than 150m home State Foreign advisors securities not listed on a National exchange
EXCEPTIONS:
TABLEs are incidental
Teachers Accountants Brokers Lawyers Engineers
Information due from private fund advisors
Basic organizational/operational information about each fund they manage
General information about the size and ownership of the fund
General fund data
The advisors services to the fund
Identification if the five gatekeepers that perform critical roles
-auditors
-prime brokers
-custodians
-administrators
-marketers
The types of clients they advise and their advisory activities and employees
Business practices that may pose significant conflicts of interest
The brochure role
Written disclosures of the following to every client
Advisory services that are provided in the fees pertaining to those services
Types of securities that are part of investments
Education background of the advisor
Participation\interest in securities transactions
This information must be given to a client before or at the time of entering into a contract.
A summary of material changes must be provided to class annually and either deliver the update brochure or offer to deliver an updated copy
Accredited Investors
(Dodd frank update)
1234 rule
Have 1,000,000 net worth exclusive of a personal residence reassessed every 4 years
Make a minimum of 200,000 per year if single
Make a minimum of 300,000 per year if married
Reg BI
Disclosure
Care
Conflict of Interest
Compliance
Uber Is A Drunk Persons Motor Vehicle
Understanding financial/personal situation Identifying/Selecting Goals Analyzing current course/alternatives Developing recommendations Presenting recommendations Implementing recommendations Monitoring progress
Education funding:
Public state
Semi private
Private
3k per year savings
6k per year savings
9k per year savings
Supply Curve Shifts
Technology
Competition
Anything other than price
Down and Right if something causes production to improve
Up and Left If something causes production costs to increase or supply to decrease.
Demand Curve shifts
Left and down if income decreases, taxes increase, savings rate increases.
Right and up if income increases, taxes decrease, savings rate declines.
Price affect on supply and demand
When price moves, supply and demand move along their respective curves. Assuming no external factors, the curves will not shift.
Equilibrium
When price at which quantity demanded equals the quantity supplied.
Substitutes
Products that serve a similar purpose.
A price change in one product changes the demand on another product.
Ex: if movie ticket prices increase, movie rentals will increase.
Complements
If razors are put on sale, demand for razor blades may increase.
Price elasticity
Price elasticity measures the change in quantity demanded, relative to changes in price.
