Core Curriculum Chapter 1 Flashcards
CFP Certification - What are the six components of financial planning?
Financial Management, Investment Planning, Insurance & Risk Management, Tax Planning, Retirement Planning, Estate Planning & Legal Aspects
CFP Certification - What are the four professional skills required of financial planners?
Critical Thinking, Interpersonal & Relationship Skills, Communication Skills, Teamwork & Collaboration
CFP Certification - What are the key steps to earning a CFP designation?
Complete the Core Curriculum, Pass the CFP Exam, Complete the Professional Education Program (PEP), Gain qualifying work experience, Adhere to ethics & continuous education
CFP vs. QAFP - What’s the difference?
CFP: For complex financial planning cases. Requires advanced courses and a case-based exam. QAFP: For simpler financial planning cases. Can ‘bridge’ to CFP with additional coursework.
Financial Planning Process - What are the first three steps?
Define Terms of Engagement (clarify roles, responsibilities, fees), Identify Client’s Goals, Needs & Priorities, Gather Client Information (quantitative & qualitative data)
Financial Planning Process - What happens after gathering client information?
- Assess Current Situation, 5. Identify & Evaluate Strategies, 6. Develop Recommendations, 7. Compile & Present the Plan, 8. Discuss Implementation & Responsibilities, 9. Implement the Plan
Letter of Engagement - What are the required disclosures?
Services to be provided, Compensation structure (fees, commissions), Potential conflicts of interest, Referral or contingency fees, Contact information for planner & firm, Client responsibilities & engagement terms
Letter of Engagement - Why is it important?
Ensures clarity on expectations, Protects both planner and client, Helps establish a trust-based relationship
What are examples of quantitative client data?
Income, tax returns, pay stubs, Investment statements (TFSA, RRSP, RDSP), Mortgage, credit card, and loan statements, Insurance policies, Pension statements
What are examples of qualitative client data?
Client’s values, attitudes, and goals, Risk tolerance and investment preferences, Concerns about financial security, Estate and legacy planning priorities
What should a planner do if client-provided information is inconsistent?
Clarify with the client (without making them feel judged), Use assumptions from industry standards if necessary, Confirm with supporting documentation
What are key considerations when presenting financial planning strategies?
What happens if the strategy is implemented? What happens if the strategy is not implemented? What trade-offs does the client need to consider? How does the strategy align with the client’s goals & values? How does the strategy impact other financial areas?
What is the planner’s role in presenting recommendations?
Provide clear, customized explanations, Use charts, visuals, and simple language, Help clients prioritize goals, Ensure clients understand trade-offs
Why is financial planning an ongoing process?
Client’s circumstances change (e.g., job change, marriage, inheritance), Market & tax laws evolve, The plan needs to be reviewed & adjusted regularly
Who might a financial planner collaborate with for implementation?
Accountants (tax strategies), Lawyers (estate planning), Insurance advisors (risk management), Investment managers (portfolio strategy)
What is the first step in the financial planning process?
Define the Terms of Engagement
Which of the following is qualitative data?
B) Client’s Risk Tolerance
What must be included in a Letter of Engagement?
C) The planner’s compensation structure
