FUND CH1 Intro to FP Flashcards
The Financial Planning Process
Establish, Gather, Analyze, Develop, Implement, Monitor (EGADIM -throw an egg ad em!)
Contents of the Financial Plan
Insurance, financial statements, analyze current, emergency fund and debt mgmt., legacy goals and other goals (retirement, education), income tax planning, investment allocation
Establishing and Defining the Client Relationship, what are 4 steps
1 effectively communicate with client 2 Introductory Meeting 3 Engagement letter 4 The Scope of the Engagement (you aim your egg at the person you want to ask on a date…kramer style)
Gathering 2 kinds of Client Data
Internal Data, External Data (the egg hit an intern, week!)
The Internal Data Collection Process (2 types of Data)
Qualitative data is how a client feels about something Quantitative data contains specific measurable attributes (the intern starts crying because it hurt her feelings because of the quantity of eggs thrown at her)
Quantitative information collected includes: (7 things)
o family member info o insurance portfolio o Bank and investment info o Taxes o Retirement and Employee Benefits o Estate Planning o Personal financial statements if available
(the intern calls her brother to beat you up, then you have to call your insurance to get your teeth fixed, and when it doesn’t cover you have to take money out of your IRA or 401k, too bad you don’t have a large trust fund , you’ll have to eat pizza everyday according to your budget)
Qualitative information includes: (7 things)
o Education goals o Retirement goals o Employment goals o Savings goals o Risk tolerance o Charitable goals o General attitude towards spending
The External Data Collection Process: (11 things)
Interest rates Housing market Job market Investment market Business cycle Local insurance costs Local cost of living Expected inflation rate Expected rate of increase in the prices of education and medical care Legislation that may impact certain industry sectors Current and expected income, gift, and estate tax rates
(the external brother that beat you up works for CNBC)
Analyzing and Evaluating the Client’s Financial Status
?
The 5 Benefits from Financial Planning
• helps identify risks, and to establish and prioritize goals. • Helps anticipate where financial needs exist and where new risks may arise. • establishes benchmarks within a finite time frame. • help keep the client focused. • can give a client confidence that they can accomplish their financial goals.
(after the intern went to get psychoanalysis, she set some goals to complete her revenge on Kramer and realized the risk of walking in an egg zone, she developed a plan to aquire chickens to produce more eggs to throw back and made a bench for her chicken coop, also she got glasses to be able to see the bench and feel confident she can do box jumps on top of it to get stronger for her revenge)
2 reasons to use a professional financial planner?
o Most clients do not know how to prepare a comprehensive financial plan and do not want to spend the time to learn how. Even when the client may have the knowledge, he lacks the confidence to undertake this process and is likely seeking confirmation of his own financial planning decisions.
o A financial planner brings objectivity, whereas a client views their financial position subjectively.
(she learned a lot from her therapist in the record time of 2 seconds, and got validation and confidence for her chicken coop egg plan her therapist even gave her a blue ribbon and sticker objects for doing so good
FP Certifications
• CERTIFIED FINANCIAL PLANNER™ • Chartered Financial Consultant (ChFC) • European Financial Planner (EFP)
(Her therapist got her CFP from the chart house when she got a grass fed European steak)
