cash flow management

Question 1

Practice Standard 1

Answer 1

understand clients personal and financial circumstances

Question 2

Practice Standard 2

Answer 2

identify and select goals 🥅, prioritize goals

Question 3

financial and investment strategies are based on the client’s what

Answer 3

client’s capacity and willingness to assume risk 😬

Question 4

identifying potential goals

Answer 4

-discuss assessment of personal financial circumstance
- effect one goal may have on another

Question 5

apply reasonable assumptions/estimates to goals (things that affect goals)

Answer 5

life expectancy 🏥, inflation rates 💲, tax rates , investment return, other material estimates and assumptions

Question 6

selecting and prioritizing goals

Answer 6

discuss any goals that might seem unrealistic 🧐

Question 7

goal’s must be consistent with client’s what

Answer 7

values, attitudes, expectations, time horizons

Question 8

goals and objectives provide

Answer 8

focus 👓, purpose, vision and direction➡️for the planning process

Question 9

objectives must be

Answer 9

clear and measurable, relevant to the scope of the ENGAGEMENT

Question 10

discussion of goals must be

Answer 10

documented

Question 11

financial goals can be paid for by

Answer 11

• committing current assets and resources
• relying on future income/earnings

Question 12

clients w/o sufficient resources to meet goals must

Answer 12

reprioritize, refine or eliminate goals, reposition assets or redirect income
EXTEND timeframe

Question 13

A goal is

Answer 13

a global 🌎statement of a CLIENTS personal or financial PURPOSE
broader and more encompassing than objectives

Question 14

an objective is

Answer 14

definite financial target that SUPPORTS a goal

want 1.5 mil in retirement so objective is accumulating 250k in roth

Question 15

wants are

Answer 15

desires or pleasures

Question 16

needs are

Answer 16

required to sustain life

Question 17

first step in goal setting process (what does client do?)

Answer 17

-have client write down 📝personal and financial goals as specifically as possible
-HOW will the goal be attained

Question 18

goal timeframes

Answer 18

short term < 2 years
intermediate 2-10 years
longterm > 10 years

Question 19

first question to ask in cash flow analysis

Answer 19

does the client have ENOUGH CASH and LIQUID ASSETS assets available for EMERGENCY 🚨 fund & meet ongoing expenses?

Question 20

2nd step in goal setting process think calendar

Answer 20

assign dates/timelines to goals

Question 21

“Fresh Start”

Answer 21

increases a person’s chance of achieving their goals, new year, new month, birthday

Question 22

3rd step in goal setting process think money

Answer 22

determine current dollar amount to fund each goal

Question 23

what happens when you have a shortfall to meet your goal

Answer 23

savings strategy must be developed using cash flow mgmt and and budget to generate addtl savings

Question 24

planned savings are what type of expense on cash flow/budget?

Answer 24

fixed

Question 25

How many goals selected for immediate action?

Answer 25

no more than 4

Question 26

Should you look at each goal in isolation?

Answer 26

No - goals may be independent or interrelated. One strat beneficial to one goal may be detrimental to another goal. May have to work on goal 1 then Goal 2 etc.

Question 27

“pay yourself first”

Answer 27

structured strategy to help save more on a regular basis

Question 28

Emergency fund should be invested in what type?

Answer 28

NAV = 1 or very close to 1

Question 29

3 categories of cash flow

Answer 29

operations, investing, financing

Question 30

How can you tell which accounts are covered by FDIC?

Answer 30

look at who owns the accounts - joint and solely owned accounts are insured up to 250k