General Principles Flashcards
Reportable matter
30 days
Appeal
Within 30 days after notice of ruling
After 30 day widow it is final
When should you notify cfp in writing
Any conviction of a crime, except misdemeanor traffic offenses or traffic ordinance violations (unless it includes alcohol or drugs or profesional suspension
Notify within 30 days
Suspensions by CFP Board
Automatically published
Who is responsible for investigation and appropriate action following rules violation
CFP Board Disciplinary and Ethics Commission (DEC)
DEC can impose what
Private diplomacy actions - may require additional CE and/or private censure
Public Disciplinary - public letter of admonition, suspension for up to 5 years, or permanent revocation of the marks
Suspensions are automatically published
Who must you notify following suspension of marks
Clients and his employer
Selling proprietary products is not against CFP board standards if
It is disclosed along with the associated compensation arrangement
Fiduciary Standard
Duty of
Loyalty
Care
Following client instructions
Diligence
Disclose and Manage conflicts of interest
Sound and Objective Professional Judgment
Professionalism
Comply with the Law
Confidentiality and Privacy
Provide Information to a client
Fairly Represent the Method of Compensation
Amort
Solve for payment
1 input (PMT made)
Gold Amort
=
Who controls monetary policy
FOMC
Federal Open Market Committee
Prime Rate
Set by the commercial banks to their most worth customers
Solving for NPV
Use typical CFP
Place rate into I/YR
Gold NPV
NPV=0 means the IR is same as the required rate of return
What elements of the CFP boards code of ethics dovetail with steps of financial planning process
The practice standards
Nouns used after marks
Certifican
Practitioner
Professional
Certification
Mark
Exam
What is simpler
Government money market or T-Bill
Government money market
Angie dies that oversee banks
FDIC
FEDERAL RESERVE
COMPTROLLER OF CURRENCY
Ownership categories FDIC
Individual account
Joint account
Revocable trust
IRA and Keogh
Money market accounts that are insured
Insured
Checking accounts
Savings accounts
MM deposit accounts
CDs
Not insured
Stocks
Bonds
MM mutual funds
Us treasury bills, bonds, or notes
How are Broker dealers regulated
FINRA
Property settlements
Tax free exchange
Structured Settlements
Receive stream of income tax free payments
Compensatory damages
1 Physical injury
Tax free
Interest is taxable
(100% tax free in single premium annuity)
2 discrimination / non-physical injury
Taxable
Medical expenses for emotional distress is tax free
Punitive Damages
Taxable except for wrongful death
Lotto winnings
Lump sum or annuity - includes full value of the award in gross income
Cash or annuity (60 day window) - chooses annuity payout over 10 years payout received are taxable
Monetary Policy
Reserve requirement
- amount banks can lend out
Discount Rate
- rate FED charges other banks
Open market operations
-repurchasing / reverse repo gov securities
Margin Rate
- REG T rates
Leading Indicators
Initial claims for unemployment insurance
New manufacturing orders
New private housing units
Stock prices S&P
Index of consumer expectations
Avg weekly hours for production workers in manufacturing
Contracts and orders for plants ad equipment
incident Indicators
Industrial Production
Number of employees on non-agricultural payrolls
Personal income less transfer payments
Lagging
Average duration of unemployment
Avg prime rate charged by banks
Commercial and industrial loans outstanding
CPI for inflation
GDP
= consumption + Investment + Gov Spending + Net Exports
Pro forma
Illustrates what future financial statements are expected to show
What agency should advisors notify first
SEC - must file first here
an investment advisor registration with the SEC
Files ADV From
$150
Must file an updated ADV Part 1 and Schedule 1 each year to the SEC
If you receive omissions you must register with
FINRA
Expressed Authority
Written explicit direction from principle to agent
Implied authority
Walk into State Farm its implied you are talking to an agent
Apparent Authority
Someone has power to accept contracts for 85 year old people when the rule says 80
FINRA Arbritration
Between customers and Broker Dealers and vice versa
Credit card liability
$50 per card
Agent to principle obligation
Loyalty
