CRPC Q AND A
ThefoDepartmentfooffoLaborforequirementsforegardingfoadvicefogivenfotoforetirementfoinves
torsfowillfomostfolikelyfo-foanswer--
INCREASEfoCLIENTfoEXPECTATIONSfoOFfoADVISERSfoANDfoPUTfoDOWNWARDfoP
RESSUREfoONfoFEES
Iffoaskingfoyoufotofosolvefoforfoanfoannuityfoduefowherefopaymentsfooccurfoatfothefobeginningf
ooffothefoperiodfo-foanswer--youfowouldfosetfocalculatorfoforfoBEG.
identifyingfospecificfofundsfoinfowhichfotofoinvestfoarefodiscussedfoon?fo-foanswer--
Specificfoinvestmentsfoarefonotfodiscussedfountilfostepfofourfooffothefoplanningfoprocess,fow
henfothefoplannerfodevelopsfoandfopresentsfotheforetirementfoplan
Thefoclient'sfoabilityfotofopurchasefoinsurancefoorfoinvestmentsfoisforeviewedfo-foanswer--
infostepfothreefooffothefoplanningfoprocess,foinfowhichfoanfoanalysisfoandfoevaluationfooffofina
ncialfostatusfotakesfoplace.
Duringfothefodatafogatheringfoprocessfothefoplannerfoshouldfoidentifyfo-foanswer--
thefoclientsforetirementfoaccountfobalances,foincomefosourcesfoandfoamountsfoandfodeter
minefohisfoorfoherforiskfotolerance.
Netfoworthfoisfodefinedfoasfo-foanswer--assetsfominusfoliabilitie
Netfocashfoflowfoisfocalculatedfobyfo-foanswer--
subtractingfototalfocashfooutflowsfofromfototalfocashfoinflows.
Collegefofundingfoisfoconsideredfoafo-foanswer--afolifestylefogoal
Foundationfogoalsfoarefothosefothatfo-foanswer--
contributefotofomorefobasicfolivingfoneedsfosuchfoasfofood,foinsurance,foandfoemergencyfofu
nds.foThefocoveragefoofforiskfoexposuresfoisfoalsofoconsideredfoafofoundationfofinancialfogo
al.
Youfohavefocompletedfoallfooffothefoactivitiesfoinvolvedfoinfothefodatafogatheringfostepfooffothe
fofinancialfoplanningfoprocess,foincludingfoobtainingfosufficientfoquantitativefoinformationfoa
ndfodocuments.foWhatfoisfothefonextfostepfooffothefoprocessfo-foanswer--
Analyzingfoandfoevaluatingfothefoclient'sfoinformation.foOncefoyoufohavefogatheredfoallfooffot
hefoappropriatefodatafoneeded,fothefonextfostepfoisfotofoanalyzefoit.
Withfosomefoexceptions,fomostfocategoriesfooffolivingfoexpenses,fosuchfoasfotransportation
,foclothing,foandfohousingfo-foanswer--decreasefoduringforetirementfoyears.
Somefoexpensesfomayfoevenfoincreasefoduringforetirementfoyears.fo-foanswer--
suchfoasfotravelfoandfomedical
,ItfoisfotruefothatfoSocialfoSecurityfobenefitsfomay?fo-foanswer--
mayfoincreasefoforfopeoplefowhofoworkfopastfotheirfoSocialfoSecurityfofullforetirementfoage.fo
Additionally,fowagesfoandfosalariesfoearnedfoduringforetirementfowillfoobviouslyfoincreasefo
retirementfoincome.
longerfolifefospansfowillforesultfo-foanswer--infoafoneedfoforfomoreforetirementfoincome
Iffoclientforetirementfofundsfoarefoinsufficientfotofomeetfogoalsfo-foanswer--
giftsfotofochildrenfoshouldfodecrease.
Delayingforetirementfo-foanswer--willfodecreasefothefoneedfoforforetirementfoincome.
Whenfoafoclient'sfofundsfoarefoinsufficientfotofoattainforetirementfogoals,foitfoisfoappropriatefof
orfothefoplannerfotofosuggestfo-foanswer--
retiringfolaterfothanfoinitiallyfoplanned,foperformingfopart-
timefoworkfoduringforetirement,fospendingfolessfoandfosavingfomorefoduringforetirement.
Duringforetirement,foCLIENTfowantsfotoforeceivefo$50,000foatfothefoendfooffoeachfoyearfoforfo
theforestfooffohisfolife.foTofocalculatefothefoamountfothatfoshefowillfoneedfotofosave,foyoufoneedfo
tofosolvefoforfo-foanswer--ordinaryfoannuity—
setfocalculatorfoatfoend.foYoufodofoneedfotofosetfothefocalculatorfoinfoENDfomodefoandfosolvefo
forfoordinaryfoannuity.
Iffoaskedfotofosolvefoforfoanfoannuityfoduefo(wherefopaymentsfooccurfoatfothefobeginningfooffot
hefoperiod)fo-foanswer--youfowouldfosetfocalculatorfoforfoBEG.
clientfowantsfotoforetirefothefo1stfooffonextfoyear.foShefowantsfotoforeceivefomonthlyforetireme
ntfoincomefopaymentsfoonfothefo1stfodayfooffoeachfomonth.foTofosolvefothefoamountfooffocapit
alforequiredfotofoprovidefoherfothefoincomefoshefowants,foyoufoneedfotofosolvefoforfo-
foanswer--annuityfodue—
setfocalculatorfoatfobegin.foyoufowouldfoneedfotofosolvefoforfoannuityfodue,foandfosetfothefocalc
ulatorfoatfobegin.
Whenfogatheringfodatafoduringfotheforetirementfoplanningfoprocess,fofinancialfogoalsfoshoul
dfobefoquantifiedfoinfodollarfoamountsfoandfowhichfooffothefofollowingfo-foanswer--
establishedfotimefoframes
Whenfosavingfoonfoafolevelfobasisfo-foanswer--
thefoinflationforatefodoesfonotfocomefointofoplayfoiffothefoquestionfonotesfoonfoafolevelfobasis.
Whenfoassistingfothefoclientfoinfoestablishingforealisticfogoals,fothefoplannerfo-foanswer--
shouldfohelpfodefinefofinancialfogoalsfosofothatfotheyfoarefoquantifiedfoinfodollarfoamountsfoa
ndfohavefoestablishedfotimefoframesfoinsteadfoofforemainingfogeneralfoinfonature.
Goalsfomayfobefoorganizedfobasedfoonfo-foanswer--
type,foownership,foandfopriorityfobutfothosefoarefonotfowaysfooffoquantifyingfothemfoandfomak
ingfothemfomorefospecific.
byfotypefooffogoal
, Afostatementfooffofinancialfopositionfoshowsfo-foanswer--
afoclient'sfonetfoworth,fowhichfoisfodefinedfoasfoassetsfominusfoliabilities,foasfooffoafospecificfod
ate.
Afocashfoflowfostatementfoshowsfo-foanswer--
afoclient'sfonetfocashfoflowfoorfodeficitfooverfoafoperiodfooffotimefousuallyfoonefoyear.
Incomeforeplacementfopercentagefoisfoanotherfonamefoforfo-
foanswer--"replacementforatio"foandfoisfousedfoasfoaforoughfoguidefoinfodeterminingfothefoam
ountfooffoincomefoneededfoinforetirementforelativefotofopre-retirementfoincome.
Onefooffothefopurposesfooffolifelongfowealthfoaccumulationfo-foanswer--
isfotofoprovidefoforfoafocomfortableforetirement.
Industryfostandardsfotypicallyfoconsiderfoexpensesfolastingfobeyondfo____fo-foanswer--
1foyearfotofobefolong-termfoliabilities.
Long-termfoliabilitiesfoarefo-foanswer--
thosefothatfoarefopayablefooverfoafoperiodfogreaterfothanfoonefoyear.foMortgagefonotesfoandfo
autofoloansfoarefoexamplesfothatfofallfointofothisfocategory.
Whichfooffothefofollowingfotypesfooffoinformationfoarefoimportantfotofogatherfofromfoafoclientfo
priorfotofodevelopingforetirementfoplanningforecommendations?fo-foanswer--
hisfoorfoherfodesiredfoagefoofforetirement,fothefoclient'sfoassumptionfoforfothefolong-
termforatefooffoinflation,foinvestmentsfothefoclientfoprefersfonotfotofouse,fonumberfooffochildre
nfoclientfoandfospousefointendfotofohave
thefoagefoofforetirementfoisforequiredfoforfo-foanswer--
determiningfoinvestmentfoandfolifefoinsurancefoneeds.
Economicfoassumptionsfoneedfo-foanswer--
tofobefogatheredfofromfothefoclient.foWhilefothefoplannerfomayfohelpforefinefothefoassumption
,foitfoisfononethelessfothefoclient'sfoassumptionfothatfoisfoneeded.
Plannersfoalsofoneedfotofogatherfoinformationfoonfo-foanswer--
investmentsfothefoclientfoabsolutelyfodoesfonotfowantfotofoincludefoinfoanfoinvestmentfomix.
Thefonumberfooffochildrenfoafocouplefomayfohavefoprovidesfoanfoindicationfoasfo-foanswer--
tofowhatfomayfobefoneededfoforfoeducationfoexpenses,fohowfochildrenfowillfoaffectfofamilyfoin
come,foandfocreatesfothefoneedfoforfootherfoformsfooffoplanningfosuchfoasfotrustsfoandfoguard
ianshipfoissues.
Youfohavefojustfofinishedfoidentifyingfo&fodisclosingfoallfooffothefoapparentfo&fopotentialfoconf
lictsfooffointerestfoinfotheforelationshipfowithfoyourfoclient.foWhatfoisfothefonextfostepfothatfoyouf
owouldfoundertakefoasfoyoufocontinuefothroughfothefoplanningfoprocess?fo-foanswer--
Gatherfoinformationfonecessaryfotofofulfillfothefoengagement
Thefoidentificationfoandforesolutionfooffoapparentfoandfopotentialfoconflictsfooffointerestfoinfot
hefoplanner/clientforelationshipfooccurs?fo-foanswer--
ThefoDepartmentfooffoLaborforequirementsforegardingfoadvicefogivenfotoforetirementfoinves
torsfowillfomostfolikelyfo-foanswer--
INCREASEfoCLIENTfoEXPECTATIONSfoOFfoADVISERSfoANDfoPUTfoDOWNWARDfoP
RESSUREfoONfoFEES
Iffoaskingfoyoufotofosolvefoforfoanfoannuityfoduefowherefopaymentsfooccurfoatfothefobeginningf
ooffothefoperiodfo-foanswer--youfowouldfosetfocalculatorfoforfoBEG.
identifyingfospecificfofundsfoinfowhichfotofoinvestfoarefodiscussedfoon?fo-foanswer--
Specificfoinvestmentsfoarefonotfodiscussedfountilfostepfofourfooffothefoplanningfoprocess,fow
henfothefoplannerfodevelopsfoandfopresentsfotheforetirementfoplan
Thefoclient'sfoabilityfotofopurchasefoinsurancefoorfoinvestmentsfoisforeviewedfo-foanswer--
infostepfothreefooffothefoplanningfoprocess,foinfowhichfoanfoanalysisfoandfoevaluationfooffofina
ncialfostatusfotakesfoplace.
Duringfothefodatafogatheringfoprocessfothefoplannerfoshouldfoidentifyfo-foanswer--
thefoclientsforetirementfoaccountfobalances,foincomefosourcesfoandfoamountsfoandfodeter
minefohisfoorfoherforiskfotolerance.
Netfoworthfoisfodefinedfoasfo-foanswer--assetsfominusfoliabilitie
Netfocashfoflowfoisfocalculatedfobyfo-foanswer--
subtractingfototalfocashfooutflowsfofromfototalfocashfoinflows.
Collegefofundingfoisfoconsideredfoafo-foanswer--afolifestylefogoal
Foundationfogoalsfoarefothosefothatfo-foanswer--
contributefotofomorefobasicfolivingfoneedsfosuchfoasfofood,foinsurance,foandfoemergencyfofu
nds.foThefocoveragefoofforiskfoexposuresfoisfoalsofoconsideredfoafofoundationfofinancialfogo
al.
Youfohavefocompletedfoallfooffothefoactivitiesfoinvolvedfoinfothefodatafogatheringfostepfooffothe
fofinancialfoplanningfoprocess,foincludingfoobtainingfosufficientfoquantitativefoinformationfoa
ndfodocuments.foWhatfoisfothefonextfostepfooffothefoprocessfo-foanswer--
Analyzingfoandfoevaluatingfothefoclient'sfoinformation.foOncefoyoufohavefogatheredfoallfooffot
hefoappropriatefodatafoneeded,fothefonextfostepfoisfotofoanalyzefoit.
Withfosomefoexceptions,fomostfocategoriesfooffolivingfoexpenses,fosuchfoasfotransportation
,foclothing,foandfohousingfo-foanswer--decreasefoduringforetirementfoyears.
Somefoexpensesfomayfoevenfoincreasefoduringforetirementfoyears.fo-foanswer--
suchfoasfotravelfoandfomedical
,ItfoisfotruefothatfoSocialfoSecurityfobenefitsfomay?fo-foanswer--
mayfoincreasefoforfopeoplefowhofoworkfopastfotheirfoSocialfoSecurityfofullforetirementfoage.fo
Additionally,fowagesfoandfosalariesfoearnedfoduringforetirementfowillfoobviouslyfoincreasefo
retirementfoincome.
longerfolifefospansfowillforesultfo-foanswer--infoafoneedfoforfomoreforetirementfoincome
Iffoclientforetirementfofundsfoarefoinsufficientfotofomeetfogoalsfo-foanswer--
giftsfotofochildrenfoshouldfodecrease.
Delayingforetirementfo-foanswer--willfodecreasefothefoneedfoforforetirementfoincome.
Whenfoafoclient'sfofundsfoarefoinsufficientfotofoattainforetirementfogoals,foitfoisfoappropriatefof
orfothefoplannerfotofosuggestfo-foanswer--
retiringfolaterfothanfoinitiallyfoplanned,foperformingfopart-
timefoworkfoduringforetirement,fospendingfolessfoandfosavingfomorefoduringforetirement.
Duringforetirement,foCLIENTfowantsfotoforeceivefo$50,000foatfothefoendfooffoeachfoyearfoforfo
theforestfooffohisfolife.foTofocalculatefothefoamountfothatfoshefowillfoneedfotofosave,foyoufoneedfo
tofosolvefoforfo-foanswer--ordinaryfoannuity—
setfocalculatorfoatfoend.foYoufodofoneedfotofosetfothefocalculatorfoinfoENDfomodefoandfosolvefo
forfoordinaryfoannuity.
Iffoaskedfotofosolvefoforfoanfoannuityfoduefo(wherefopaymentsfooccurfoatfothefobeginningfooffot
hefoperiod)fo-foanswer--youfowouldfosetfocalculatorfoforfoBEG.
clientfowantsfotoforetirefothefo1stfooffonextfoyear.foShefowantsfotoforeceivefomonthlyforetireme
ntfoincomefopaymentsfoonfothefo1stfodayfooffoeachfomonth.foTofosolvefothefoamountfooffocapit
alforequiredfotofoprovidefoherfothefoincomefoshefowants,foyoufoneedfotofosolvefoforfo-
foanswer--annuityfodue—
setfocalculatorfoatfobegin.foyoufowouldfoneedfotofosolvefoforfoannuityfodue,foandfosetfothefocalc
ulatorfoatfobegin.
Whenfogatheringfodatafoduringfotheforetirementfoplanningfoprocess,fofinancialfogoalsfoshoul
dfobefoquantifiedfoinfodollarfoamountsfoandfowhichfooffothefofollowingfo-foanswer--
establishedfotimefoframes
Whenfosavingfoonfoafolevelfobasisfo-foanswer--
thefoinflationforatefodoesfonotfocomefointofoplayfoiffothefoquestionfonotesfoonfoafolevelfobasis.
Whenfoassistingfothefoclientfoinfoestablishingforealisticfogoals,fothefoplannerfo-foanswer--
shouldfohelpfodefinefofinancialfogoalsfosofothatfotheyfoarefoquantifiedfoinfodollarfoamountsfoa
ndfohavefoestablishedfotimefoframesfoinsteadfoofforemainingfogeneralfoinfonature.
Goalsfomayfobefoorganizedfobasedfoonfo-foanswer--
type,foownership,foandfopriorityfobutfothosefoarefonotfowaysfooffoquantifyingfothemfoandfomak
ingfothemfomorefospecific.
byfotypefooffogoal
, Afostatementfooffofinancialfopositionfoshowsfo-foanswer--
afoclient'sfonetfoworth,fowhichfoisfodefinedfoasfoassetsfominusfoliabilities,foasfooffoafospecificfod
ate.
Afocashfoflowfostatementfoshowsfo-foanswer--
afoclient'sfonetfocashfoflowfoorfodeficitfooverfoafoperiodfooffotimefousuallyfoonefoyear.
Incomeforeplacementfopercentagefoisfoanotherfonamefoforfo-
foanswer--"replacementforatio"foandfoisfousedfoasfoaforoughfoguidefoinfodeterminingfothefoam
ountfooffoincomefoneededfoinforetirementforelativefotofopre-retirementfoincome.
Onefooffothefopurposesfooffolifelongfowealthfoaccumulationfo-foanswer--
isfotofoprovidefoforfoafocomfortableforetirement.
Industryfostandardsfotypicallyfoconsiderfoexpensesfolastingfobeyondfo____fo-foanswer--
1foyearfotofobefolong-termfoliabilities.
Long-termfoliabilitiesfoarefo-foanswer--
thosefothatfoarefopayablefooverfoafoperiodfogreaterfothanfoonefoyear.foMortgagefonotesfoandfo
autofoloansfoarefoexamplesfothatfofallfointofothisfocategory.
Whichfooffothefofollowingfotypesfooffoinformationfoarefoimportantfotofogatherfofromfoafoclientfo
priorfotofodevelopingforetirementfoplanningforecommendations?fo-foanswer--
hisfoorfoherfodesiredfoagefoofforetirement,fothefoclient'sfoassumptionfoforfothefolong-
termforatefooffoinflation,foinvestmentsfothefoclientfoprefersfonotfotofouse,fonumberfooffochildre
nfoclientfoandfospousefointendfotofohave
thefoagefoofforetirementfoisforequiredfoforfo-foanswer--
determiningfoinvestmentfoandfolifefoinsurancefoneeds.
Economicfoassumptionsfoneedfo-foanswer--
tofobefogatheredfofromfothefoclient.foWhilefothefoplannerfomayfohelpforefinefothefoassumption
,foitfoisfononethelessfothefoclient'sfoassumptionfothatfoisfoneeded.
Plannersfoalsofoneedfotofogatherfoinformationfoonfo-foanswer--
investmentsfothefoclientfoabsolutelyfodoesfonotfowantfotofoincludefoinfoanfoinvestmentfomix.
Thefonumberfooffochildrenfoafocouplefomayfohavefoprovidesfoanfoindicationfoasfo-foanswer--
tofowhatfomayfobefoneededfoforfoeducationfoexpenses,fohowfochildrenfowillfoaffectfofamilyfoin
come,foandfocreatesfothefoneedfoforfootherfoformsfooffoplanningfosuchfoasfotrustsfoandfoguard
ianshipfoissues.
Youfohavefojustfofinishedfoidentifyingfo&fodisclosingfoallfooffothefoapparentfo&fopotentialfoconf
lictsfooffointerestfoinfotheforelationshipfowithfoyourfoclient.foWhatfoisfothefonextfostepfothatfoyouf
owouldfoundertakefoasfoyoufocontinuefothroughfothefoplanningfoprocess?fo-foanswer--
Gatherfoinformationfonecessaryfotofofulfillfothefoengagement
Thefoidentificationfoandforesolutionfooffoapparentfoandfopotentialfoconflictsfooffointerestfoinfot
hefoplanner/clientforelationshipfooccurs?fo-foanswer--
