MR VS CRPC RULE DIFFERENCES QUESTIONS ANSWERS

CRPC QUESTIONS AND ANSWERS

ThejcDepartmentjcofjcLaborjcrequirementsjcregardingjcadvicejcgivenjctojcretirementjcinvest
orsjcwilljcmostjclikelyjc-
jcINCREASEjcCLIENTjcEXPECTATIONS jcOFjcADVISERSjcANDjcPUTjcDOWNWARDjcP

RESSUREjcONjcFEES

Ifjcaskingjcyoujctojcsolvejcforjcanjcannuityjcduejcwherejcpaymentsjcoccurjcatjcthejcbeginningjco
fjcthejcperiodjc-jcyoujcwouldjcsetjccalculatorjcforjcBEG.

identifyingjcspecificjcfundsjcinjcwhichjctojcinvestjcarejcdiscussedjcon?jc-
jcSpecificjcinvestmentsjcarejcnotjcdiscussedjcuntiljcstepjcfourjcofjcthejcplanningjcprocess,jcwh

enjcthejcplannerjcdevelopsjcandjcpresentsjcthejcretirementjcplan

Thejcclient'sjcabilityjctojcpurchasejcinsurancejcorjcinvestmentsjcisjcreviewedjc-
jcinjcstepjcthreejcofjcthejcplanningjcprocess,jcinjcwhichjcanjcanalysisjcandjcevaluationjcofjcfinan

cialjcstatusjctakesjcplace.

Duringjcthejcdatajcgatheringjcprocessjcthejcplannerjcshouldjcidentifyjc-
jcthejcclientsjcretirementjcaccountjcbalances,jcincomejcsourcesjcandjcamountsjcandjcdeterm

inejchisjcorjcherjcriskjctolerance.

Netjcworthjcisjcdefinedjcasjc-jcassetsjcminusjcliabilitie

Netjccashjcflowjcisjccalculatedjcbyjc-
jcsubtractingjctotaljccashjcoutflowsjcfromjctotaljccashjcinflows.



Collegejcfundingjcisjcconsideredjcajc-jcajclifestylejcgoal

Foundationjcgoalsjcarejcthosejcthatjc-
jccontributejctojcmorejcbasicjclivingjcneedsjcsuchjcasjcfood,jcinsurance,jcandjcemergencyjcfun

ds.jcThejccoveragejcofjcriskjcexposuresjcisjcalsojcconsideredjcajcfoundationjcfinancialjcgoal.

Youjchavejccompletedjcalljcofjcthejcactivitiesjcinvolvedjcinjcthejcdatajcgatheringjcstepjcofjcthejcf
inancialjcplanningjcprocess,jcincludingjcobtainingjcsufficientjcquantitativejcinformationjcand
jcdocuments.jcWhatjcisjcthejcnextjcstepjcofjcthejcprocessjc-

jcAnalyzingjcandjcevaluatingjcthejcclient'sjcinformation.jcOncejcyoujchavejcgatheredjcalljcofjct

hejcappropriatejcdatajcneeded,jcthejcnextjcstepjcisjctojcanalyzejcit.

Withjcsomejcexceptions,jcmostjccategoriesjcofjclivingjcexpenses,jcsuchjcasjctransportation,jc
clothing,jcandjchousingjc-jcdecreasejcduringjcretirementjcyears.

Somejcexpensesjcmayjcevenjcincreasejcduringjcretirementjcyears.jc-
jcsuchjcasjctraveljcandjcmedical

,ItjcisjctruejcthatjcSocialjcSecurityjcbenefitsjcmay?jc-
jcmayjcincreasejcforjcpeoplejcwhojcworkjcpastjctheirjcSocialjcSecurityjcfulljcretirementjcage.jcA

dditionally,jcwagesjcandjcsalariesjcearnedjcduringjcretirementjcwilljcobviouslyjcincreasejcreti
rementjcincome.

longerjclifejcspansjcwilljcresultjc-jcinjcajcneedjcforjcmorejcretirementjcincome

Ifjcclientjcretirementjcfundsjcarejcinsufficientjctojcmeetjcgoalsjc-
jcgiftsjctojcchildrenjcshouldjcdecrease.



Delayingjcretirementjc-jcwilljcdecreasejcthejcneedjcforjcretirementjcincome.

Whenjcajcclient'sjcfundsjcarejcinsufficientjctojcattainjcretirementjcgoals,jcitjcisjcappropriatejcforj
cthejcplannerjctojcsuggestjc-jcretiringjclaterjcthanjcinitiallyjcplanned,jcperformingjcpart-

timejcworkjcduringjcretirement,jcspendingjclessjcandjcsavingjcmorejcduringjcretirement.

Duringjcretirement,jcCLIENTjcwantsjctojcreceivejc$50,000jcatjcthejcendjcofjceachjcyearjcforjcth
ejcrestjcofjchisjclife.jcTojccalculatejcthejcamountjcthatjcshejcwilljcneedjctojcsave,jcyoujcneedjctojcs
olvejcforjc-jcordinaryjcannuity—
setjccalculatorjcatjcend.jcYoujcdojcneedjctojcsetjcthejccalculatorjcinjcENDjcmodejcandjcsolvejcfo
rjcordinaryjcannuity.

Ifjcaskedjctojcsolvejcforjcanjcannuityjcduejc(wherejcpaymentsjcoccurjcatjcthejcbeginningjcofjcth
ejcperiod)jc-jcyoujcwouldjcsetjccalculatorjcforjcBEG.

clientjcwantsjctojcretirejcthejc1stjcofjcnextjcyear.jcShejcwantsjctojcreceivejcmonthlyjcretirementj
cincomejcpaymentsjconjcthejc1stjcdayjcofjceachjcmonth.jcTojcsolvejcthejcamountjcofjccapitaljcre

quiredjctojcprovidejcherjcthejcincomejcshejcwants,jcyoujcneedjctojcsolvejcforjc-jcannuityjcdue—
setjccalculatorjcatjcbegin.jcyoujcwouldjcneedjctojcsolvejcforjcannuityjcdue,jcandjcsetjcthejccalcul
atorjcatjcbegin.

Whenjcgatheringjcdatajcduringjcthejcretirementjcplanningjcprocess,jcfinancialjcgoalsjcshould
jcbejcquantifiedjcinjcdollarjcamountsjcandjcwhichjcofjcthejcfollowingjc-

jcestablishedjctimejcframes



Whenjcsavingjconjcajcleveljcbasisjc-
jcthejcinflationjcratejcdoesjcnotjccomejcintojcplayjcifjcthejcquestionjcnotesjconjcajcleveljcbasis.



Whenjcassistingjcthejcclientjcinjcestablishingjcrealisticjcgoals,jcthejcplannerjc-
jcshouldjchelpjcdefinejcfinancialjcgoalsjcsojcthatjctheyjcarejcquantifiedjcinjcdollarjcamountsjcan

djchavejcestablishedjctimejcframesjcinsteadjcofjcremainingjcgeneraljcinjcnature.

Goalsjcmayjcbejcorganizedjcbasedjconjc-
jctype,jcownership,jcandjcpriorityjcbutjcthosejcarejcnotjcwaysjcofjcquantifyingjcthemjcandjcmaki

ngjcthemjcmorejcspecific.
byjctypejcofjcgoal

Ajcstatementjcofjcfinancialjcpositionjcshowsjc-
jcajcclient'sjcnetjcworth,jcwhichjcisjcdefinedjcasjcassetsjcminusjcliabilities,jcasjcofjcajcspecificjcd

ate.

, Ajccashjcflowjcstatementjcshowsjc-
jcajcclient'sjcnetjccashjcflowjcorjcdeficitjcoverjcajcperiodjcofjctimejcusuallyjconejcyear.



Incomejcreplacementjcpercentagejcisjcanotherjcnamejcforjc-
jc"replacementjcratio"jcandjcisjcusedjcasjcajcroughjcguidejcinjcdeterminingjcthejcamountjcofjcin

comejcneededjcinjcretirementjcrelativejctojcpre-retirementjcincome.

Onejcofjcthejcpurposesjcofjclifelongjcwealthjcaccumulationjc-
jcisjctojcprovidejcforjcajccomfortablejcretirement.



Industryjcstandardsjctypicallyjcconsiderjcexpensesjclastingjcbeyondjc____jc-
jc1jcyearjctojcbejclong-termjcliabilities.



Long-termjcliabilitiesjcarejc-
jcthosejcthatjcarejcpayablejcoverjcajcperiodjcgreaterjcthanjconejcyear.jcMortgagejcnotesjcandjc

autojcloansjcarejcexamplesjcthatjcfalljcintojcthisjccategory.

Whichjcofjcthejcfollowingjctypesjcofjcinformationjcarejcimportantjctojcgatherjcfromjcajcclientjcpri
orjctojcdevelopingjcretirementjcplanningjcrecommendations?jc-
jchisjcorjcherjcdesiredjcagejcofjcretirement,jcthejcclient'sjcassumptionjcforjcthejclong-

termjcratejcofjcinflation,jcinvestmentsjcthejcclientjcprefersjcnotjctojcuse,jcnumberjcofjcchildrenjc
clientjcandjcspousejcintendjctojchave

thejcagejcofjcretirementjcisjcrequiredjcforjc-
jcdeterminingjcinvestmentjcandjclifejcinsurancejcneeds.



Economicjcassumptionsjcneedjc-
jctojcbejcgatheredjcfromjcthejcclient.jcWhilejcthejcplannerjcmayjchelpjcrefinejcthejcassumption,j

citjcisjcnonethelessjcthejcclient'sjcassumptionjcthatjcisjcneeded.



Plannersjcalsojcneedjctojcgatherjcinformationjconjc-
jcinvestmentsjcthejcclientjcabsolutelyjcdoesjcnotjcwantjctojcincludejcinjcanjcinvestmentjcmix.



Thejcnumberjcofjcchildrenjcajccouplejcmayjchavejcprovidesjcanjcindicationjcasjc-
jctojcwhatjcmayjcbejcneededjcforjceducationjcexpenses,jchowjcchildrenjcwilljcaffectjcfamilyjcinc

ome,jcandjccreatesjcthejcneedjcforjcotherjcformsjcofjcplanningjcsuchjcasjctrustsjcandjcguardia
nshipjcissues.

Youjchavejcjustjcfinishedjcidentifyingjc&jcdisclosingjcalljcofjcthejcapparentjc&jcpotentialjcconfli
ctsjcofjcinterestjcinjcthejcrelationshipjcwithjcyourjcclient.jcWhatjcisjcthejcnextjcstepjcthatjcyoujcwo
uldjcundertakejcasjcyoujccontinuejcthroughjcthejcplanningjcprocess?jc-
jcGatherjcinformationjcnecessaryjctojcfulfilljcthejcengagement



Thejcidentificationjcandjcresolutionjcofjcapparentjcandjcpotentialjcconflictsjcofjcinterestjcinjcth
ejcplanner/clientjcrelationshipjcoccurs?jc-
jcinjcthejcfirstjcstepjcofjcthejcretirementjcplanningjcprocess:jcEstablishingjcandjcDefiningjcthejc

Client/PlannerjcRelationship.