Wrong Answer GP Flashcards
Durable vs Non Durable Goods
Durable goods are hard goods which do not wear out quickly. They are cyclical. The would be affected by a recession.
Non durable goods may be used up immediately or have a short life span. They are not affected by a recession because people always need them.
Things Deductible for alimony by payor
-Cash payments
-paying for payees mortgage if the payor does not own the house
-paying for payee’s taxes, education
-paying for life insurance premiums where the payor spouse is insured and it is owned by the payee spouse
Coordination Rules
Use only one:
-AOTC
-Lifetime Learning Credit
-Coverdell
-529
Examples of things that matter for life insurance companies
-premium and dividend options
-ownership
-policy loans
Fee Based vs Fee Only
Fee only may not receive sales commission in any manner. Fee based indicates planner or firm is compensated with both commission and fees.
Home value effect on changes in net worth
Can increase or decrease networth in a given year
CFP Practice Standards
1) loyalty
2) care
3) follow client instructions
4) dilligence
5) disclose and manage conflicts of interest
6) sound and objective professional judgement
7) professionalism
8) comply with the law
9) confidentiality and privacy
10) provide info to client
11) fairly represent method of comp
Code of Ethics
- Act with honesty, integrity, competence and dilligence
- Act in a clients best interest
- Excercise due care
- Avoid or disclose and manage conflicts of interest
- Maintain confidentiality
- Act in a manner that reflect positively on planning profession
Data Gathering for New Client
All questions are generally necessary in the data gathering phase. None is more important than other in a question unless its way out of left field
Series 6 License
Limits dealing with UITs on the secondary market or close ended funds that trade on an exchange
Use Begin Mode When…
“Starting to” or “beginning” is in the question
Things to consider when choosing between mortgages
-estimated length of ownsership
-cash currently available
Coverdell Keys
-$2000 per year contribution up to age 18
-qualified expenses include tuition, fees, tutoring, spcial need services, books, supplies or other equipment in connection with k-12 enrollment
-must be USED before student reaches age 30, 30 day grace period
Compensatory Damages Annuity Exception
Where damages are to be paid periodically and the person has no right to the discounted present value, the entire amount of each periodic payment is excludable from taxes.
Compensatory Damages Keys
-Compensatory damages received because of sickness or physical injuries are tax free
-interest paid on tax free damage award is taxable
-damages received in discrimination are taxable
Written Scope of Engagement Includes
Planners compensation arrangement,
responilities of client,
duration of engagement,
services to be provided,
info that would limit scope of engagement,
parties involved,
how each party can terminate
CFP scope of engagement keys
-Must be in writing
-can be revised by mutual agreement.
-is is the range of service that the planner and client agree is appropriate and that the planner is qualified and willing to provide
