Steps in the Financial Planning Process

Question 1

What is Step 1 of the Financial Planning Process?

Answer 1

Understanding the Client’s Personal and Financial Circumstances

Question 2

Is Health Quantitive or Qualitative Data?

Answer 2

Qualatative

Question 3

Is Income Quantitive or Quantitative Data?

Answer 3

Quantitative

Question 4

What is Quantitative data?

Answer 4

Information that can be measured with numbers such as Income, Assets, Liabilities, and Networth

Question 5

What information should a CFP acquire in Step 1 of the Financial Planning Process?

Answer 5

Quantitative and Qualitative and Address Incomplete Information

Question 6

Are family circumstances Quantitive or Quantitative Data?

Answer 6

Qualitative

Question 7

Is a client’s current course of action Quantitive or Quantitative Data?

Answer 7

Qualitative

Question 8

Are a client’s needs Quantitive or Qualitative Data?

Answer 8

Qualitative

Question 9

If a client has inconsistent income, would this be noted in quantitative or qualitative data?

Answer 9

Quantitative

Question 10

What documents provide quantitative data? (Name at least 3)

Answer 10

Tax returns, employee benefits programs details, insurance policies, loan statements, mortgage statements, estate planning documents, 401k statements, brokerage statements, & budgets

Question 11

How is qualitative data collected? (Name at least 2)

Answer 11

Questionnaires, phone conversations, in-person conversations, emails, etc.

Question 12

Why is life expectancy a discussed topic in Step 1?

Answer 12

To determine how long plans should last

Question 13

What is Step 2 in the Financial Planning Process?

Answer 13

Identify & Select Goals

Question 14

What is Step 3 of the Financial Planning Process?

Answer 14

Analyzing the Client’s Course of Action and Potential Alternative Course(s) of Action

Question 15

What is the ultimate outcome of Step 3?

Answer 15

Determining whether the client will meet their goals

Question 16

What is Step 4 of the Financial Planning Process?

Answer 16

Developing the Financial Planning Recommendation(s)

Question 17

Give three examples of assumptions made in Step 4?

Answer 17

Assumptions for inflation, rates of return, taxes, social security,

Question 18

What is Step 5 of the Financial Planning Process?

Answer 18

Presenting the Financial Planning Recommendation

Question 19

Explain Step 5 of the Financial Planning Process

Answer 19

Present the recommendations and the information considered when developing the recommendation.

Question 20

What is Step 6 of the Financial Planning Process?

Answer 20

Implementing the Financial Planning Recommendations

Question 21

What are the 4 parts of Step 6 of the Financial Planning Process?

Answer 21

Address implementation responsibilities
i.e., Who will do what

Identify, analyze, and select actions, products, and services
i.e., Show the clients what is available

Recommend one or more actions, products, and services for implementation
i.e., Pick which products, services, and securities

Select and implement actions, products, or services
i.e., Get going

Question 22

What is Step 7 of the Financial Planning Process?

Answer 22

Monitor Progress & Updating

Question 23

How does a Financial Planner implement Step 7 in practice?

Answer 23

Reviewing updates from clients at each meeting and then updating goals or objectives.