HS300 Fundamentals of Financial Planning Exam Questions with Verified Answers| Latest
Update Graded A+
Chapter 1 Intro to financial planning
7 Steps of financial planning process 1. Understanding the client's personal and financial
circumstances (data collection)
2. ID and select goals
3. Analyze the client's current course of action and potential alternatives course(s) of action
(Preparing client(s) financial statements occurs here)
4. Develop financial planning recommendation(s)
5. Presenting financial planning recommendation(s)
6. Implementing financial planning recommendation(s)
7. Monitoring progressing and updating the plan
Who determines the scope of the financial planning process? CFP Board's Code of Ethics and
Standards of Conduct
a financial plan should look at a client(s) 1. risk management (insurance contracts)
2. financial statement prep (cash flow analysis and budgeting)
3. emergency fund / debt management (STG)
4. long term goals (retirement, education, major purchases, estate)
5. taxes through their plan
6. investment plan portfolio
Only the first 5 steps are required for every financial planning engagement
Establish and define client relationship Intro meeting - effectively communicate with the
client
,intro meeting
engagement letter (given prior to the 7 steps)
The planner discloses any conflicts of interest.
Intro meeting get to know each other (learn about their hobbies, the planner discusses their
background and investment philosophy).
collect some data (personal and family)
answer questions
clarify goals (assist client with est. defined goals and how their values fit into these goals.
reduce fears
discuss best communication method (phone, email)
time frame for plan to be completed
steps in planning
fee
provided relevant disclosures
send FPE after meeting
Financial planners earn compensation in the form of percentage of assets managed.
an hourly rate or fee.
a commission on investment and insurance products sold.
Step 1 Understanding the client's personal and financial circumstances (data collection) 1.
Internal Data - financial goals and values
Qualitative
Quantitative
2. External Data - environmental
3. analyze info
,4. address incomplete info
Step 1 Internal Data - Qualitative (quaLity) · Goals (i.e. education)
· Values
· Risk tolerance
· Psychology (i.e. attitude about spending)
Step 1 Internal Data - Quantitative (quaNtity) · Current income
· Tax returns
· Expected future income
· Family member ages
· Value of assets and debts
Estate planning documents
Step 1 External Data · Gift and estate taxes
· Investment returns
· Inflation, interest rates
· Stage of the business cycle
· Housing and job markets
· Local cost of living
· Local insurance costs
· Other pending legislation
You meet with Geoffrey, a new client, who provides you with his tax returns from the previous
year. In which part of the financial planning process are you engaged? Step 1 Understanding
the client's personal and financial circumstances (data collection)
, Step 2 ID and select goals Understand client(s) values determine their goals in this moment
in their life.
Goal setting
· Goals must be objective and stated in specific and measurable terms.
· Goals must be realistic, based on reasonable assumptions, and examined with regard to the
client's resources and constraints and their impact on other goals.
· Goals must be stated in order of priority.
SMART
· Specific
· Measurable
· Achievable
· Reasonable
· Time-Based
examples of identifying and selecting goals prioritizing goals.
discussing whether a goal is realistic and attainable.
understanding a client's wants and needs.
What step is prepare and analyze financial statements including running a Monte Carlo 3.
Analyzing the Client's Current Course of Action and Potential Course(s) of Action
During this step, the planner devises recommendations for the client. considers assumptions
and estimates Step 4 Developing the Financial Planning Recommendation(s)
Step 5 present to the client selected recommendations and info required to be considered
when dev recs
Update Graded A+
Chapter 1 Intro to financial planning
7 Steps of financial planning process 1. Understanding the client's personal and financial
circumstances (data collection)
2. ID and select goals
3. Analyze the client's current course of action and potential alternatives course(s) of action
(Preparing client(s) financial statements occurs here)
4. Develop financial planning recommendation(s)
5. Presenting financial planning recommendation(s)
6. Implementing financial planning recommendation(s)
7. Monitoring progressing and updating the plan
Who determines the scope of the financial planning process? CFP Board's Code of Ethics and
Standards of Conduct
a financial plan should look at a client(s) 1. risk management (insurance contracts)
2. financial statement prep (cash flow analysis and budgeting)
3. emergency fund / debt management (STG)
4. long term goals (retirement, education, major purchases, estate)
5. taxes through their plan
6. investment plan portfolio
Only the first 5 steps are required for every financial planning engagement
Establish and define client relationship Intro meeting - effectively communicate with the
client
,intro meeting
engagement letter (given prior to the 7 steps)
The planner discloses any conflicts of interest.
Intro meeting get to know each other (learn about their hobbies, the planner discusses their
background and investment philosophy).
collect some data (personal and family)
answer questions
clarify goals (assist client with est. defined goals and how their values fit into these goals.
reduce fears
discuss best communication method (phone, email)
time frame for plan to be completed
steps in planning
fee
provided relevant disclosures
send FPE after meeting
Financial planners earn compensation in the form of percentage of assets managed.
an hourly rate or fee.
a commission on investment and insurance products sold.
Step 1 Understanding the client's personal and financial circumstances (data collection) 1.
Internal Data - financial goals and values
Qualitative
Quantitative
2. External Data - environmental
3. analyze info
,4. address incomplete info
Step 1 Internal Data - Qualitative (quaLity) · Goals (i.e. education)
· Values
· Risk tolerance
· Psychology (i.e. attitude about spending)
Step 1 Internal Data - Quantitative (quaNtity) · Current income
· Tax returns
· Expected future income
· Family member ages
· Value of assets and debts
Estate planning documents
Step 1 External Data · Gift and estate taxes
· Investment returns
· Inflation, interest rates
· Stage of the business cycle
· Housing and job markets
· Local cost of living
· Local insurance costs
· Other pending legislation
You meet with Geoffrey, a new client, who provides you with his tax returns from the previous
year. In which part of the financial planning process are you engaged? Step 1 Understanding
the client's personal and financial circumstances (data collection)
, Step 2 ID and select goals Understand client(s) values determine their goals in this moment
in their life.
Goal setting
· Goals must be objective and stated in specific and measurable terms.
· Goals must be realistic, based on reasonable assumptions, and examined with regard to the
client's resources and constraints and their impact on other goals.
· Goals must be stated in order of priority.
SMART
· Specific
· Measurable
· Achievable
· Reasonable
· Time-Based
examples of identifying and selecting goals prioritizing goals.
discussing whether a goal is realistic and attainable.
understanding a client's wants and needs.
What step is prepare and analyze financial statements including running a Monte Carlo 3.
Analyzing the Client's Current Course of Action and Potential Course(s) of Action
During this step, the planner devises recommendations for the client. considers assumptions
and estimates Step 4 Developing the Financial Planning Recommendation(s)
Step 5 present to the client selected recommendations and info required to be considered
when dev recs
