Fiduciary Principles - Test 1

Front 1

CFP Code of Ethics and Professional Responsibility

Back 1

There are 7 principles:

Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism, Diligence

Front 2

Principle 1 –

Back 2

Integrity
Provide professional services with integrity.

Front 3

Principle 2 –

Back 3

Objectivity
Provide professional services objectively.

Front 4

Principle 3 –

Back 4

Competence
Maintain the knowledge and skill necessary to provide professional services competently.

Front 5

Principle 4 -

Back 5

Fairness
Be fair and reasonable in all professional relationships. Disclose conflicts of interest.

Front 6

Principle 5 –

Back 6

Confidentiality
Protect the confidentiality of all client information.

Front 7

Principle 6 –

Back 7

Professionalism
Act in a manner that demonstrates exemplary professional conduct.

Front 8

Principle 7 –

Back 8

Diligence
Provide professional services diligently.

Front 9

Financial Planning Process

Back 9

EGAD IM

-Establish and Define Relationship w/ a client
-Gather client data
- Analyze and Evaluate the client's financial status
- Develop and present financial planning recommendations
- Implement financial planning recommendations
- Monitor

Front 10

100 1: Defining the Scope of the Engagement

Back 10

Identifying the service(s) to be provided;
Disclosing the practitioner’s material conflict(s) of interest;
Disclosing the practitioner’s compensation arrangement(s);
Determining the client’s and the practitioner’s responsibilities;
Establishing the duration of the engagement; and
Providing any additional information necessary to define or limit the scope.

Front 11

200 1: Determining a Client’s Personal and Financial Goals, Needs and Priorities

Back 11

The financial planning practitioner and the client shall mutually define the client’s personal and financial goals,
needs and priorities that are relevant to the scope of the engagement before any recommendation is made
and/or implemented.

Front 12

200 2: Obtaining Quantitative Information and Documents

Back 12

The financial planning practitioner shall obtain sufficient quantitative information and documents about a client
relevant to the scope of the engagement before any recommendation is made and/or implemented.

Front 13

300 1: Analyzing and Evaluating the Client’s Information

Back 13

A financial planning practitioner shall analyze the information to gain an understanding of the client’s financial
situation and then evaluate to what extent the client’s goals, needs and priorities can be met by the client’s
resources and current course of action.

Front 14

400 1-3: Identifying and Evaluating Financial Planning Alternative(s)

Back 14

What is Possible?
What is Recommended?
How is it Presented?

Front 15

500 1: Agreeing on Implementation Responsibilities

Back 15

The financial planning practitioner and the client shall mutually agree on the implementation responsibilities
consistent with the scope of the engagement.

Front 16

500 2: Selecting Products and Services for Implementation

Back 16

The financial planning practitioner shall select appropriate products and services that are consistent with the
client’s goals, needs and priorities.

Front 17

600 1: Defining Monitoring Responsibilities

Back 17

The financial planning practitioner and client shall mutually define monitoring responsibilities.

Front 18

How do we set goals for clients?

Back 18

By Considering Quantitative, Qualitative, and Exogenous factors.

Front 19

Quantitative Factors

Back 19

-Income
-Debt
-Spending Habits
-Marital Status
-Dependents
-Inheritance
-Income Factors
-Prospects for Future Income

Front 20

Qualitative Factors

Back 20

- Health Conditions
- Likes and Dislikes
- Life Experience
- Objectives
- Time Horizon

Front 21

Exogenous Factors

Back 21

- State of the Economy
- Tax Laws
- Tax Reform
- Interest Rates
- Legal Issues
- Political Change

Front 22

Components of an Engagement Letter

Back 22

PROCF FCIT

- Parties to the Contract
- Restate and Confirm what was discussed in the interview
- Outline of Services
- Client Responsibilities
- Financial Planner's Responsibilities
- Fees and Structure
- Confidentiality Agreement
- Implementation Guidelines
- Termination Clause

Front 23

What are the 7 Functional Areas of Financial Planning?

Back 23

- Insurance
- Credit Management
- Capital Accumulation
- Tax Planning
- Retirement Planning
- Special Circumstances (Multiple Marriages, Brady Bunch Families)
- Estate Planning

Front 24

What is the "5 'P' " principle

Back 24

Proper
Planning
Prevents
Poor
Performance