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FP511 > Module 1 - Financial Planning Process > Flashcards

Module 1 - Financial Planning Process Flashcards

1
Q

What are the 7 steps in the Financial Planning Process?

A
  1. Understanding the Clients Personal and Financial Situation.
  2. Identifying and selecting goals.
  3. Analyzing current course and potential alternative courses.
  4. Developing the Financial Planning Recommendations.
  5. Present the Financial Planning Recommendations.
  6. Implementing the Financial Planning Recommendations.
  7. Monitor and progress update
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2
Q

What takes place in step 1- Understanding the Clients personal and financial situation?

A

Obtain qualative (personal things - values, age, dreams and goals) and quantative (financial things - tax returns, retirement information, financial docs)

Analyze the information and address incomplete information.

Missing info could lead to limited planning or termination of engagement.

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3
Q

What takes place in step 2- Identifying or selecting goals?

A

This is a collaboration in nature between the advisor and the client.

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4
Q

What takes place in step 3- Analyze the current course and potential alternative courses?

A

List material advantages and disadvantages.

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5
Q

What takes place in step 4- Developing the Financial Planning Recommendations?

A 
Remember RABIT:
Recommendations
Assumptions
Basis
Incorporation
Timing
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6
Q

What takes place in step 5 - Present the Financial Planning Recommendations?

A

Presentation should be clear and understandable. Both written and verbally.

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7
Q

What takes place in step 6- Implementing the Financial Planning Recommendations?

A

The CFP implements the plan unless otherwise decided.

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8
Q

What takes place in step 7 - Monitoring and Progress update?

A

The CFP reviews for changes or things not working.

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9
Q

To help remember the steps, remember this phrase:

Umbrella’s In A Downpour Prevent Immense Mess

A 
Understanding
Identifying
Analyze
Develop
Present
Implement
Monitor
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10
Q

What are the 3 phases of a clients financial life cycle?

A
  1. Asset Accumulation
  2. Conservation (or Protection)
  3. Distributing (or Gifting)
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11
Q

What influences the 3 phases of a clients financial life cycle?

A 
Influencing factors include:
Age
Financial Status
Special Needs
Marital Status & dependents
Attitudes, Values and Beliefs

Contextual Variables such as net worth, assets.

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12
Q

Describe the Asset Accumulation Phase:

A

Phase last until around age 45

Beginning of the phase:

  • Limited excess funding
  • High degree of debt to net worth
  • Low net worth
  • Lack of concerns for risk

As the client moves through the phase:

  • Increased cash for saving or investing
  • Reduced use of debt as a percentage of total assets
  • Increased net worth
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13
Q

Describe the Conservation (or protection) phase

A

Phase lasts from age 45-60 or up to retirement age.

Increase to cash flow, assets and net worth

Decrease in proportionate use of debt.

People usually become more risk adverse as assets are acquired.

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14
Q

Describe the Distribution (0r Gifting) phase

A

This phase is approximately from age 60 (or retirement phase) until date of death.

Distribution - gifts to heirs.

Implementation of estate planning strategies.

High new worth and cash flow.

Low debt.

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15
Q

What are the CFP® board certified nouns?

A 
Certificate
Professional
Practitioner
Certification
Mark
Exam
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16
Q

CFP® proper use

A

must always be in CAPS
No periods
Always use the ®
Always use CFP® unless it immediately follows a person’s name

i.e. Jennifer Verscheure, CFP®
Jen, a CFP® practitioner

17
Q

CERTIFIED FINANCIAL PLANNER™ proper use

A

Always use cap letters or small cap font
Always use the ™ symbol
Always use one of the CFP® approved nouns unless directly following the name of the approved certificate.
Always associate with individual certified.

18
Q

Proper use of CFP® plaque designs

A

Always reproduce the plaque design from the original artwork

Never alter or modify the plaque design

Always associate with the individual certified

Maintain min. size of .5 inch for print and 50 px on a screen

Always maintain a clear space around the mark

FP511 (3 decks)

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