General Principals Flashcards
Practice Standards
Uber Is A Drunk Person’s Immediate MotorVehicle
Understanding the cleint’s personal and financial circumstances
Identifying and selecting goals
Analyzing the client’s current course of action and potential alternative courses of action
Developing the financial planning recommendations
Presenting the financial planning recommending
Impementing the financial planning recommendationg
Monitoring progress and updating
Ethics
Act with honesty, integrity, competeence and diligence
Act in the client’s best interests
Excercise due care
Avoid or disclose and manage conflicts of interest
Maintain the confidentiality and protect the privacy of client information
Act in a manner that reflects positively on the financial planning profession and CFP certification
The Fiduciary Standard
The Duty of Loyalty
The Duty of Care
The Duty to Follow Client Instructions
The Duty of Diligence
The Duty to DIsclose and Manage Conflicts of Interest
The Duty of Sound and Objective Professional Judgement
The Duty of Professionalism
The Duty to Comply with the Law
The Duty of Confidentiality and Privacy
The Duty to Provide Information to a Client
The Duty to Fairly Represent the Method of Compensation
When CFP® Or CERTIFIED FINANCIAL PLANNER is used in a sentence, must be followed by:
Certificant Practioner Professional Certification Mark Exam Registrant**
**Regristants are individual who are not currently certified but have been certified by the CFP board in the past and are generally entitled to use the CFP ® marks
Emergency Funds
3 months if:
Single with 2nd source of income
Married, both work, have reasonable wages
Married, only one spouse works, have a 2nd source of income
OTHERWISE USE 6 MONTHS
2nd source of income includes:
significant alimony if divorced
Beneficiary of large trust fund
Financially well off
FHA (Federal Housing Administration)
Government guaranteed mortgages through FSA insurance for low and middle income individuals. Mortgage maximum ranges between 270k and 730K
Qualified Residence Interest Rules
If proceeds of a mortgage loan are used to buy, build, or improve a taxpayer’s home and if these morgages combined with any others taked out total more than 750K (375K MF separate), only the interest on the first 750K is deductible (includes deductible home equity loans)
If the proceeds of such mortgage loans are used for purposes OTHER than buying, building, or improving the taxpayer’s home (HEL), NON of the interest is deductible
***If home equity loan proceeds are used to improve the taxpayer’s home, the interest is deductibe
Investment recommendations for children’s education account
Age 12 and under —> be aggressive
13-17 —> be conservative
17+ —> basically cash
Fiscal Policy
Federal taxation and spending intended to level the business cycle
Monetary Policy
The Fed Reserve Board has great power to influence the “supply” of money of credit in the domestic economy. FOMC reviews financial conditions and determines appropriate stance of monetary policy. Monetary policy is action taken by the Fed Reserve to influence the growth of the money supply. Tools include Reserve requirements/Discount Rate and Open Market Ops
Reserve Requirements/Discount Rate
Discount rate: Rate that Fed Reserve charges its member banks to borrow to satisfy reserve requirements
To tighten credit —> Fed increases the reserve requirements/discount rate
To loosen credit —> Fed lowers the reserve requirement/discount rate
Loose and relaxed
Loose and Lower
Open market operations
Under a repo(repurchase), Fed gives the dealer funds (cash) in return for a temporary pledge of government securities(bonds)
Under a reverse repo, Fed gives the dealer a temporary pledge of government securities(bonds) in return for cash
“Repo” FED BUYS SECURITIES (bonds)—- expansionary/easy money policy
“Reverse Repo”. FED SELLS SECURITIES(bonds)—- contractionary/tight money polocy
Easy/expansion(repo) , everyones buying shit including governement. E E EASY EXPANSION
Financial Service Regulation and Requirements
RIA with under $100M AUM must register with state of domicile.
They may wait until AUM reach $100M to register with the SEC
Advisors MUST register with SEC once their AUM are at $110M
Exceptions: BLAT (incidental)
Banks that are not also investment companies
Lawyers
Accountants
Teachers
Broker/dealers or registered reps whose performance is incidental and who get no special compensation for advice
Advisors whose only clients are insurance companies
Family Office (advisory services provided exclusively for family members)
Debts not cancelable by bankruptcy
Student Loans Government Loans Child Support Alimony Taxes
