Financial Planning

Question 1

Practice Standards for Financial Planning

Answer 1

1. ) Understanding the client’s personal and financial circumstances
2. ) Identifying and selecting goals
3. ) Analyzing the client’s current course of action and alternative courses of action
4. ) Developing the financial planning recommendations
5. ) Presenting the financial planning recommendations
6. ) Implementing the financial planning recommendations
7. ) Monitoring and Updating

Question 2

1.) Understanding clients personal and financial circumstances

Answer 2

• obtaining qualitative and quantitative information
• analyzing information
• addressing incomplete information (possibility of limiting scope or terminating engagement)

Question 3

2.) Identifying and selecting goals

Answer 3

• analyzing and selecting goals (must discuss goals that might not be realistic)

Question 4

3.) Analyzing the clients current course of action and potential alternatives

Answer 4

• must analyze the client’s current course of action and whether that maximizes chances for meeting goals

Question 5

4.) Developing the Financial Planning Recommendations

Answer 5

• develop recommendations

Question 6

5.) Presenting the financial planning recommendations

Answer 6

• CFP must present to the client the selected recommendations and the information that was required to be considered when developing the recommendations

Question 7

6.) Implementing the financial planning recommendations

Answer 7

• establish with client if CFP has implementation responsibilities

Question 8

7.) Monitoring progress and updating

Answer 8

• establish with client if CFP has monitoring and updating responsibilities

Question 9

Financial Planning Definition

Answer 9

A collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances

Question 10

When Financial Planning practice standards apply

Answer 10

• providing financial planning
• financial advice that requires integration of relevant elements of client’s financial circumstance
• the client has a reasonable basis to believe the CFP will or has provided financial planning

Question 11

No client agreement to engage for financial planning

Answer 11

If client doesn’t agree to enter into financial planning CFP must:

• not enter engagement
• terminate engagement
• limit scope
• provide requested services after informing client how financial planning would benefit them and by not doing so may limit the financial advice (transactions, life insurance, asset allocation)