GP - V2

Question 1

PITI

Answer 1

Principal, Interest, Taxes, Insurance (Home Owners)

Question 2

Consumer Credit Report Act

Answer 2

Interest Must be Reported as (APR)
Credit Terms must be disclosed Points Prepayment Penalties
Lost or stolen credit cards limited liability $50 Per Card

Question 3

Kiddie Tax

Answer 3

On the first $1,250 (No Tax Applied)
Next $1,250 Tax @ 10%
After $2,500 Taxed at Parent’s Marginal Tax Rate

Question 4

Fee Based

Answer 4

Indicated the planner or planning firm are compensated through both commission and fees

Question 5

Requirements for Chapter 7

Answer 5

Average monthly net income for 60 Months less than $6,000
Between $6,000 and $10,000 for the last 60 Months (Net Income Must be less than 25% of all non-priority unsecured debts) (Priority Debt Taxes, Alimony, Child Support, and Criminal Fines)

Question 6

According to CFP Board, how often should a client’s financial plan be monitored?

Answer 6

The CFP Board specifies nothing. As deemed appropriate by the client and advisor

Question 7

Seven Steps of the Planning Process

Answer 7

Gathering Information, Identify and Select Goals, Analyze current course of action and alternatives, Developing Recommendations Presenting Recommendations, Implementing Recommendations, Monitoring Recocommendations

Question 8

Code of Conduct Catch-All

Answer 8

Act in a manner that reflects positively on the financial planning profession and the CFP certification

Question 9

SEC Regulation S-P

Answer 9

Financial Institutions must provide customers with a notice of privacy policies and practices and must not disclose non-public personal information

Question 10

Fee-Based and Fee-Only

Answer 10

Not Interchangeable. Fee-Based compensated through fees and commission. Fee-Only is not compensated on sales including annuities and insurance.

Question 11

Exception to Borrowing money from a client?

Answer 11

When the client regularly engages in the business of lending money

Question 12

CFP Board (DEC)

Answer 12

Disciplinary and Ethics Commission is responsible to take appropriate action
regarding alleged violations of code of ethics and practice standards

Question 13

Trust Companies

Answer 13

An organization usually associated with a commercial bank, which is engaged as a trustee fiduciary, or agent for individuals and organizations

Question 14

CFP Code of Conduct

Answer 14

October 19, 2019 Revised
Act with honesty, integrity, competence, and diligence
Act in the client’s best interests
Exercise due care
Avoid or disclose or manage conflicts of interest
Maintain confidentiality and protect the privacy of client information
Act in a manner that reflects positively on the financial planning profession and CFP certification

Question 15

Duties Owed to Clients

Answer 15

Fiduciary Standard, Duty of Loyolaty, Duty of Care, Duty to Follow Client Instructions, The Integrity Standard, The Competence Standard, The Diligence Standard, Standard to disclose and manage conflicts of interest. Sound and Objective Professional Judgement Standard, The Professionalism Standard, Standard to Comply with the Law, Confidentiality Privacy Standard.

Question 16

Money Scripts

Answer 16

Money avoidance, Money worship, money vigilance, Money status

Question 17

Which is the leading indicator of inflation trends PPI or CPI?

Answer 17

PPI as producer prices increase they are passed along to the consumer

Question 18

Reverse Mortgage

Answer 18

1.) Proceeds are tax-free can be used for any purpose
2.) The repayment amount cannot exceed the value of the home regardless of loan balance
3.) Once the loan is repaid, any remaining equity is distributed to the borrower’s estate
4.) The home does not need to be owned free and clear to qualify for reverse mortgage

Question 19

Investments Adviser (ABCs)

Answer 19

A person who provides Advice or a issues a report or analysis regarding securities
A person who is in the Business of providing such services
A person provides such services as Compensation

Question 20

Execeptions (BLAT)

Answer 20

A Bank or holding company
A Lawyer, Accountant, Engineer, or Teacher

Question 21

Filing with SEC

Answer 21

1.) Files an ADV for with the SEC
2.) Filing fee $150
3.) Submits ADV Part I and Schedule I updates annually

Question 22

ADV-W

Answer 22

Form filed to cease operations

Question 23

Can RIA initials be used in business card?

Answer 23

No, it must be fully written out (Registered Investment Advisor)

Question 24

FINRA Registration

Answer 24

1.) Associates with Broker Dealer
2.) Registers with FINRA through a B/D on form U-4
3.) Passes appropriate exams
4.) Central Registration Depositary (CRD) system makes registration uniform across states

Question 25

Express Authority

Answer 25

Written explicit direction from the principal

Question 26

Implied Authority

Answer 26

That which the public believes the individual has and is based on such indicators as signage, rate, and books. Implied authority is the actual authority that the agent has to carry out the principal’s business in accordance with the general business practices

Question 27

Apparent Authority

Answer 27

Arises out of the negligence of the principal allowing the agent to appear to have authority bc of certain past actions

Question 28

Conditional Receipt

Answer 28

Temporary contract obliging a life insurance company to provide coverage as long as the premium accompanies an acceptable application. Pays death benefit if insured dies and application WOULD have been approved.

Question 29

Investment Advisors Act (IAA) of 1940

Answer 29

Regulates Investment Advisors and their activities under the Investment Advisors Act (IAA) of 9140

Question 30

Regulatory Requirements for RIAs?

Answer 30

Less than $100mm under management currently registers with their state of office (not home) domicile. If no provisions for registration in the state advisors can register with SEC. Advisors may need to register in multiple states.

Question 31

Chapter 7 filers must satisfy a “means test”

Answer 31

Average monthly income for 60 months > $10,000 NOT and Option
Average monthly income for 60 month < $6,000 is an OPTION
Average monthly income is between $6,000 and $10,000 debtor can file Chapter 7 if net monthly income is <25% of all non-priority unsecured debts. $32,000 Credit Card balance (25% $8,000) average monthly income $7,000 - Qualifies for Chapter 7

Question 32

Chapter 13

Answer 32

Reorganization - Payments to creditors are typically reduced and more manageable, creditors cannot harass, debtors are generally not required to relinquish assets

Question 33

Chapter 11

Answer 33

Generally, for individuals who do not qualify under Chapter 13 because they exceed debt limitations

Question 34

Money Illusion/Price illusion

Answer 34

A tendency in which people tend to view their wealth in nominal terms rather than real terms

Question 35

Can a loss be taken on a personal residence?

Answer 35

Losses on a personal residence are not allowed

Question 36

Does GDP Include Inflation?

Answer 36

No

Question 37

Must a financial planing agreement be written?

Answer 37

Yes

Question 38

When must written documents be provided?

Answer 38

When Financial Planning is part of the financial advice (EXCEPT PRIVACY ALWAYS WRITTEN)

Question 39

If Financial Planning is part of the Financial Advice what documents must be written?

Answer 39

Privacy Policy, Services and Products, How the Client Pays, How you firm and related parties compensated, Public Discipline and Bankruptcy, Referral Compensation, Terms of Engagement, Other Material Information

Question 40

Does turnkey management or fees related to soliciting clients count as “fee based”?

Answer 40

No the CFP Board does not deem as sales related

Question 41

Are soft dollar arrangements considered “fee based”?

Answer 41

No