16487103
Description
Flashcards by David Skillen, updated more than 1 year ago
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Created by David Skillen
over 5 years ago
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| Question | Answer |
| 4 financial planning specialist include: | 1) Accountants - Tax law, rules & regulations, government pensions 2) Lawyers - Will's, Trusts, employment contracts 3) Investment Advisors - Investing expert 4) Insurance Agents - managing various risks. Life, disability, critical illness, and property & casualty insurance products |
| 4 Codes of Ethics for PFP: | 1) General Responsibility - understand your limitations, exercise due diligence and practice with sound judgment 2) Responsibilities to the client 3) Responsibility to the Profession - conduct themselves with honesty, trust, competence and abide by the terms of the PFP Cert Mark License Agreement 4) Responsibility to the Employer |
| 6 Principles - Code of Ethics for CFP Professional | 1) Client First 2) Integrity 3) Objectivity 4) Competence 5) Fairness 6) Confidentiality |
| Core financial planning definition | defining the clients goals and objectives |
| Objective & Constraints of clients | Objectives 1) savings need 2) financial objective 3) return expectations 4) risk Constraints 1) time horizon 2) liquidity 3) tax concerns 4) legal requirments 5) personal preferences |
| Time Horizon | Adjustments to the time horizon are sometimes considerations that clients have to accept to achieve the desired retirement goals |
| Liquidity Needs - 4 Common Reasons | 1) Financial emergency - 3-6 months of cash on hand to pay for expenses 2) Financial Goal - Short term goal: buying a car or house, pay for education 3) Pay known, pending expenses. Income tax, Cap gain, probate, etc 4) Take advantage of investment opportunities |
| Goal Achievement - 6 factors to think about | The client can control: 1) Years to Retirement 2) Annual Income at retirement 3) Amount of money which the client can save each year 4) The expected return on the client's savings over the years. The client can't control: 5) Amount of retirement savings already in place 6) Inflation rate between now and retirement |
| What should a client consider who requires income to meet day to day expenses | 1) Current living expenses 2) Income that is met through guaranteed income from pensions and government sources (OAS/CPP) 3) # of years the income must last (unknown. Impossible to know how long you will live) 4) The existing pool of retirement savings (RRSP, TFSA, Real Estate, Etc) 5) Inflation rate 6) expected return on investments in both reg and non-reg |
| Prospect Theory - Amos Tversky & Daniel Kahneman | Client is twice as sensitive to losses as he is to gains |
| Myopic Loss Aversion Theory - Benartzi & Thaler | clients evaluate their portfolios frequently, and despite the actual investment horizon, will respond and act upon short-term gains or losses experienced during that evaluation period. |
| 6 Step Financial Planning Process | 1) Establishing the Client/Advisor relationship; 2) Collecting data and information; 3) Analyzing data and information; 4) Recommending strategies to meet goals; Implementing recommendations 5) Conducting a periodic review or follow-up. |
| Role of a Financial Analysis - 6 Step Fin Process | Financial analysis clarifies the client's present financial status and identifies any problem areas and opportunities |
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