CFP Curriculum Discussion Questions

Fundamentals Chapter 1 Discussion Questions: “Introduction to Financial Planning”

Discussion Questions: information relating to the end-of-chapter “Discussion Questions” from the financial planning coursework material through New York University’s CFP® Program (in conjunction with Dalton Education).

Discussion Questions for Chapter 1: “Introduction to Financial Planning”

  1. What is personal financial planning?
    1. “The process of formulating, implementing, and monitoring financial decisions integrated into a plan that guides an individual or a family to achieve their financial goals.”
  2. Define the process of financial planning.
    1. “The process of financial planning includes: (1) establishing and defining the client relationship, (2) gathering client data, (3) analyzing and evaluating the client’s financial status, (4) developing and presenting financial plan recommendations, (5) implementing financial plan recommendations, and (6) monitoring the plan.”
  3. What are examples of internal data items collected from the client as part of the “gather client data” part of the financial planning process?
    1. Includes both quantitative and qualitative data about the client:
      1. Quantitative data includes family specifics, insurance, banking, investment, tax, retirement, and estate planning information.
      2. Some qualitative data includes the client’s values, attitudes, expectations, goals, needs, and priorities.
  4. What are examples of external data items required as part of the “gather client data” part of the financial planning process?
    1. Current economic, legal, political, sociological, tax, and technology environments. Examples: current interest rates, status of the housing, job, insurance, and investment markets, the local cost of living, and the expected inflation rate.
  5. List some important elements of a financial planning engagement letter.
    1. Define the parties to the agreement.
    2. A description of the mutually agreed upon services (scope of work)
    3. The time horizon for the work to be completed.
    4. A description of the fees and costs.
    5. The obligation and responsibilities of each party (planner/client) regarding:
      1. Defining the goals, needs, and objectives
      2. Gathering data
      3. Projecting the result of no action
      4. Formulating alternative possibilities
      5. Selecting from those alternatives
      6. Establishing who is expected to implement which elements of the plan (this can be subject to revision at the implementation phase of the process)
      7. Defining who has monitoring responsibilities
      8. Delineating services that are not provided, such as legal documents or income, gift, or estate tax return preparation.
      9. In addition to the above, there should be a mutual understanding regarding the use of proprietary products and/or other professionals or entities in meeting any of the service obligations in the engagement agreement.
  1. What are some of the benefits a client receives from choosing to use a professional financial planner?
    1. Most don’t have the knowledge needed to prepare a comprehensive financial plan and do not want not spend the time to learn how.
      1. Even when they may have the knowledge, typically lacks the confidence to undertake the process and likely is seeking confirmation of own financial decisions.
    2. A planner has the knowledge and objectivity regarding the various planning domains. Clients rarely have knowledge of objective factors and perceives subjectively that he or she is fine (doesn’t need life or disability insurance).
    3. Also, planners past experience with variously-situated clients that can be helpful.
  1. What is the job and economic outlook for the financial planning profession?
    1. Job outlook:
      1. “With the rising number of baby boomer retirees over the next decade, the occupation is expected to grow by 30 percent (2014 to 2024).”
    2. Economic outlook:
      1. “Financial planners earn on average $89,160 annually. This average does not include bonuses or the wages of self-employed practitioners.”

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