General Principles Flashcards
(56 cards)
The Steps in the Financial Planning Process
- Establishing the relationship
- Gathering data & goals
- Processing and Analyzing the data
- Recommending
- Implementing the plan
- Monitoring the plan
Think: EGPRIM
The Rules of Conduct
Rule 1: Defining the Relationship with the prospective client or clients
Rule 2: Information Disclosed to prospective client or clients
Rule 3: Prospective client or clients information and property
Rule 4: Obligations to prospective clients
Rule 5: Obligations to the employer
Rule 6: Obligations to the CFP Board
When CFP(r) and CERTIFIED FINANCIAL PLANNERtm marks are used in a sentence, they must be followed by these 7 nouns
- Certificant
- Certification
- Practitioner
- Professional
- Registrant
- Mark
- Exam
Bonus: Designee
If home equity loan proceeds are used to improve the taxpayer’s home, the interest is _____.
Deductible
How is the American Opportunity Credit (AOTC) Calculated?
$1/$1 on first $2,000
$.25/$1 on next $2,000
Cap: $2,500 PER STUDENT PER YEAR, so 3 kids could be as much as $7,500
How is the Lifetime Learning Credit Calculated?
20% on the first $10,000
Cap: $2,000 PER YEAR
Represents federal taxation and spending intended to level the business cycle
Fiscal Policy
The action taken by the Federal Reserve to influence the growth of money supply
Monetary Policy
What tools do the Federal Reserve use to influence the growth of money supply?
- Reserve Requirements/Discount Rate
2. Open Market Operations
To tighten credit, the Fed _____ the reserve requirements or discount rate
Increases
To loosen credit, the Fed ____ the reserve requirements or discount rate
Lowers/decreases
Registered Investment Advisors with under $100M under management must register with _____
their state of domicile
Registered Investment Advisors with $110M or more under management must register with _____
the SEC
When does money held in Coverdells or 529 Plans become creditor protected
After 2 years
Qualifying Home Equity Debt calculation.
Used to deduct loan interest from loan proceeds.
Current FMV - Current Indebtedness
Steps for Education Funding
Step 1: Determine the cost of the first year of college. End Mode.
Step 2: Determine how much the child will need at age 18. Use Begin Mode
Step 3: Determine how much the parent needs to save either in lump sum (PV) or in yearly payments (PMT). Begin or End mode.
Gifts to UGMA/UTMA, Coverdells, and 529 Plans are gifts of _____ interest. Present or Future?
Present
Who can own a 529 Plan
- Parents/Grandparents
- Single people with no dependents
- A Trust
- Corporation/Partnership
- Estate
- Person acting in a fiduciary capacity
How are 529 Plans treated for federal financial aid?
As the parent’s asset
Are contributions to Coverdells deductible?
No
When must a student use Coverdell Funds by?
Age 30
If an UGMA/UTMA is transferred to a 529 Plan, who is the owner?
The Child
The calculation for Financial need
Financial Need = Cost of Attendance - Expected Family Contribution (EFC)
Leading | Coincident | Lagging Economic Indicator
Average Weekly hours for production workers in manufacturing
Leading
