CFP exam
Topic 1: Financial Planning Process - Answer ...
6 step process: EGADIM - Answer 1. Establish Relationship
2. Gather Information
3. Analyze data
4. Develop plan
5. Implement
6. Monitor
Step 1: Establish Relationship - Answer • Services that will be provided
• compensation/billing
• Responsibilities of both client/planner
• Time frame of relationship
Step 2: Gather quantitative and qualitative data - Answer • It is important that goals be
defined before any recommendations
• A goal should be specific, prioritized and quantified
• Fact finder form
Step 3: Analyze data - Answer • Identify strengths and weaknesses
• Analysis of current position
• Should be based on realistic assumptions
Step 4: Develop Plan - Answer • Objective
• Should be presented to client
• Mutually decide on revisions
• Prioritized list of implementation steps and timing
Step 5: Implement - Answer • Work closely with other professional team members
• Help client with product acquisitions
Step 6: Monitor - Answer • Fed tax changes
• Economic changes
• Modifications to plan
Topic 2: Code of Ethics & Professional Responsibility + Disciplinary Rules Procedures -
Answer ...
Aspirational Principles - Answer • Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
, • Professionalism
• Diligence
Confidential Information can be disclosed only when... - Answer • The client consents
• Court ordered
• CFP must defend accusations
• Civil suit between client and CFP
CFP Board of Professional Review - Answer • Inquiry Panel - grounds for discipline
• The Hearing Panel - Recommendation to board
• Board of Appeal - w/in 30 days
Topic 3: Financial Planning Practice Standards - Answer ...
Purpose of practice standards - Answer • To ensure professionals follow agreed upon
norms
• To advance professionalism
• To enhance value of planning process
100-1: Defining Scope of the Engagement - Answer • Mutually define scope of
engagement
• Identify services to be provided
• Disclose conflicts of interest
• Compensation agreement
• Responsibilities of each party
• Duration
200-1: Determining a Clients Personal and Financial Goals, Needs, and Priorities -
Answer • Mutually define personal and financial goals
• Explore clients values, attitudes, expectations, and time horizons
• Subjective to practitioner
200-2: Obtaining quantitative Information and Documents - Answer • Interviews,
questionnaires, client records and documents
• Mutually define clients relevant goals, needs, and priorities
• Objectives should be precise and measurable
• Obtain sufficient relevant, quantitative information and documents
300-1: Analyzing and Evaluating the Clients Information - Answer • Personal
assumptions need to be made regarding: retirement age, life expectancy, income
needs, risk factors, time horizons and special needs
• Economic assumptions need to be made regarding: inflation rates, tax rates, and
investment returns
400-1: Identifying and Evaluating Financial Planning Alternatives - Answer • What is
possible?
Topic 1: Financial Planning Process - Answer ...
6 step process: EGADIM - Answer 1. Establish Relationship
2. Gather Information
3. Analyze data
4. Develop plan
5. Implement
6. Monitor
Step 1: Establish Relationship - Answer • Services that will be provided
• compensation/billing
• Responsibilities of both client/planner
• Time frame of relationship
Step 2: Gather quantitative and qualitative data - Answer • It is important that goals be
defined before any recommendations
• A goal should be specific, prioritized and quantified
• Fact finder form
Step 3: Analyze data - Answer • Identify strengths and weaknesses
• Analysis of current position
• Should be based on realistic assumptions
Step 4: Develop Plan - Answer • Objective
• Should be presented to client
• Mutually decide on revisions
• Prioritized list of implementation steps and timing
Step 5: Implement - Answer • Work closely with other professional team members
• Help client with product acquisitions
Step 6: Monitor - Answer • Fed tax changes
• Economic changes
• Modifications to plan
Topic 2: Code of Ethics & Professional Responsibility + Disciplinary Rules Procedures -
Answer ...
Aspirational Principles - Answer • Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
, • Professionalism
• Diligence
Confidential Information can be disclosed only when... - Answer • The client consents
• Court ordered
• CFP must defend accusations
• Civil suit between client and CFP
CFP Board of Professional Review - Answer • Inquiry Panel - grounds for discipline
• The Hearing Panel - Recommendation to board
• Board of Appeal - w/in 30 days
Topic 3: Financial Planning Practice Standards - Answer ...
Purpose of practice standards - Answer • To ensure professionals follow agreed upon
norms
• To advance professionalism
• To enhance value of planning process
100-1: Defining Scope of the Engagement - Answer • Mutually define scope of
engagement
• Identify services to be provided
• Disclose conflicts of interest
• Compensation agreement
• Responsibilities of each party
• Duration
200-1: Determining a Clients Personal and Financial Goals, Needs, and Priorities -
Answer • Mutually define personal and financial goals
• Explore clients values, attitudes, expectations, and time horizons
• Subjective to practitioner
200-2: Obtaining quantitative Information and Documents - Answer • Interviews,
questionnaires, client records and documents
• Mutually define clients relevant goals, needs, and priorities
• Objectives should be precise and measurable
• Obtain sufficient relevant, quantitative information and documents
300-1: Analyzing and Evaluating the Clients Information - Answer • Personal
assumptions need to be made regarding: retirement age, life expectancy, income
needs, risk factors, time horizons and special needs
• Economic assumptions need to be made regarding: inflation rates, tax rates, and
investment returns
400-1: Identifying and Evaluating Financial Planning Alternatives - Answer • What is
possible?
