1. The Financial Planning Process

Front 1

Code of Ethics

Back 1

A written set of rules and expectations that embodies principles for behavior, a list of standards for professional conduct, and a set of disciplinary procedures.

Front 2

Comprehensive Financial Plan

Back 2

A financial plan that covers just about all of a person's financial objectives, including consideration of risk management, investment planning, tax planning, retirement planning, and estate planning.

Front 3

Data Survey Form

Back 3

A questionnaire used by financial planners to gather information from clients.

Front 4

Duty to Consult

Back 4

consult with an expert on issues that go beyond the personal competence of the financial planner.

Front 5

Duty to Diagnose

Back 5

diagnose ares of importance, such as the current economic environment and the client's risk tolerance level, financial circumstances, present portfolio, and stated goals before making recommendations.

Front 6

Duty to Disclose

Back 6

disclose all material facts and conflicts of interest.

Front 7

Duty to Keep Current

Back 7

keep current practices, issues, and knowledge relating to the financial services industry.

Front 8

Fiduciary Duty

Back 8

An affirmative duty of utmost good faith and full and fair disclosure of all material facts

Front 9

Fiduciary Relationship

Back 9

A relationship between two parties in which one (the fiduciary) has a high duty to act in good faith for the benefit of the other.

Front 10

Financial Goal

Back 10

A written statement, clearly defined and quantified, that identifies the financial purpose to be achieved.

Front 11

Financial Planning

Back 11

The development and implementation of total, coordinated plans designed to achieve and individual's financial objectives.

Front 12

New York Stock Exchange Rule 405 (the "Know Your Customer" Rule)

Back 12

The rule stating that members must exercise due diligence to learn the essential facts about every customer.

Front 13

Objectives

Back 13

Pertains to the financial planning process. Objectives are what the person wishes to accomplish as a result of planning.

Front 14

Personal Financial Planning

Back 14

The process of determining whether and how an individual can meet life goals through the proper management of financial resources.

Front 15

Principle of Competence

Back 15

principle that requires attaining, maintaining, and applying a sufficient level of knowledge and skill in servicing the client.

Front 16

Principle of Confidentiality

Back 16

principle that requires not disclosing "any confidential client information without the specific consent of the client unless in response to proper legal process."

Front 17

Principle of Diligence

Back 17

principle that requires providing services in a reasonably prompt and thorough matter.

Front 18

Principle of Fairness

Back 18

principle that requires disclousre of any conflicts of interest and the subordination of one's own feelings and biases to the benefit of the client.

Front 19

Principle of Integrity

Back 19

principle that "demands honesty and candor which must not be subordinated to personal gain and advantage."

Front 20

Principle of Objectivity

Back 20

principle that requires the application of intellectual honesty and impartiality.

Front 21

Principles of Professionalism

Back 21

principle that requires the conduct of a financial planner to reflect credit upon the profession.

Front 22

Prudent Investor Rule

Back 22

Pertains to IRA investment assets and states that an investor/IRA owner must use assets to purchase investments as a prudent investor would.

Front 23

Special Needs Planning

Back 23

A financial plan that looks at just one objective, such as funding a college education, buying a first home, caring for an elderly parent or handicapped child, or reducing a tax burden.

Front 24

Well-stated goal

Back 24

goal should, after being identified, be clearly defined, understood, and written down. The goal should be stated in quantifiable terms (such as how much, over what period, beginning when).

Front 25

Steps in the Financial Planning Process

Back 25

1. Establishing and defining the relationship. 2. Gathering data, including goals. 3. Analyzing and evaluating the financial status. 4. Developing and presenting financial planning recommendations 5. Implementing recommendations. 6. Monitoring recommendations

Front 26

Quantitative Data Collected

Back 26

Family profile, assets and liabilities, cash inflows and outflows, insurance information, tax returns

Front 27

Qualitative Data Collected

Back 27

Goals and objectives, health status, interests and hobbies, expectations about employment, risk tolerance level

Front 28

If planner determines in the analysis step that the client's goals cannot be met, what are four possible options for the planner to review to continue the financial planning process?

Back 28

1. modify priority order of goals 2. modify goals 3. reevaluate current lifestyles decisions 4. reevaluate available resources