CFP Exam Study Guide | Complete
Financial Planning Process, Ethics, and
Cash Flow Management Notes |
2025 Edition
100-1: Defining Scope of the Engagement --Correct ANW:• Mutually define scope of
engagement
• Identify services to be provided
• Disclose conflicts of interest
• Compensation agreement
• Responsibilities of each party
• Duration
200-1: Determining a Clients Personal and Financial Goals, Needs, and Priorities --
Correct ANW:• Mutually define personal and financial goals
• Explore clients values, attitudes, expectations, and time horizons
• Subjective to practitioner
200-2: Obtaining quantitative Information and Documents --Correct ANW:•
Interviews, questionnaires, client records and documents
• Mutually define clients relevant goals, needs, and priorities
• Objectives should be precise and measurable
• Obtain sufficient relevant, quantitative information and documents
300-1: Analyzing and Evaluating the Clients Information --Correct ANW:• Personal
assumptions need to be made regarding: retirement age, life expectancy, income
needs, risk factors, time horizons and special needs
• Economic assumptions need to be made regarding: inflation rates, tax rates, and
investment returns
400-1: Identifying and Evaluating Financial Planning Alternatives --Correct ANW:•
What is possible?
• What other actions can be taken other than one currently using
• May involve consulting other professionals
, 400-2: Developing the Financial Planning Recommendations --Correct ANW:• What
is recommended?
• What strategy will best suit meeting clients goals considering alternatives
400-3: Presenting the Financial Planning Recommendations --Correct ANW:• How to
present?
• Should present in manner to help client make informed decision
• Should communicate factors: assumptions, interdependence of recommendations,
advantages & disadvantages, risks, time sensitivity
500-1: Agreeing on Implementation Responsibilities --Correct ANW:• Should
mutually decide how to split up responsibilities
500-2: Selecting Products and Services for Implementation --Correct ANW:•
Practitioner uses professional judgement in selecting the products and services that
the of clients interest
• Professional judgement incorporates both qualitative and quantitative information
6 step process: EGADIM --Correct ANW:1. Establish Relationship
2. Gather Information
3. Analyze data
4. Develop plan
5. Implement
6. Monitor
600-1: Defining Monitoring Responsibilities --Correct ANW:• What is to be
monitored?
• Frequency of monitoring
• Communication method
ARM Mortgage (adjusted rate mortg) --Correct ANW:Interest rate changes with
changes in level of interest in economy. Have additional risk to borrower so carry
initial lower interest rates
Aspirational Principles --Correct ANW:• Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
• Professionalism
• Diligence
Balance sheet vs. indiv. statement of fin. position --Correct ANW:• Net worth vs.
shareholder equity
• Majority of business assets will be use assets
Financial Planning Process, Ethics, and
Cash Flow Management Notes |
2025 Edition
100-1: Defining Scope of the Engagement --Correct ANW:• Mutually define scope of
engagement
• Identify services to be provided
• Disclose conflicts of interest
• Compensation agreement
• Responsibilities of each party
• Duration
200-1: Determining a Clients Personal and Financial Goals, Needs, and Priorities --
Correct ANW:• Mutually define personal and financial goals
• Explore clients values, attitudes, expectations, and time horizons
• Subjective to practitioner
200-2: Obtaining quantitative Information and Documents --Correct ANW:•
Interviews, questionnaires, client records and documents
• Mutually define clients relevant goals, needs, and priorities
• Objectives should be precise and measurable
• Obtain sufficient relevant, quantitative information and documents
300-1: Analyzing and Evaluating the Clients Information --Correct ANW:• Personal
assumptions need to be made regarding: retirement age, life expectancy, income
needs, risk factors, time horizons and special needs
• Economic assumptions need to be made regarding: inflation rates, tax rates, and
investment returns
400-1: Identifying and Evaluating Financial Planning Alternatives --Correct ANW:•
What is possible?
• What other actions can be taken other than one currently using
• May involve consulting other professionals
, 400-2: Developing the Financial Planning Recommendations --Correct ANW:• What
is recommended?
• What strategy will best suit meeting clients goals considering alternatives
400-3: Presenting the Financial Planning Recommendations --Correct ANW:• How to
present?
• Should present in manner to help client make informed decision
• Should communicate factors: assumptions, interdependence of recommendations,
advantages & disadvantages, risks, time sensitivity
500-1: Agreeing on Implementation Responsibilities --Correct ANW:• Should
mutually decide how to split up responsibilities
500-2: Selecting Products and Services for Implementation --Correct ANW:•
Practitioner uses professional judgement in selecting the products and services that
the of clients interest
• Professional judgement incorporates both qualitative and quantitative information
6 step process: EGADIM --Correct ANW:1. Establish Relationship
2. Gather Information
3. Analyze data
4. Develop plan
5. Implement
6. Monitor
600-1: Defining Monitoring Responsibilities --Correct ANW:• What is to be
monitored?
• Frequency of monitoring
• Communication method
ARM Mortgage (adjusted rate mortg) --Correct ANW:Interest rate changes with
changes in level of interest in economy. Have additional risk to borrower so carry
initial lower interest rates
Aspirational Principles --Correct ANW:• Integrity
• Objectivity
• Competence
• Fairness
• Confidentiality
• Professionalism
• Diligence
Balance sheet vs. indiv. statement of fin. position --Correct ANW:• Net worth vs.
shareholder equity
• Majority of business assets will be use assets
