Module 1

Question 1

Six steps FP Process

Answer 1

EGADIM
Establish client planner relationship
Gather data/ determine goals
Analyze and evaluate clients fin status
Develop and present plan
Implement plan
Monitor plan

Question 2

Quantitative data

Answer 2

Numbers- cash flow statements, benefit package, descriptions, copies of personal insurance, policies, investment and bank statements, Social Security, statement, liability, contracts, and debt statements, Will’s, power of attorney, trust and other legal docs

Question 3

Qualitative data

Answer 3

Subjective related to a clients life, individual traits, values, opinions, attitudes and beliefs, goals, objectives, health status, risk tolerance, etc.

Question 4

A comprehensive financial plan includes

Answer 4

Retirement, education and other accumulation, goals, emergency reserves, debt management, goals, investment management, concerns, health, insurance, concerns, disability, contingency, plan, loss of life, contingency, plan, long-term care, property and liability, concerns, legal docs and estate planning, anticipated changes in lifestyle, family health, and other concerns

Question 5

Contextual variables

Answer 5

Family status
Net worth
Income level
Life or professional stage
Other circumstances - health, divorce, change of employment, aging parents, special needs kids.

Question 6

Asset accumulation phase characteristics

Answer 6

Typically until age 45
Limited excess funds for investing
High degree of debt to net worth
Low net worth
Lack of concern for risks

Question 7

Conservation or protection phase characteristics

Answer 7

Age 45-60
Increased, cash flow, assets, and net worth
Decreases and proportionate use of debt
Becoming more risk adverse
Becoming more concerned about losing what they have acquired
Become aware with risks they used to ignore

Question 8

Distribution or gifting phase characteristics

Answer 8

Age 60
From retirement until death
Distribution strategies
Implement estate planning strategies
High net worth in, cash flow
Low debt

Question 9

Standards of conduct disclose and manage conflict of interest. CFP professional must:

Answer 9

1. avoid or fully disclosed material conflict of interest
2. Obtain informed consent.
3. Manage the conflict of interest.