Dank Review Flashcards
Financial Planning engagement - written or unwritten?
Written
Financial Planning process - 7 steps or more
Not limited to 7 steps
Qualitative data?
Anything subjective - based on attitudes, emotions and desires) (ex. Health Status)
Fam Info, trustees, others advisors(objective - Quantitative)
Frequency of monitoring financial plan?
As determined by cline and planner
Difference between planning steps and planning subject areas?
Planning steps -7 step process
Planning subject areas - 8 planning
Retirement age - Quantitative or qualitative?
QUALITATIVE
Self attribution bais
Overconfidence
Belief that profits are rooted in investor skills while losses are simply the result of bad luck
Media bias
Framing bais - believe based on how things are framed
Reflection Bais
Confirmation bias
Heuristic
Shortcuts for decision making
Overreaction
Over the top, immediate action
Mental accounting
View money from different sources in different ways
Health status affects what parts of the plan?
Retirement
Life insurance
Disability Insurance
Estate tax consequences (based on life expectancy)
Non-Sales related competitions
Custodial and admin fees that are not based on size of clients assets or quantity of transactions
Solicitation fees
Advisory fees for TAMP
When to report firms bankruptcy to CFP?
When you are the control person in the firm
Which rulings from DEC can be appealed?
All adverse rullings can be appleaded within 30 days from the date of the adverse rulling; only one opportunity for the appeal
SEC RULE SP-F and Privacy Policy
Any privacy policy documents that satisfy the requirements of SEC Rule SP-F fully will satisfy the CFP B’s requirements too; must be reviewed and updated annually if there are any material changes to the privacy policy.
Are you considered CPF Professional after passing the exam if you have 3-5 years of financial services experience?
No. You have to complete the ethics declaration and satisfy the CFP board’s fitness standards (which include background check)
What’s the definition of FMV
amount at which well-informed buyer is willing to buy from a well-informed seller where neither is compelled to buy or sell
Auto Note Balance - On what statement
It’s a libility and so it’s on balance sheet (not cashflow)
How much funds do you available for emergency ?
Amount available for emergency = Cash/Cash equivalent(Checking/Savings/MM) - (total fixed + total variable expenses)
Emergency fund calculation and checking account
First use checking account to determine funds available emergency (checking account amount - total outflow); use any reamining amount towards emergency. If 0 available, then checking account amount is not available for emergency fund.
Checking account amount is left for monthly outflows first !
Rule of Thumb for PITI
PITI should be <= to on 28% of Gross Income
Year Debt
includes loan payments + Credit card payments (IT DOSE NOT Include taxes and insurance)
what needs to be reduced before emergency fund can be established?
Total Debt (monthly debt/payments)
What’s a better option ? Reduce consumer debt or establish 6-month emergency fund?
Establish 6-month emergncy fund first ; reduce consumer debt second
For clients who are in ambivalent phase, what should you do to help?
Provide education as they are increasingly receptive to learning about potentially negative concequencyes of their behavior.
Difference between funding an retirement account from cashflow vs. checking/savings/MM accounts
Funding a retirement account from payroll is considered increase in networth; vs. funding it from checking/mm accounts, the net worth doesn’t change.
