General Planning Flashcards
The CFP Board was founded in what year?
1985
Within how many days must a CFP inform the CFP Board of an address change?
30 days
How many CE hours per reporting period are required?
30 hours
The CFP Commission can order a license suspension not to exceed ___ years.
5
Responses to complaints shall be in writing and submitted within ___ calendar days.
30
Evidence in support of an investigation may be submitted up to ___ days prior to the scheduled hearing.
45
Use of Initials Registered Investment Advisor and Certified Financial Planner
NO:
* RIA
* C.F.P.
YES:
* Registered Investment Advisor
* CFP®
* CERTIFIED FINANCIAL PLANNER®
Acceptable nouns following CFP® or CERTIFIED FINANCIAL PLANNER®
Pretty Please CC ME
* Practitioner
* Professional
* Certificant
* Certification
* Mark
* Exam
When can a CFP® licensee release client information to other persons?
- When an attorney or court subpoenas the information
- At the client’s request
- As a defense against charges of wrongdoing
Determining the Release of an Emergency Fund (Use 3 or 6 months if…)
3 months if:
* Single with 2nd source of income
* Married, both work
* Married, only 1 spouse works, but have a second source of income
6 months if
* Single wage earner
* Married and only 1 spouse works
Net Worth
Assets - Liabilities
How to calculate amount in an emergency fund
(Fixed Expenses + Variable Expenses)/12= Ans
Ans x (3 or 6 months)
Ideal savings rate
5-8% of Gross Income
How much consumer debt is considered acceptable?
≤20% of NET income
How much Total Monthly Debt is considered acceptable?
≤36% of GROSS income
How much PITI is considered acceptable?
≤28% of GROSS income
Current Ratio
Current Assets ÷ Current Liabilities
Current Assets
- Cash Equivalents
- Marketable Securities
- Accounts Receivable
- Inventory
Pro-Forma Statement
Projects expected profitability or return of the next year or longer. Estimates amount of excess income over expenses
Net Present Value Implications
- NPV = 0 … IRR = req. rate of return
- NPV = + … IRR > req. rate of return
- NPV = - … IRR < req. rate of return
- Choose highest IRR and NPV
What counts as emergency funds?
- Checking and savings accounts
- Laddered CDs ≤ 6 months
- Govt. Money Mkts
- CDs if close to maturity ≤ 90 days
Current Liabilities
- Accounts Payable
- Credit Card Debt
- Taxes Payable
Insurance Limitations on Deposits
- Individual Accounts = Max $250k on all accounts
- Joint Accounts = Only insured on their half up to $250k of all accounts
- Revocable trust (in trust for or payable on death) = $250k per bene
- IRAs and KEoghs: Insured separately but additional $250k per account
Main Goals of State Regulation of Insurance Companies
- Maintain solvency of insurers
- Protect policy holders against mistreatment by insurers
- Assure coverage will be available to all
- Maintaining fair competition