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CFP Board Financial Planning Competency Handbook

ISBN: 978-1-118-47012-1
768 pages
April 2013
CFP Board Financial Planning Competency Handbook (1118470125) cover image

Whether you’re studying to become a financial planner, preparing for the CFP exam, or a practitioner looking for a comprehensive reference to help serve your clients' needs, this is the ultimate guide. Developed by Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Competency Handbook gives you everything you need to meet the daily challenges of your current or future profession.

The book comes with access to nearly 400 practice questions online, as well as the option to upgrade to a 28-Credit Continuing Education test for CFP professionals based in the United States.

This all-inclusive handbook covers the entire list of nearly 90 vital topics on integrated financial planning, including such major components as:

  • General Principles of Finance and Financial Planning
  • Insurance Planning
  • Employee Benefits Planning
  • Investment and Securities Planning
  • State and Federal Income Tax Planning
  • Estate Tax, Gift Tax, and Transfer Tax Planning
  • Retirement Planning
  • Estate Planning
  • Principles of Communication and Counseling
  • And more
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Acknowledgments xiii

About the Book xv

Preface xvii
Charles R. Chaffin, EdD, CFP Board

About the Practice Questions xxiii

About the Contributors xxv

PART ONE

1 Theory and Practice 3
Charles R. Chaffin

2 Financial Planning Process 13
John E. Grable and Ronald A. Sages

3 Financial Statements 25
Thomas Warschauer

4 Cash Flow Management 35
Martie Gillen and Michael Gutter

5 Financing Strategies 43
Kenneth Wynn, Martie Gillen, Michael Gutter and Jorge Ruiz-Menjivar

6 Function, Purpose, and Regulation of Financial Institutions 49
John E. Grable and Sonya L. Britt

7 Education Planning 59
Michael Gutter and Martie Gillen

8 Financial Planning for Special Circumstances 65
Sharon A. Burns

9 Economic Concepts 71
Dave Yeske

10 Time Value of Money 79
Jorge Ruiz-Menjivar, Martie Gillen, Michael Gutter and Kenneth Wynn

11 Financial Services Regulations and Requirements 87
John E. Grable and Sonya L. Britt

12 Business Law 97
Thomas Warschauer and Don L. Harrington

13 Consumer Protection Laws 107
John E. Grable and Sonya L. Britt

14 Principles of Risk and Insurance 117
Dave Yeske

15 Analysis and Evaluation of Risk Exposures 127
Dave Yeske

16 Health Insurance and Health Care Cost Management 135
Sharon A. Burns

17 Disability Income Insurance (Individual) 141
Dave Yeske

18 Long-Term Care Insurance 149
Sharon A. Burns

19 Life Insurance (Individual) 155
Dave Yeske

20 Income Taxation of Life Insurance 163
Martin C. Seay and Lance Palmer

21 Business Uses of Life Insurance 169
John Gilliam

22 Insurance Needs Analysis 185
Thomas Warschauer

23 Insurance Policy and Company Selection 193
Thomas Warschauer and Andrew Head

24 Annuities 203
John Gilliam and Andrew Head

25 Characteristics, Uses, and Taxation of Investment Vehicles 215
Swarn Chatterjee and Lance Palmer

26 Types of Investment Risk 223
Thomas Warschauer

27 Quantitative Investment Concepts 229
Thomas Warschauer

28 Measures of Investment Returns 237
Thomas Warschauer

29 Bond and Stock Valuation Concepts 245
Dave Yeske

30 Portfolio Development and Analysis 253
Thomas Warschauer

31 Investment Strategies 263
Dave Yeske

32 Asset Allocation and Portfolio Diversification 271
Dave Yeske

33 Income Tax Law Fundamentals 279
Lance Palmer

34 Tax Compliance 289
Sharon A. Burns

35 Income Tax Fundamentals and Calculations 295
Lance Palmer

36 Characteristics and Income Taxation of Business Entities 303
Webster Hewitt and Lance Palmer

37 Income Taxation of Trusts and Estates 313
Martin C. Seay and Lance Palmer

38 Basis 321
Sharon A. Burns

39 Tax Consequences of the Disposition of Property 327
Lance Palmer and Martin C. Seay

40 Alternative Minimum Tax (AMT) 333
Webster Hewitt and Lance Palmer

41 Tax Reduction and Management Techniques 341
Lance Palmer

42 Passive Activity and At-Risk Rules 351
Lance Palmer

43 Tax Implications of Special Circumstances 357
Lance Palmer

44 Charitable Contributions and Deductions 365
Webster Hewitt and Lance Palmer

45 Retirement Needs Analysis 373
Sharon A. Burns

46 Social Security (Old-Age, Survivors, and Disability Insurance) 379
Thomas Warschauer

47 Types of Retirement Plans 387
John E. Grable

48 Qualified Plan Rules and Options 395
Sharon A. Burns

49 Other Tax-Advantaged Plans 401
Sharon A. Burns

50 Regulatory Considerations 407
Sharon A. Burns

51 Key Factors Affecting Plan Selection for Business 411
Sharon A. Burns

52 Investment Considerations for Retirement Plans 417
Dave Yeske

53 Distribution Rules, Alternatives, and Taxation 427
Sharon A. Burns

54 Characteristics and Consequences of Property Titling 435
Sharon A. Burns

55 Methods of Property Transfer at Death 439
Sharon A. Burns

56 Estate Planning Documents 445
Sharon A. Burns

57 Gifting Strategies 451
Elissa Buie

58 Gift Tax Compliance and Tax Calculation 459
Elissa Buie

59 Incapacity Planning 467
Elissa Buie

60 Estate Tax Compliance and Tax Calculation 475
Elissa Buie

61 Sources for Estate Liquidity 483
Elissa Buie

62 Powers of Appointment 489
Sharon A. Burns

63 Types, Features, and Taxation of Trusts 495
Elissa Buie

64 Qualified Interest Trusts 503
Elissa Buie

65 Charitable Transfers 511
Elissa Buie

66 Use of Life Insurance in Estate Planning 517
Elissa Buie

67 Marital Deduction 525
Elissa Buie

68 Deferral and Minimization of Estate Tax 531
Elissa Buie

69 Intrafamily and Other Business Transfer Techniques 537
Elissa Buie

70 Generation-Skipping Transfer Tax 547
Elissa Buie

71 Fiduciaries 553
Martie Gillen

72 Income in Respect of a Decedent 559
Elissa Buie

73 Postmortem Estate Planning Techniques 565
Elissa Buie

74 Estate Planning for Nontraditional Relationships 571
Elissa Buie

75 Client and Planner Attitudes, Values, Biases, and Behavioral Characteristics and the Impact on Financial Planning 579
Dave Yeske

76 Principles of Communication and Counseling 587
John E. Grable and Kristy L. Archuleta

77 Standards of Professional Conduct 599
Jorge Ruiz-Menjivar and Martie Gillen

PART TWO

78 Establishing and Defi ning the Client-Planner Relationship 611
Elissa Buie and Dave Yeske

79 Gathering Information Necessary to Fulfill the Engagement 619
Elissa Buie and Sharon A. Burns

80 Analyzing and Evaluating the Client’s Current Financial Status 625
Thomas Warschauer, Vickie Hampton and Andrew Head

81 Developing the Financial Planning Recommendations 637
John E. Grable and Lance Palmer

82 Communicating the Financial Planning Recommendations 653
Dave Yeske and John E. Grable

83 Implementing the Financial Planning Recommendations 665
Deena Katz and Vickie Hampton

84 Monitoring the Financial Planning Recommendations 677
Thomas Warschauer and Sharon A. Burns

CONCLUSION

85 Moving Forward 685
Elissa Buie, Sharon A. Burns, Vickie Hampton, Lance Palmer, Thomas Warschauer, Dave Yeske and Charles R. Chaffin

Index 701

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Certified Financial Planner Board of Standards, Inc., is a nonprofit organization acting in the public interest by fostering professional standards in personal financial planning. The CFP Board sets and enforces the standards for CFP® certification, the recognized standard of excellence for personal financial planning. Individuals who successfully complete the CFP Board's initial and ongoing certification requirements—including requirements related to education, examination, experience, and ethics—are awarded the right to use the CFP® certification marks. CFP® certification identifies financial planners who are true professionals in one of the fastest growing and exciting careers today, allowing the public to find professionals qualified to provide competent and ethical financial planning services delivered with a fiduciary standard of care, putting the client's best interests first. They are located in Washington, D.C.

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April 22, 2013
CFP Board Financial Planning Competency Handbook

The Financial Planning Competency Handbook is a comprehensive source for the knowledge, actions, and contexts associated with personal financial planning. The book encompasses all of the major content areas associated with practice, from estate planning, taxation, investments, and principles of communication. This book goes beyond explaining theoretical content, but explores specific techniques used within financial planning practice to serve a variety of needs and objectives. There are 164 vignettes in this book that outline situations and contexts that financial planning practitioners encounter on a daily basis.

Students will benefit from definitions of all of the key concepts associated within financial planning, as well as how these concepts come alive within financial planning practice. Faculty teaching in financial planning programs and related disciplines can see how higher order cognitive thinking can be facilitated within the classroom or online learning platform relative to each of the major content areas. Practitioners will benefit from the identification of three levels of expertise relative to each of the content areas, assisting them in self-assessment relative to their own performance as well as enabling them to develop better mentorship programs for their employees.

From CFP Board, the Financial Planning Competency Handbook is a comprehensive exploration of the concepts, actions, and contexts associated within financial planning. This book is designed to accompany both a student throughout their program of study as well as sit on the desks of practitioners serving clients around the world.

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