Exam (elaborations)
CFP EXAM STUDY GUIDE
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CFP EXAM STUDY GUIDE
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CFP EXAM STUDY GUIDETopic 1: Financial Planning Process - Answers -...
6 step process: EGADIM - Answers -1. Establish Relationship
2. Gather Information
3. Analyze data
4. Develop plan
5. Implement
6. Monitor
Step 1: Establish Relationship - Answers -• Services that will be provided
• compensation/billing
• Responsibilities of both client/planner
• Time frame of relationship
Step 2: Gather quantitative and qualitative data - Answers -• 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 - Answers -• Identify strengths and weaknesses
• Analysis of current position
• Should be based on realistic assumptions
Step 4: Develop Plan - Answers -• Objective
• Should be presented to client
• Mutually decide on revisions
• Prioritized list of implementation steps and timing
Step 5: Implement - Answers -• Work closely with other professional team members
• Help client with product acquisitions
Step 6: Monitor - Answers -• Fed tax changes
• Economic changes
• Modifications to plan
Topic 2: Code of Ethics & Professional Responsibility + Disciplinary Rules Procedures -
Answers -...
Aspirational Principles - Answers -• Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
• Professionalism
, • Diligence
Confidential Information can be disclosed only when... - Answers -• The client consents
• Court ordered
• CFP must defend accusations
• Civil suit between client and CFP
CFP Board of Professional Review - Answers -• Inquiry Panel - grounds for discipline
• The Hearing Panel - Recommendation to board
• Board of Appeal - w/in 30 days
Topic 3: Financial Planning Practice Standards - Answers -...
Purpose of practice standards - Answers -• To ensure professionals follow agreed upon
norms
• To advance professionalism
• To enhance value of planning process
100-1: Defining Scope of the Engagement - Answers -• 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 -
Answers -• Mutually define personal and financial goals
• Explore clients values, attitudes, expectations, and time horizons
• Subjective to practitioner
200-2: Obtaining quantitative Information and Documents - Answers -• 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 - Answers -• 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 - Answers -• What is
possible?
• What other actions can be taken other than one currently using
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