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CFP Exam > CFP Fundamentals > Flashcards

CFP Fundamentals Flashcards

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CFP® flashcards
1
Q

When must a RIA register with the state?

A

If the RIA has AUM <$100M

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2
Q

When must a RIA register with the SEC?

A

If the RIA has AUM >$110M

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3
Q

Can you use the letters RIA after your name?

A

No, SEC does not permit. Only may use the words “Registered Investment Advisor”

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4
Q

Investment advisor is defined for purposes of the Investment Advisors Act of 1940 as some who is: (1) (2) (3)

A

(1) in the business
(2) of providing advice about securities
(3) for compensation

ABC

Advice
Business
Compensation

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5
Q

For an advisor to register with the SEC they must file form

A

ADV

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6
Q

For an advisor to withdraw registration with the SEC an advisor must file form

A

ADV-W

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7
Q

TABLEs are incidental, and are EXCEPTIONS from registering with the SEC? Define TABLE

A

Teachers
Accountants
Brokers
Lawyers
Engineers

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8
Q

VIPs are SaFE from EXEMPTIONS from registering with the SEC. What does this stand for?

A

Venture capital
Insurance companies
Private funds < $150M

homeState
a
Foreign advisors
Exchange (not on national exchange)

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9
Q

Who are the five gatekeepers that perform critical roles for advisors and the private funds they manage?

A

Auditors
Prime Brokers
Custodians
Administrators
Marketers

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10
Q

What is considered a mid-sized advisor?

A

$25M-$100M AUM

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11
Q

What is the Brochure Rule?

A

Requires written disclosures to every client:
-advisory services provided and fees
-type of securities that are part of investments
-education background of advisor
-participation/interest in securities transactions
-summary of material changes must be provided annually

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12
Q

How does a person register with FINRA?

A

Form U-4

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13
Q

What does FINRA stand for?

A

Financial Industry Regulatory Authority

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14
Q

Series 6 authorizes

A

Mutual Funds, UITs, variable life insurance and variable annuities

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15
Q

Series 7 authorizes

A

A person may sell everything except commodities and futures

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16
Q

Dodd-Frank Wall Street Reform and Consumer Protection Act summary

A

-Lenders must verify income, credit history
-Lenders prohibited from refinancing unless the new mortgage provides a benefit to the borrower
-Homeowners unable to pay may qualify for $50k assistance
-Banks must retain at least 5% of risk loan exposure on their books
-FDIC $250k
-Definition of an accredited investor

17
Q

What is the definition of an Accredited Investor?

A

$1M of net worth exclusive of personal residence
OR
-Make a minimum of $200,000 (single)
OR
-Make a minimum of $300,000 joint

TIP: Remember 1 , 2, 3

18
Q

What is Reflective Listening?

A

Repeating the perceived message back to the speaker to get their confirmation of the message, feelings, and next steps

19
Q

What is Motivational Interviewing?

A

Developed to support changes in behavior. Avoids giving advice but instead conveys empathy and acceptance while guiding the client to discover their own motivations to change.
-Partnership
-Evocation
-Accepance
-Compassion

20
Q

What does a Visual learner like?

A

Pictures, Charts, Graphs

21
Q

What does an Auditory learner like?

A

Explanations, repeating key information

22
Q

What does a Kinesthetic learner like?

A

Hands on activities, offer online and technology driven exercises

23
Q

Pre-Contemplation Phase

A

No intent to change

24
Q

Contemplation Phase

A

Aware that change is needed, considering change, not ready to take action

25
Q

Preparation Phase

A

Gathering information, preparing to change

26
Q

Action Phase

A

Action is taken to implement the plan. Bad habits transition to healthier habits.

27
Q

Maintenance Phase

A

Prevention of relapse

28
Q

Extrinsic Motivation

A

Comes from reward or fear of pnishment

29
Q

Intrinsic Motivation

A

Comes from within and is often associated with satisfaction and enjoyment

30
Q

What factor is the most important element in financial planning?

A

Age

31
Q

Life Cycle Factors

A

Age
Marital Status
Dependents/Elderly parents
Income and Net Worth

32
Q

How often should wills, power of attorney, health care proxy be updated?

A

Annually

33
Q

How many days to elect COBRA coverage?

A

60 days

34
Q

How many days do you have to rollover a 401k?

A

Typically 60 days

35
Q

As a planner, it’s critical to determine a client’s life cycle position because

A

As a planner, it’s critical to determine a client’s life cycle position because

Life cycle position impacts a client’s goals and behavior

CFP Exam (23 decks)

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