Lesson 1

Question 1

3 Approaches to Financial Planning

Answer 1

1. Single Purpose (One topic area - “How do I invest my 401k?”
2. Multi Purpose (Multiple topics and goals) “How can I retire at 60 and fund my childs education?”
3. Comprehensive Approach - consider all financial aspects.

Question 2

Financial Planning Process

Answer 2

1. Establishing and Defining the Client-Planner Relationship
2. Gathering Information Necessary to Fulfill the Engagement
3. Analyzing and Evaluating the Client’s Current Financial Status
4. Developing the Recommendations
5. Communicating the Recommendations
6. Implementing the Recommendations
7. Monitoring the Recommendations

Question 3

Life Cycle Planning

Answer 3

1. Early age (25-35)
2. Career Development (35-50)
3. Peak Accumulation (50-62)
4. Pre-Retirement (3-6 years before planned retirement)
5. Retirement (62 or 66+)

Question 4

Comprehensive Financial Planning

Answer 4

• Client Oriented Process
• Discover client goals before exploring solutions
• A team of experts can be employed to cover topic areas.

Question 5

Using the Financial Planning Pyramid

Answer 5

• Stage 1 > Guarding Against Uncertainty (Insurance Planning)
• Stage 2 > Growing Investments (Investment Planning)
• Stage 3 > Managing Retirement and the Estate. (Retirement and Estate Planning)

Question 6

Guiding Ethical Principles

Answer 6

• Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
• Professionalism
• Diligence

Question 7

Interviewing

Answer 7

• Non Directive Interview
  >Discuss wide range of areas
  >Client controls pace
  > Advantages - greater flexibility, more in depth analysis, & Facilitates strengthening client-planner relationship.

Question 8

Counseling

Answer 8

• Focus on helping and assistance.
• Ideal to understand (where clients are; where they want to be.)
• Collaborate build a plan of action to reach goals.
• Includes discussion and reflection.

(Paraphrasing, Reflecting their emotions, sharing feedback, clarifying, summarizing, interpreting information).

Maintain focus on helping the client.

Question 9

Advising

Answer 9

• Providing specific guidance.
• Advice from an expert.
• CAN GENERATE SELF-ADVICE FROM A CLIENT.
• Advisor must have more knowledge on subject.

Question 10

Advice vs. Advisor

Answer 10

Advice - actual suggestions and recommendations

Advisor - Professional who works with clients to achieve their goals.

Question 11

Developing Rapport

Answer 11

Comfortable Harmonious Relationship, it’s best when the advisor is proactive about building it.

1. Acceptance of the client
2. Clients’ awareness of this acceptance.
3. Respect the uniqueness of each client
4. Express sincere desire to help the client

• Environment that promotes openness
• Alleviate concerns of clients
• Respond to the social styles of clients
• Communicate effectively
• Structure communication effectively.

Question 12

Barriers to Building Rapport

Answer 12

• Distrust of a salesman.
• Fear of making a decision
• Need for stability
• Time constraints
• Fear of fraud

Question 13

Tips to alleviate Client Concerns

Answer 13

• Dont impose
• Be aware of verbal pace. (Calm, unhurried, never interrupt,.)
• Listen carefully when they speak.
• Be aware of non-verbal cues
• Encourage clients to talk
• Control anxiety
• Be transparent