CFP Board Financial Planning Competency Handbook

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.

• Acknowledgments xiiiAbout the Book xvPreface xviiCharles R. Chaffin, EdD, CFP BoardAbout the Practice Questions xxiiiAbout the Contributors xxvPART ONE1 Theory and Practice 3Charles R. Chaffin2 Financial Planning Process 13John E. Grable and Ronald A. Sages3 Financial Statements 25Thomas Warschauer4 Cash Flow Management 35Martie Gillen and Michael Gutter5 Financing Strategies 43Kenneth Wynn, Martie Gillen, Michael Gutter and Jorge Ruiz-Menjivar6 Function, Purpose, and Regulation of Financial Institutions 49John E. Grable and Sonya L. Britt7 Education Planning 59Michael Gutter and Martie Gillen8 Financial Planning for Special Circumstances 65Sharon A. Burns9 Economic Concepts 71Dave Yeske10 Time Value of Money 79Jorge Ruiz-Menjivar, Martie Gillen, Michael Gutter and Kenneth Wynn11 Financial Services Regulations and Requirements 87John E. Grable and Sonya L. Britt12 Business Law 97Thomas Warschauer and Don L. Harrington13 Consumer Protection Laws 107John E. Grable and Sonya L. Britt14 Principles of Risk and Insurance 117Dave Yeske15 Analysis and Evaluation of Risk Exposures 127Dave Yeske16 Health Insurance and Health Care Cost Management 135Sharon A. Burns17 Disability Income Insurance (Individual) 141Dave Yeske18 Long-Term Care Insurance 149Sharon A. Burns19 Life Insurance (Individual) 155Dave Yeske20 Income Taxation of Life Insurance 163Martin C. Seay and Lance Palmer21 Business Uses of Life Insurance 169John Gilliam22 Insurance Needs Analysis 185Thomas Warschauer23 Insurance Policy and Company Selection 193Thomas Warschauer and Andrew Head24 Annuities 203John Gilliam and Andrew Head25 Characteristics, Uses, and Taxation of Investment Vehicles 215Swarn Chatterjee and Lance Palmer26 Types of Investment Risk 223Thomas Warschauer27 Quantitative Investment Concepts 229Thomas Warschauer28 Measures of Investment Returns 237Thomas Warschauer29 Bond and Stock Valuation Concepts 245Dave Yeske30 Portfolio Development and Analysis 253Thomas Warschauer31 Investment Strategies 263Dave Yeske32 Asset Allocation and Portfolio Diversification 271Dave Yeske33 Income Tax Law Fundamentals 279Lance Palmer34 Tax Compliance 289Sharon A. Burns35 Income Tax Fundamentals and Calculations 295Lance Palmer36 Characteristics and Income Taxation of Business Entities 303Webster Hewitt and Lance Palmer37 Income Taxation of Trusts and Estates 313Martin C. Seay and Lance Palmer38 Basis 321Sharon A. Burns39 Tax Consequences of the Disposition of Property 327Lance Palmer and Martin C. Seay40 Alternative Minimum Tax (AMT) 333Webster Hewitt and Lance Palmer41 Tax Reduction and Management Techniques 341Lance Palmer42 Passive Activity and At-Risk Rules 351Lance Palmer43 Tax Implications of Special Circumstances 357Lance Palmer44 Charitable Contributions and Deductions 365Webster Hewitt and Lance Palmer45 Retirement Needs Analysis 373Sharon A. Burns46 Social Security (Old-Age, Survivors, and Disability Insurance) 379Thomas Warschauer47 Types of Retirement Plans 387John E. Grable48 Qualified Plan Rules and Options 395Sharon A. Burns49 Other Tax-Advantaged Plans 401Sharon A. Burns50 Regulatory Considerations 407Sharon A. Burns51 Key Factors Affecting Plan Selection for Business 411Sharon A. Burns52 Investment Considerations for Retirement Plans 417Dave Yeske53 Distribution Rules, Alternatives, and Taxation 427Sharon A. Burns54 Characteristics and Consequences of Property Titling 435Sharon A. Burns55 Methods of Property Transfer at Death 439Sharon A. Burns56 Estate Planning Documents 445Sharon A. Burns57 Gifting Strategies 451Elissa Buie58 Gift Tax Compliance and Tax Calculation 459Elissa Buie59 Incapacity Planning 467Elissa Buie60 Estate Tax Compliance and Tax Calculation 475Elissa Buie61 Sources for Estate Liquidity 483Elissa Buie62 Powers of Appointment 489Sharon A. Burns63 Types, Features, and Taxation of Trusts 495Elissa Buie64 Qualified Interest Trusts 503Elissa Buie65 Charitable Transfers 511Elissa Buie66 Use of Life Insurance in Estate Planning 517Elissa Buie67 Marital Deduction 525Elissa Buie68 Deferral and Minimization of Estate Tax 531Elissa Buie69 Intrafamily and Other Business Transfer Techniques 537Elissa Buie70 Generation-Skipping Transfer Tax 547Elissa Buie71 Fiduciaries 553Martie Gillen72 Income in Respect of a Decedent 559Elissa Buie73 Postmortem Estate Planning Techniques 565Elissa Buie74 Estate Planning for Nontraditional Relationships 571Elissa Buie75 Client and Planner Attitudes, Values, Biases, and Behavioral Characteristics and the Impact on Financial Planning 579Dave Yeske76 Principles of Communication and Counseling 587John E. Grable and Kristy L. Archuleta77 Standards of Professional Conduct 599Jorge Ruiz-Menjivar and Martie GillenPART TWO78 Establishing and Defi ning the Client-Planner Relationship 611Elissa Buie and Dave Yeske79 Gathering Information Necessary to Fulfill the Engagement 619Elissa Buie and Sharon A. Burns80 Analyzing and Evaluating the Client’s Current Financial Status 625Thomas Warschauer, Vickie Hampton and Andrew Head81 Developing the Financial Planning Recommendations 637John E. Grable and Lance Palmer82 Communicating the Financial Planning Recommendations 653Dave Yeske and John E. Grable83 Implementing the Financial Planning Recommendations 665Deena Katz and Vickie Hampton84 Monitoring the Financial Planning Recommendations 677Thomas Warschauer and Sharon A. BurnsCONCLUSION85 Moving Forward 685Elissa Buie, Sharon A. Burns, Vickie Hampton, Lance Palmer, Thomas Warschauer, Dave Yeske and Charles R. ChaffinIndex 701