B.7 Financial Planning Process Flashcards
1.
Subjective data reflecting values, attitudes, and financial experiences.
Qualitative Information
Objective data such as income, expenses, assets, and liabilities.
Quantitative Information
Core beliefs that influence financial decisions and priorities.
Client’s Values
A client’s ability and willingness to endure market fluctuations to achieve goals.
Risk Tolerance
The period available to achieve financial goals, impacting strategy.
Time Horizon
An assessment of income and expenses to evaluate financial health.
Cash Flow Analysis
A snapshot of financial health: total assets minus total liabilities.
Net Worth Statement
A plan for allocating income toward expenses, savings, and debt repayment.
Budgeting
Savings reserved for unexpected expenses or emergencies.
Emergency Fund
Strategies for allocating assets to align with goals and risk tolerance.
Investment Planning
Identifying and managing risks through appropriate insurance coverage.
Insurance Planning
Strategies to minimize tax liabilities and maximize after-tax income.
Tax Planning
Financial preparation to ensure sufficient income after leaving the workforce.
Retirement Planning
Arranging the management and transfer of assets during life and after death.
Estate Planning
Setting aside funds and choosing investments to finance education costs.
Educational Planning
Developing strategies for efficient debt repayment and control.
Debt Management
Establishing and defining the professional relationship with the client.
Client Engagement
The agreed-upon services and responsibilities between the planner and client.
Scope of Engagement
The ethical obligation to act in the client’s best interest.
Fiduciary Duty
A situation where personal or financial interests could affect professional judgment.
Conflict of Interest
A set of guiding principles for ethical and professional conduct.
Code of Ethics
Guidelines ensuring quality and professionalism in financial planning services.
Practice Standards
A detailed outline of steps to achieve financial goals.
Action Plan
The process of ranking financial objectives based on importance and timeline.
Goal Prioritization
The study of how psychological factors influence financial decision-making.
Behavioral Finance
Adapting financial strategies to different stages of life.
Life Cycle Planning
Testing financial strategies against potential future events.
Scenario Analysis
Evaluating a financial plan under adverse conditions to ensure resilience.
Stress Testing
The ongoing process of revisiting and adjusting the financial plan as needed.
Monitoring and Review
