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12 Cards in this Set

  • Front
  • Back
FP defined:
Ongoing process
Determines whether/how individual can meet life goals
Thru mgmt of financial resources
Can include individuals, families, business, trusts/estates that a family owns or controls
FP subject areas
Financial statement preparation
Cash flow analysis/planning & budgeting
Investment planning
Portfolio design, asset allocation, portfolio mgt
Income tax planning
Education planning
Risk mgt & insurance
Retirement planning
Estate planning
Employee benefit plng
Benefits of FP:
Use of resources
Acquisition of resources
Control of resources
Improved standard of living options
FP Process
Establish & define client/planner relationship
Collect data, including goals
Analyze & evaluate financial status
Develop and present FP recommendations/alternatives
Implement recommendations
Monitor recommendations
Elements of the Process:
Scope of engagement = universe of services that the planner and client agree is necessary & appropriate & FP is qualified to provide
Segmented/modular = limited to defined areas
May not include FP services – just a transaction related to a product
Data gathering
Personal goals
Fin. Goals
Time horizon
Risk tolerance
Time horizon
• Period of time over which specific goals need to be accomplished
• Yrs. the client expects the portfolio will be invested w/out touching principal
• Obj. stay in place w/out being modified
risk tolerance
• Degree by which risk influences choices
• Subjective
• Also – risk/reward trade-off
Data gathering
Tax returns
Employee benefits
Tax returns
Investment accts.
Health status
Evaluating & analyzing financial status
Based on mutually specified personal and econ assumptions
Retirement age
Life expectancy
Income requirements
Risk factors
Time horizon
Special needs
Developing & presenting financial planning recommendations/alternatives-based on:
Scope of engagement
Mutually-defined goals, needs & priorities
Quantitative data
Personal & econ assumptions
FP analysis and eval of situation
Alternatives selected by FP
Make an effort for client to understand
Disclose conflict of interest – if required
Implementing FP recommendations
Accept/reject by client
Implementation decisions made by client
FP duties that may be assumed
Identifying activities necessary for implementation
Determining the division of activities btwn FP and client
Est selection criteria for selecting & referring other professionals
Coordinating with other professionals
Sharing info as authorized
Selecting and securing products/services