Ch.1 - Financial Planning Process Flashcards
<p>A comprehensive financial plan is something that you normally do not see. Why is that?</p>
<p>It's expensive and it's hard to get clients to commit to a comprehensive plan.</p>
<p>Should include all financial plannings topics, IGIFTBEER.</p>
<p>What are the 7 reasons people begin financial planning?
| (GETRED)</p>
<p>1. Generate income
2. Education planning
3. Tax planning
4. Retirement planning
5. Emergency fund planning
6. Debt management</p>
<p>According to the Retirement Confidence Survey conducted by the Employment Benefit Research Institution, how long do workers anticipate their retirement will last?</p>
<p>At least 20 years</p>
<p>EGADCIMP...?</p>
<p>– Establish the relationship – Gather information – Analyze/evaluate current financial status – Develop recommendations – Communicate recommendations – Implement recommendations – Monitor recommendations – Practice within professional standards</p>
<p>In this part of the financial planning process the advisor acquires the financial products/services to implement the plan and motivate the client during the process.</p>
<p>Implementing Recommendations</p>
<p>In this part of the financial planning process the advisor communicates the recommendations and what changes to make, but ensures the client that the plan is achievable.</p>
<p>Communicating Recommendations</p>
<p>Domain 5</p>
<p>In this part of the financial planning process the advisor determine the clients present financial status, identify strengths/weaknesses, modify goals, and determine where the client is in regards to reaching their goals.</p>
<p>Analyze and Evaluate Status</p>
<p>In this part of the financial planning process the advisor explains the financial process, fees/payment, and talk about background and philosophy related to financial planning.</p>
<p>Establish Relationship</p>
<p>In this part of the financial planning process the advisor follows federal/state regulation, implement plans in the correct legal framework as laws change frequently.</p>
<p>Practice Within Standards</p>
<p>In this part of the financial planning process the advisor gathers tax/will/trust/insurance info, create goals, and determine the clients risk tolerance.</p>
<p>Gather Data</p>
<p>In this part of the financial planning process the advisor review/revise the implemented plan and can change the plan if the client has a change in their financial environment.</p>
<p>Monitoring Recommendations</p>
<p>In this part of the financial planning process the advisor writes a detailed report on the financial planning recommendations.</p>
<p>Develop Recommendations</p>
<p>Domain 4</p>
<p>This approach involves solving a single financial planning problem for the client.</p>
<p>single-purpose approach</p>
<p>This approach involves solving more than one financial problem by implementing the financial planning process for the client.</p>
<p>multiple-purpose approach</p>
<p>This type of financial planning encompasses all personal/financial situations and integrates all techniques and narrowly focuses the approaches to solve financial problems.</p>
<p>comprehensive financial planning</p>
<p>What are the 10 core areas for specializing in financial planning?</p>
<p>(IGIFTBEERR)</p>
<p>Investment evaluation General principles Insurance and risk management Financial status evaluation Taxation Business ownership planning Estate planning Evaluation of benefits Real estate valuation Retirement planning</p>
<p>What are the 3 stages of a financial planning pyramid?</p>
<p>(SAR)</p>
<p>Stage 1 (Security) – protecting against uncertainty (emergency savings, insurance, will) Stage 2 (Accumulation) – wealth accumulation Stage 3 (Retirement) – retirement/estate distribution</p>
<p>What are the five phases a career minded person will go through in their financial life cycle?</p>
<p>– Early Career
– Career Development
– Peak Accumulation (moving towards the maximum earnings and trying to meet goals)
– Pre-Retirement (Implementation of risk reduction)
– Retirement</p>
<p>What are the top three obstacles that prevent people from gaining control of their financial freedom?</p>
<p>1. Living beyond their means
2. Procrastination
3. Lack of financial knowledge</p>
<p>What is the best way to present a client with a comprehensive financial plan?</p>
<p>In writing</p>
<p>What is the most popular area of financial planning that people specialize in?</p>
<p>Investment planning</p>
<p>What is the top reason people begin financial planning?</p>
<p>Build a retirement fund.</p>
<p>Rising median age Dual income families
Volatility of financial conditions
Increasing sophistication of financial technology
Increasing education costs
Are all what? </p>
Opportunities for financial planners
