CERTIFIEDFINANCIALPLANNER Certification

AssessmentCriteriaandStandards

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1.Introduction
TheawardoftheCERTIFIEDFINANCIALPLANNERCMcertificationisdependentupondemonstrationof knowledgeandskilltoadefinedinternationalstandard. Thelearningcompetences(cognitiveorthinkingcompetences)requiredare: ComprehensionInterpreting,summarisingorcomputinggiveninformation ApplicationUsinginformationtocarryoutafunction AnalysisSeparatinginformationintopartsuntiltherelationshipsbetweenthemareclearin identifyingproblems SynthesisCombininginformationtoproducesolutions EvaluationDecisionmakingorjudgementbasedoncriteriaorrationale TheCFPCMCertificationisbasedonapracticalassessmentofappliedskills.Theapplicationskillsare assessedundertheCFPCertificationsyllabusandarelargelyconcernedwiththeapplicationof knowledgecompetencestowrittencommunication,i.e.theabilitytopresentacomplexargumentand complexsupportingdatatoaclientinacoherentandclearmanner.However,nonverbalandverbal communicationskillswillnormallyberequiredwhenobtainingdata,orwhenexplainingawritten communication. Theseskillsareimpliedandsoarenotexplicitlyassessed.Theskilllevels(psychomotorcompetences) requiredare: PrecisionSkillsperformedwithaccuracy ArticulationTasksperformedinsequenceandwithconsistency NaturalisationSkillsareperformedeasily,automaticallyandwithoutreferencetoasource

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2.InternationalStandards
MinimumStandardsforaComprehensiveFinancialPlan
FinancialPlanningisaprofessionalserviceforclientswhoneedobjectiveassistanceinorganisingtheir personalorcorporatefinancialaffairstomorereadilyachievetheirgoals. TheFinancialPlanningprocessincludessixsteps: Collectingandassessingallrelevantpersonalandfinancialdata Identifyingfinancialobjectivesandproblems Processingandanalysinginformation Producingafinancialplan,theimplementationofwhichshouldmakethemosteffectiveuseofa client'sresourcestowardstheachievementofhisobjectives,andidentifyingalternative solutions Implementingtheplan Reviewingprogressandmodifyingtheplanasnecessarytotakeaccountofchanged circumstances Comprehensive Financial Planning will include the basic areas of Financial Planning along with other areasofconcerntotheclient.Thebasicareasinclude: FinancialStatementanalysis InvestmentPlanning TaxPlanning RiskManagementandInsurance RetirementPlanning EstatePlanning Otherareasofconcernmayinclude: CashManagement EducationFunding EmployeeBenefits CharitablePlanning BusinessPlanning

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2.1StandardsforaComprehensivePersonalFinancialPlan
Acomprehensivepersonalfinancialplanshouldcontainanalysisofallrelevantfactorsrelatingtothe clientandshouldincorporatethesixcomponentsmentionedabove.Whileorderandstyleof presentationmayvarydependingupontheclient'sindividualcircumstancesandneeds,theplanshould include,butnotbelimitedto,thefollowing15elements: ClientData ClientGoalsandObjectives IdentificationofIssuesandProblems Assumptions BalanceSheet/NetWorth CashFlowManagement IncomeTax RiskManagementandInsurance Investments RetirementPlanningandotherspecialneeds EstatePlanning Recommendations Implementation Periodicreviewsandplanupdates Compliancerequirementsofcomprehensivefinancialplans

2.2ElementsofaComprehensivePersonalFinancialPlan 2.2.1ClientData
Theclientdatacollectionformstoincluderelevantpersonalandfamilydataforpartiescoveredunder theplan. Thedatacollectionrecordsshouldbecompletedandkeptonfile.Theseshouldinclude,butnotbe limitedto,name,address,birthdateandotherrelevantdatasuchasnamesandaddressesofother specialistadvisersincludingaccountantsandsolicitors,namesofnextofkin,detailsofpowerof attorney,andwhetherWillshavebeenmadeout.Allapplicableareasshouldbecompleted.Areason thedatarecordsthatarenotrelevantshouldbeclearlymarkedN/A.

2.2.2 ClientGoalsandObjectives
Theplannershouldprovideastatementoftheclient'sstatedgoalsandobjectives,indicatingpriorities andincludingatimeframewhereapplicable.
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 The statement will form the basic framework for the development of the financial plan. The client's goalsandobjectivesshouldbeexpressedinspecificandpreciselanguage.

2.2.3IdentificationofIssuesandProblems
Theplannerlistspersonalandfinancialissuesandproblemswhichmayaffecttheclient,suchasmajor illness,educationcosts,taxesetc.Whiletheclientmaybeawareofmanyifnotalloftheissues,the plannermaydiscoverotherareasthatareorcoulddevelopintoaproblem. These issues and problems, when combined with the client's goals and objectives will complete the frameworkanddirectionforthefinancialplan.

2.2.4.Assumptions
The planner should identify and state material assumptions used in the preparation of the plan. Assumptionsshouldinclude,butnotbelimitedto,inflation,investmentgrowthrate,earningsgrowth rate,mortality,etc.

2.2.5.BalanceSheet/NetWorth
The plan should have a presentation and analysis to include, but not be limited to, a schedule listing assetsandliabilitieswithacalculationofnetworthanditemisedschedulesofliabilitiesandassetstobe includedasappropriate. Footnotesshouldbeincludedasappropriate.

2.2.6.CashFlowManagement
The plan should have statements and analysis to include, but not be limited to, a statement of the client'ssourcesandusesoffundsforthecurrentyearandforallrelevantyears. The planner should indicate net cash flow (positive and negative) as well as a separate income statementwhereappropriate. Sourcesofincomewouldincludeearnedincome,investmentincome,saleproceeds,giftsetc. Usesofincomewouldincludelivingexpenses,debtservice,acquisitionofassets,taxespaidetc.

2.2.7.Taxation
Theplannershouldprovideataxstatementandanalysistoinclude,butnotbelimitedto,theincome andothertaxesforallrelevantyearscoveredbytheplan. Computations should show the nature of the income and deductions in sufficient detail to permit calculation of tax liability. The analysis should identify the marginal tax rate for each year and any
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 special situations which affect the client's tax liability. The client should be informed(by footnotes if necessary) in the plan, of any taxes which have not been addressed. Income tax analysis and recommendations on tax effective investments should be, where appropriate, referred to the client's accountantortaxspecialist/adviser.

2.2.8.RiskManagementandInsurance
Theplannershouldprovideananalysisoftheclient'sfinancialexposurerelativetomortality(survivor incomeandcapitalneedsanalysis)andmorbidity(impactofpoorhealth)asappropriate. Theplannershouldprovidealistingandanalysisofcurrentpoliciesandproblemstoinclude,butnotbe limitedto,life,disability,andmedicalinsurances.

2.2.9.Investments
The planner should provide a breakdown of existing asset allocation and analysis or discussion of liquidity,diversificationandinvestmentriskexposureoftheportfolioandincludethesuitabilityofthe investmentsinrelationshiptotheclient'sneeds,goalsandobjectives. The financial plan should include, but not be limited to, risk tolerance, risk analysis of investments, suitability,liquidityandassetallocation.

2.2.10.RetirementPlanningandOtherSpecialNeeds
The planner should provide analysis of capital needed at some future time to provide for financial independence,retirementeducationorotherspecialneeds. Theanalysisshouldincludeaprojectionofresourcesexpectedtobeavailabletomeetthoseneedsat that time. Inflation, growth of assets and State and company benefits should be considered where applicable.Specialsectionsmayrequireseparateheadingsinthefinancialplan.Forexample,pension benefitsmayrequireananalysisoftypesavailable,pretaxcontributionsneeded,taxtreatmentofplans andinvestmentofpensionfundassets.

2.2.11.EstatePlanning
ThereshouldbeadiscussionontherelevanceofWills,trustsandthevariouspowersofattorney. The planner should, where appropriate, include reference to the client's solicitor for advice on estate matters.Theremaybeaneedtoidentifyassetstobeincludedintheclient'sestateandananalysisof the control (title, trusteeship, power of attorney etc) disposition (transfer of ownership by Will to individuals, beneficiaries or to a trust) and taxation (Inheritance Tax and income tax consequences to thebeneficiaries).Evidenceshouldbedocumentedthattheclient: HaskeptWillsupdatedandthesewillbeappropriatetoestaterequirementsafterthefinancial planisimplementedorhasarrangedtohavehisorhersolicitorsdrawupnewWills.
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2.2.12.Recommendations
The planner should provide clearly identified and stated written recommendations relating to the client'sgoalsandobjectivesaswellasfinancialissuesandproblems. The plan should include a determination of the actions necessary to compensate for any shortfalls. Recommendationsshouldnotbeconveyedbyimplicationorinference,andmaybegenericorspecific.

2.2.13.Implementation
The planner should provide a list of action points required to implement the recommendations, indicatingresponsibleparties,actionrequiredandtiming.Thisshouldfollowtheclient'sagreementto therecommendationsmade.

2.2.14.PeriodicReviewsandPlanUpdates
The plan should include a note of intended periodic reviews and updates of the client's plan and implementationstrategy. The planner's policy must be stated. For example, is a review made at the request of the client, six monthlyorannually?Doesthereviewonlyconsiderinvestmentassetsorotheractions.

2.2.15.ComplianceRequirementsofComprehensiveFinancialPlans
Allplansmustmeetlegalcompliancerequirementsasatthedatethefinancialplanwasprepared. [ForthepurposesofCFPCMCertificationCaseStudyentry,theserequirementsmaybeomitted]

2.3GeneralCommentsontheComprehensiveFinancialPlan
The planner is responsible for the above elements of a comprehensive financial plan, from data gathering through to analysis and presentation to the client. Those elements of the plan which the plannerdoesnotpersonallyperformremaintheresponsibilityoftheplannertocoordinateandthese shouldbeindicatedintheplan. The implications of the involvement of other family members and/or business partners in the plan shouldbeconsidered. When technical areas such as legal, insurance etc, are not personally performed by the planner, the financial plan should include reference to the extent to which these areas have been or will be co ordinatedbytheplanner.
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 Analysisofeachelementoftheplanshouldconsistofareviewofrelevantfacts,aconsiderationofthe advantagesand/ordisadvantagesofthecurrentsituationandadeterminationofwhat,ifany,further actionisrequired.Theplanshouldincludeasummarystatementprovidingtheplanner'scommentson the analysis and his or her recommendations where appropriate for each element of the plan, plus a statementoftheplanner'sclientreviewpolicy.

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3.AssessmentSyllabus
N.B.Candidatesarerequiredtosubmitacasestudybasedfinancialplanforassessment.Thefinancial planwillbeassessedagainstthefollowingcompetencestatementsandtheaccompanyingperformance standardsforeachcompetencestatements. The standards marked with M are MANDATORY. Each and every mandatory standard must all be passedtopassthecertificationassessmentoverall.

PartAGeneralCompetences

1:Presentation
1.1 M Doesthereportorplanhaveastructurewhichislogicalandformaplanofaction? 1.2 1.4 1.5 Wastheuseoflanguageappropriatetotheclientinthecircumstances? Istheplanlogicallycollated? Istheplaneasytoreadandfollow? 1.3 M Didthelanguageusedcommunicateideasclearlytoathirdparty?

1.6 Istheplanboundorotherwisefastenedtogetherasadocument?

2:Clientneedsandobjectives
2.1 M Wereclientsneeds,objectives,aspirationsorconcernsestablishedandrecorded? 2.2 M Weretheobjectivesquantifiedandqualified(i.e.what,howmuch,whenetc.)? Wereadditionalneedsorissuesandproblems/potentialproblemsconsideredinrespectof 2.3 theseobjectivesandaconclusionreached?

3:Identificationofissuesandproblems
3.1 M Wereappropriatepotentialproblemsqualified,quantifiedandclearlystatedfortherecord? Hasdiscussionandjustificationofrecommendationsbeenmadeforthreespecificfinancial 3.2 planningissues? Isthereclearreferencetoandjustificationfortheexclusionofanyotherfinancialplanning 3.3 issues?

4:Clientdata
4.1 4.3 Hasclientsattitudetopersonalandbusinessriskmanagementbeenidentified? Doesclientdataincludesufficienthardfacttoadviseoneachobjectiveidentified? 4.2 M Hasclientsinvestmentriskattitudebeenidentifiedforeachobjective? 4.4 Istheclientdatacollatedandunderstandablebyathirdpartywithinthereport?
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5:Assumptions
Wereassumptionsregardinginvestmentgrowth,priceinflationandearningsinflation discussed? 5.2 M Wereotherrelevantworkingassumptionsstatedanddiscussed? 5.1 M 5.3 M Werethevariousassumptionsmadeadequatefortheadvicerequired? 5.4 M Werealltheassumptionsstatedbytheadviserreasoned? 5.5 Weretheassumptionsstatedbytheadviserreasonable?

6:Abalancesheet/networthstatementhasbeenproduced?
6.1 M Wasastatementofnetworthproduced? 6.2 M Doesitincludeallrelevantassetsandistheownershipbasisidentifiedaccurately? 6.3 Doesitincludeallrelevantdebtandisthisapportionedaccurately? 6.4 Isitclearwhetherthisrelatestolifetimeordeathorboth(theremaybemorethanone).

7:IncomeTaxCalculation
7.1 M Wasananalysisproducedforeachclient? 7.2 7.4 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 Isitcleartowhichtimeperioditrelates? Hasthetaxpositionbeenreviewedresultingincommentstotheclients? 7.3 M Isittechnicallyaccurate?

8:Incomeandexpenditure/cashflow
M Wasananalysisofincomeandexpenditureproduced? M Isthetimeperiodtowhichitrelates,clearlyidentified? Doesitidentifygrossandnetincome? Doesitapportionincomebetweenrecipientswherenecessary?

M Doesitcorrectlyidentifyshortfallorsurplusofincomeoverexpenditure? Is there reference to and/or discussion of net cash flow (spendable income) in relation to jointincomeand/oreachclient(wheremorethanone). Doesitincludeallrelevantassetsandareirregularcapitalreceiptsseparatelyidentified?

Arecashflow/spendableincomeobjectivesestablishedinlinewiththeclientswishes? Isitclearwhethertheclientsaspirationscanbeachievedwithincurrentand/orfuturecash 8.9 M flowconstraintsorifnotcanthesolutionbetrimmed/adjustedorprioritisedtofitcashflow constraints? 8.10 Hasliquidityand/oracashreservebeenconsidered?

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9:Recommendations,ImplementationandReview
9.1 9.2 9.3 9.4 9.5 9.6 9.7 M M M M M Arerecommendationsmadeforeachoftheproblems/concerns,identifiedandeachofthe goals/objectivesidentified? Arethereclearexplanationsofhowtheproposedsolutionsolvestheproblem? Arerequiredactions,timing,partiesandresponsibilitiesstatedorlisted(subjecttoclients prioragreement)? Hasaclearactionplanbeenagreedwiththeclients? Is the solution generally suitable for the client and no evidence of unsuitable advice demonstrated? Arereviewperiods,updatesandactionsstated?

M Arereviewcontents,responsibilitiesandpartiesclearlyidentified? Isitclearhowareviewwillbeinitiated(e.g.atclientrequestorbyFinancialPlannerannually 9.8 orhalfyearly)? 9.9 M Dothesolutionsmatchtheclientsagreedinvestmentriskattitude(whererelevant)? Istheownershipandmethodofarrangingpolicies/assetsclearlyexplained(i.e.underwriting 9.10 process,whotakesactiontoimplementthisprocess)?

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PartBTechnicalCompetences
Please note, candidates will be assessed on three of these technical competences. Candidates should read the information at the start of the case study for guidance on which of the technical areas to address.Insomecases,thetechnicalareaswillbespecified,inothers,candidatescanselectfromalist.

1:Personalriskmanagement/insurance
1.1 1.2 1.3 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Hastheclientsfinancialexposuretomortalityrisk(riskofdeath)andmorbidityrisk(riskof illhealthorinjury)beendiscussed? Haveexistingriskmanagementstrategiesorinsurancepoliciesbeenanalysedandtakeninto account(includingsocialsecurity,pensionsoremployeebenefits)? Havethesolutionsbeenexplained,e.g.intermsofproviding: acapitalsumtorepaydebt; acapitalsumforaspecificpurpose; acapitalsumtoproduceanincomebyinvestment; areplacementregularincomestreambyinsurance? Arethesolutionsclearlyexplainedtotheclientstatingwhyrecommendedandhowitsolves theproblem? Havetaxationconsiderationsofsolutionsbeentakenintoaccount? Have appropriate qualifications, caveats and implications been stated (e.g., taxation, underwriting,legalorgenericcontractlimitations)? Aretheproposedsolutionsaffordablewithinparametersagreedwiththeclient? Dothesolutionsmatchtheclientsagreedinvestmentriskattitude(whererelevant)? Istheownershipandmethodofarrangingpolicies/assetsclearlyexplained(i.e.underwriting process,whotakesactiontoimplementthisprocess)? Havesocialsecuritybenefitsbeentakenintoaccountwhereapplicable?

1.4

1.5 1.6 1.7 1.8 1.9

1.10 1.11

1.12 M Doeachoftheproposedsolutionsmeettheclientsagreedobjectivesasfullyaspossible? 1.13 M Arethesolutionsgenerallytechnicallyaccurate?

2:Investments
2.1 2.2 2.3 2.4 2.5 2.6 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Haveexistingportfolioparametersbeenclearlyestablishedandstated(i.e.whichassetsare tobeincluded/excluded,istheportfoliojointorindividual)? Arerealisablecapitalassetstakenintoaccountwherenecessary? Ifajointportfolioisbeingrecommended,haveagreedindividualownershiplimitationsbeen addressedandstated? Withintheclientsexistingagreedportfolio,havetheassetsbeenanalysedbytaxation, vehicle(i.e.producttype),ownership,underlyingassets/fund,incomeproducedandthen comparedagainstthedesiredmodelportfolioparametersagreedwiththeclient? Hasconsiderationbeengiventocomparingtheclientsagreedrisktoleranceagainstthe existingportfolioandgapsidentified?
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 Hasconsiderationbeengivento: systematicandnonsystematicrisk(theriskwithinmarketoreconomy); absoluterisk(theriskofariseorfallinvalue); comparativerisk(theriskofariseorfallcomparedagainstinflationoranother asset)? Hasconsiderationbeengiventodiversificationtoreducetheriskassociatedwithasset concentration: withinmarket/sectors withinassettypes Hasallowancebeenmadeforliquidity(bothcurrentrequirementandfuturerequirements)? Haveallassumptionsandtimescalesbeenidentifiedandexplained? Arealltheassumptionsreasoned,reasonableandtakeaccountofvariationsinreturnsof differentassetclasses(i.e.outorunderperformance)? Hasaccountbeentakenofbothcurrentandfutureincomerequirements?

2.7

2.8 2.9

2.10 2.11 2.12 2.13

Hasasset/productownershipbeenstatedandjustified? Haveanyrelevantimplications,limitationsorlegal/taxationconditionsbeenstatedand 2.14 explainedtotheclient? Doestherecommendedportfolioclearlymeettheclientsagreedobjectivesandneedsas 2.15 M fullyaspossible? 2.16 M Arethesolutionsgenerallytechnicallyaccurate?

3:PersonalRetirementPlanning(includingBusinessOwners)
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Hasananalysisbeencarriedoutofincomeandcapitalrequiredtoachievecurrentorfuture objectivesandneedsandthetimescale(s)applicable? Haveexistingoranticipatedassetsorcapitalbeentakenintoaccount? Hasreferencebeenmadetospecificobjectives(e.g.pensionfunding,longtermcarecosts) andindividualsolutionsdesignedandintegratedtomeetthesevariousobjectives? Haveassumptionsbeenstatedandaretheyreasonedandreasonable? Havesocialsecuritybenefitsandcontributionsbeentakenintoaccount? Havetaxationconsiderationsbeentakenintoaccount? Aresolutionsconsistentwiththeclientsagreedinvestmentattitude? Canthecapitalorexpendituresfromincomerequiredbeaffordedbasedontheclients agreedcashflow/expenditurepattern? Haveappropriatemortalityandmorbidityrisksbeentakenintoaccountandquantified?

3.10 3.11

Havesolutionsbeenrecommendedtotheseriskswhererequired?

Haveanyrelevantimplications,limitationsorlegal/taxationconditions/consequencesbeen 3.12 statedandexplained? Dothesolutionsrecommendedclearlymeettheclientsagreedneedsandobjectivesasfully 3.13 M aspossible? 3.14 M Arethesolutionsgenerallytechnicallyaccurate?

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4:EstatePlanning
4.1 M Havetheclientsestateplanningneedsandobjectivesbeenclearlyquantified/qualified? Has consideration been given to the most appropriate method(s) of achieving the clients wishes,e.g. Useofwills 4.2 Useoftrusts Useofpowersofattorney Useofgifts? Havetaxationconsiderationsbeentakenintoaccountforboththeclientandtheintended 4.3 beneficiaries? 4.4 Haveappropriate/relevantimplicationsorlimitationsbeendrawntotheclientsattention? Haveanyknockoneffectsonotherareasoffinancialplanningbeendrawntotheclients 4.5 attentionandexplained(e.g.longtermcare/depletionofestatevalue)? Hasthepotentialneedtorefertotheclientsspecialistlegaland/ortaxationadvisersbeen 4.6 statedandexplained? Hasthemostappropriateownershipofassetstoachievetheclientsobjectivesbeenstated 4.7 andexplained? Is there evidence that the client is recommended to draw upnew Wills or amend existing 4.8 Willsortrustsorwillmaintainuptodatelegaldocumentstoachievetheobjectives? Dotherecommendationsclearlymeettheclientsagreedobjectivesandneedsasfullyas 4.9 M possible? 4.10 M Arethesolutionsgenerallytechnicallyaccurate?

5:Educationalfunding
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Hasananalysisbeencarriedoutofincomeandcapitalrequiredtoachievecurrentorfuture objectivesandneedsandthetimescale(s)applicable? Haveexistingoranticipatedassetsorcapitalbeentakenintoaccount? Has reference been made to obstacles of achieving the clients specific objective (e.g. pension funding, longterm care costs) and individual solutionsdesigned and integratedto meetthesevariousobjectives? Haveassumptionsbeenstatedandaretheyreasonedandreasonable? Havesocialsecuritybenefitsandcontributionsbeentakenintoaccount? Havetaxationconsiderationsbeentakenintoaccount? Aresolutionsconsistentwiththeclientsagreedinvestmentattitude? Canthecapitalorexpendituresfromincomerequiredbeaffordedbasedontheclients agreedcashflow/expenditurepattern? Haveappropriatemortalityandmorbidityrisksbeentakenintoaccountandquantified?

5.10 5.11

Havesolutionsbeenrecommendedtotheseriskswhererequired? Haveanyrelevantimplications,limitationsorlegal/taxationconditions/consequencesbeen 5.12 statedandexplained? Dothesolutionsrecommendedclearlymeettheclientsagreedneedsandobjectivesasfully 5.13 M aspossible?

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5.14 M Arethesolutionsgenerallytechnicallyaccurate?

6:SpecialNeeds(e.g.longtermcare/structuredsettlements)
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Has reference been made to obstacles of achieving the clients specific objective (e.g. pension funding, longterm care costs) and individual solutionsdesigned and integratedto meetthesevariousobjectives? Haveexistingoranticipatedassetsorcapitalbeentakenintoaccount? Haveassumptionsbeenstatedandaretheyreasonedandreasonable? Have social security benefits and contributions been taken into account (e.g. attendance allowance)? Havetaxationconsiderationsbeentakenintoaccount? Aresolutionsconsistentwiththeclientsagreedinvestmentattitude? Can the capital or expenditures from income required be afforded based on the clients agreedcashflow/expenditurepattern? Haveappropriatemortalityandmorbidityrisksbeentakenintoaccountandquantified?

6.10

Havesolutionsbeenrecommendedtotheseriskswhererequired? Haveanyrelevantimplications,limitationsorlegal/taxationconditions/consequencesbeen 6.11 statedandexplained(e.g.preservationofestatevalue)? Dothesolutionsrecommendedclearlymeettheclientsagreedneedsandobjectivesasfully 6.12 M aspossible? 6.13 M Arethesolutionsgenerallytechnicallyaccurate?

7:TaxationandNationalInsurance
7.1 7.2 7.3 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Istherereferencetoanddiscussionofeachclientstaxationposition? Aretaxesreferredtotheonlyrelevanttaxeswithothertaxesnotrelevant? Doesreferencetotaxesinclude(whereappropriate): Incometaxes(e.g.CorporationTax/IncomeTax) Capitaltaxes(e.g.CGT/IHT) Advaloremtax/duty(e.g.,VAT/StampDuty) NationalInsuranceContributions Localtaxation(e.g.CouncilTax/Rates) Is there sufficient detail to compute/has computation been done to produce an approximatedtaxliabilityforeachrelevanttax? Istaxationcommentgenerallytechnicallyaccurate? Does it clearly identify the highest marginal rate(s) of taxation applicable to each year coveredbytheplan? Have all relevant allowances, exemptions, reliefs or other allowable deductions been identifiedandtakenintoaccount? Haveanyrelevantimplications(e.g.AgeAllowancereduction)beenidentifiedand
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7.4

7.5 7.6 7.7 7.8 7.9

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 discussed? Havetaxefficientinvestmentsand/orothertaxmitigationactionsbeendrawntotheclients attention(possiblyinothersectionsofthereportprovidingtheclientsattentionisdrawnto theappropriatesection)? Is reference made to an appropriate specialist adviser, if needed, with a clear explanation 7.11 givenastowhythisisrequired? Do the recommendations clearly meet the clients agreed objectives and needs as fully as 7.12 M possible? 7.13 M Arethesolutionsgenerallytechnicallyaccurate? 7.10

8:DebtManagement
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 M Hastheclientsproblem/requirementbeenclearlydefined,agreedandstated? Haveanycrisispoints/timescalesbeenidentified,agreedandstated? Havetheclientsassetsandliabilitiesbeenquantified,qualifiedandanalysed? Hastheclientsincomeandexpenditurebeenquantified,qualifiedandanalysed?

Hasthedebtservicingabilityandhistorybeenanalysedandassessed?
Haverelevantlegal,taxationandcostconstraintsbeentakenintoaccount? Whererelevant,hastheclientbeenadvisedofother/specialistsourcesofadvice? Hasrenegotiationorrefinancingofdebtonimprovedtermsbeenconsidered?

Haveappropriatemortalityandmorbidityrisksbeenanalysedandcommentedupon? Haveappropriateandtechnicallyaccuraterecommendationsbeenmadeincludingrelevant 8.10 legal,taxationandownershipimplications? Arerecommendationsclearlystated,justifiedanddotheymeettheclientsobjectives/needs 8.11 M asfullyaspossible? 8.12 M Arethesolutionsgenerallytechnicallyaccurate?

9:BusinessSuccessionPlanning
9.1 9.2 M Have the clients succession planning options and objectives been clearly and accurately stated? Hastheneed to refertobusinesslegal documentsbeenconsidered, statedandexplained, e.g.,PartnershipAgreementorCompanyMemorandumandArticlesofAssociation? Has consideration been given to the most appropriate method(s) of achieving the clients wishes,e.g. Useofwills Useoftrusts Useofpowersofattorney Useofgifts Sharepurchaseagreements Hasfundingofsharepurchasebeenconsidered(whererelevant)? Havetaxationconsiderationsbeentakenintoaccountforboththeclientandtheintended beneficiaries/purchaser? Aretimescalesofsuccessionplanningobjectivesdiscussed(e.g.lackoftrainedchildtotake
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9.4 9.5 9.6

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 overthebusiness)? 9.7 Haveappropriate/relevantimplicationsorlimitationsbeendrawntotheclientsattention? Has business valuation been explored and the implications, complexities and potential 9.8 solutionsexplained? Haveanyknockoneffectsonotherareasoffinancialplanningbeendrawntotheclients 9.9 attentionandexplained? Hasthepotentialneedtorefertotheclientsspecialistlegaland/ortaxationadvisersbeen 9.10 statedandexplained? 9.11 M Aresolutionsrecommendedgenerallytechnicallyaccurate? Dothesolutionsrecommendedclearlymeettheclientsagreedneedsandobjectivesasfully 9.12 M aspossible?

10:AcquisitionorDisposalofaBusiness
10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 M Have needs and objectives been stated and quantified/qualified and agreed where appropriate? Has the client been advised to consult with other relevant advisers (legal, tax, pension, etc.)? Has the acquisition or disposal method been discussed, implications stated and a recommendationstated? Haveallassumptionsandtimescalesbeenidentifiedandexplained(i.e.whenconsidering disposingorbuyingabusiness)? Hastheclientbeenappraisedoftheneedforvariousguarantees/undertakings/warranties andconfidentiality? Where relevant, has the client been advised of the need for a business plan, cash flow forecast,operatingbudgetandprofitgrowthforecast? Havetheclientsassetsbeenanalysedandassessedregardingfinancing anacquisitionor proceedsofadisposal? Havetherelevantlegalstructuresbeendiscussedandagreed? Havetherelevantlegal/taxationconstraintsbeendiscussed/agreed(e.g.employmentlaw/ socialsecuritylaw/companylaw)? Havetheemployeerelationsimplicationsbeenconsidered?

10.10 10.11

Haverelevanttaxmitigationoptionsbeenidentified,discussedandagreed/recommended? Havetherelevantoptionsforfinancing(saleorpurchase),consideration(saleprice/value) 10.12 and payment (timing and amounts) been identified, considered and agreement reached/recommendationmade(whereappropriate)? Do the solutions recommended clearly meet the clients needs and objectives as fully as 10.13 M possible? 10.14 M Arethesolutionsrecommendedgenerallytechnicallyaccurate?

11:BusinessRiskManagement/Insurance
11.1 11.2 11.3 M Haveneedsandobjectivesbeenstatedandquantified/qualified? Have existing risk management strategies or insurance policies been analysed and taken intoaccount(includingsocialsecurityorpensions)? Havethesolutionsbeenexplained,e.g.intermsofproviding:
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 acapitalsumtorepaydebt; acapitalsumforaspecificpurpose; areplacementregularincomestreambyinsurance? Are the solutions clearly explained to the client stating why recommended and how it solvestheproblem? Have appropriate qualifications, caveats and implications been stated (e.g. taxation, underwriting,legalorgenericcontractlimitations)? Aretheproposedsolutionsaffordablewithinparametersagreedwiththeclient? Does each of the proposed solutions meet the clients agreed objectives as fully as possible? Dothesolutionsmatchtheclientsagreedinvestmentriskattitude(whererelevant)?

11.4 11.5 11.6 11.7 11.8 11.9

Isownershipofpolicies/assetsandmethodofholding(e.g.trusts,etc.)clearlyexplained? Does the recommended portfolio/ recommendations clearly meet the clients agreed 11.10 M objectivesandneeds? 11.11 M Arethesolutionsgenerallytechnicallyaccurate?

12:EmployeeBenefits
12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 M Havebenefitdesignoptionsbeenconsideredagreedandstated,quantified/qualified? Hasthepopulation/populationstobeincludedbeenclearlyidentifiedandqualified? Hasananalysisbeencarriedoutofincomeandcapitalrequiredtoachievecurrentorfuture objectives,needsorgoalsandthetimescale(s)applicable? Haveexistingoranticipatedassetsorcapitalbeentakenintoaccount? Hasreferencebeenmadetospecificobjectives(e.g.pensionfunding,sickpayscheme)and individualsolutionsdesignedandintegratedtomeetthesevariousobjectives? Haveassumptionsbeenstatedandaretheyreasonedandreasonable? Haveemployeerelationsbeenconsidered(whereappropriate)? Havesocialsecuritybenefitsandcontributionsbeentakenintoaccount? Have legal requirements been taken into account (e.g. member nominated trustees or similar)? Havetaxationconsiderationsbeentakenintoaccountforemployer/employee/trustees?

12.10 12.11

Aresolutionsconsistentwiththeclientsagreedinvestmentattitude? Canthecapitalorexpendituresfromincomerequiredbeaffordedbasedontheclients 12.12 agreedcashflow/expenditurepattern? Have appropriate mortality and morbidity risks been taken into account and 12.13 quantified/qualified? 12.14 Havesolutionsbeenrecommendedtotheseriskswhererequired? Haveanyrelevantimplications,limitationsorlegal/taxationconditions/consequencesbeen 12.15 statedandexplained? Do the recommended portfolio/ recommendations clearly meet the clients agreed 12.16 M objectivesandneedsasfullyaspossible? 12.17 M Arethesolutionsgenerallytechnicallyaccurate?
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4.CFPCMCertificationKnowledgeSyllabus
CFP Certification candidates must provide evidence that they have met the knowledge and understandingrequirementssetoutintheKnowledgeSyllabus(below).Atleastthreeyearsrelevant financialplanningexperiencemustbedemonstratedinadditiontotheknowledgerequirement. FinancialPlanningisamultidisciplinaryprofession.Thereforeanyprofessionalqualificationrelevantto personal and/or business Financial Planning will normally be considered asevidence of meeting all or part of the CFP Certification Knowledge Syllabus requirements. However, the following qualifications are deemed sufficient (*as long as specific examination subjects are passed), to meet the knowledge requirementsinconjunctionwiththeCFPCertification: TobeeligibletoembarkontheprocessofbecomingaCFPpractitionertherearethreecompulsory criteriawhichmustbemet: Aminimumofthreeyearsexperienceoffinancialservices AnFSSCAppropriateExaminationforAdvisingonPackagedProducts Anexaminationpassineachofthefollowingareas: Taxation FinancialPlanning AdvancedTechnicalArea Forfurtherdetails,pleaseseetheIFPwebsite: http://www.financialplanning.org.uk/planners/cfp_entry_requirements.cfm

4.1 TheFinancialPlanningProcess

4.1.1Candidatesshouldknow,understandandbeabletoapplytheFinancialPlanningprocessand
howitdiffersfromthefinancialadvisoryprocess. TheFinancial Planningprocess: gatheringdata establishingclientobjectives processingandanalysinginformation recommendingacomprehensiveplan implementationoftheplan reviewingtheplan Thefinancialadvisoryprocess: gatheringdata establishingclientobjectives processingandanalysinginformation
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 theskillsrequiredtogatherandrecorddata theskillsrequiredtoagreeandrecordclientneeds,objectivesandpriorities thedifferencebetweenobjectives,goalsandneeds theneedforgoodwritten,verbalandnonverbalcommunication theneedtoquantifyandqualifydata theneedtoestablishattitudinaldata,especiallyregardinginvestment,morbidityandmortality risks theneedtolinkriskattitudetotimeandpurpose recommendingasolution implementingthesolution

4.1.2Candidatesshouldknow,understandandbeabletoapply:

4.1.3Candidatesshouldknowandunderstandtheimportanceofandbeabletoapply:
experience legalknowledge taxationknowledge productknowledge professionalcontacts interpersonalskills tosynthesiseasolutiontomeetaclientsagreedneeds,prioritiesandaspirationsasfullyas possible

4.1.4Candidatesshouldknow,understandandbeabletoapplytheFinancialPlanningprocessto
differenttypesofclient: individuals soletraders/partnerships companiesandothercorporatebodies trustfundsandothercollectiveentities

4.2PersonalFinancialPlanning

4.2.2 Candidates should know, understand, and be able to apply the following to the level of
performingrelativelystraightforwardcomputationsbasedongivendata: IncomeTax residenceanddomicilestatus schedules rates reliefs allowances paymentdates
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 taxableincometypes nontaxableincometypes benefitsinkind earnedandunearnedincome taxationdeductedatsource taxcredits

NationalInsurance contractedinliabilityforemployerandemployee contractedoutliabilityforemployerandemployee selfemployedliability benefitsinkind voluntarycontributions CapitalGainsTax(CGT) residenceanddomicilestatus gainsandlosses indexation reliefsandallowances exemptions basisofchargeandassessment paymentdates InheritanceTax(IHT) residenceanddomicilestatus basisofcharge chargeablelifetimegifts potentiallyexempttransfers reliefsandallowances exemptions theNilRateBand nonchargeablelifetimegift

4.2.2 Candidates should be able to demonstrate an awareness and application of the taxation
aspectsofthefollowing: socialsecuritybenefitsentitlementfortheselfemployedandemployees rulesforpensionprovisionfortheemployedandemployees taxationofpensionbenefitsandsocialsecuritybenefits taxation of other employee benefits, e.g. Profit Related Pay, Share Option Schemes, Profit SharingSchemesandCafeteriaBenefits/BenefitsinKind typesofhousepurchaseborrowingandrepaymentvehicles marriage,separation,divorceandmaintenance bringupchildren retirementandAgeAllowance
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4.2.3Candidatesshouldbeabletodemonstrateknowledge,understandingandapplicationofthe
taxationofthefollowingtypesofinvestmentsinFinancialPlanning: Onshore depositbasedinvestments governmentbonds(gilts)LocalAuthoritybonds equitiesincludingInvestmentTrusts NationalSavings CorporateBonds insurancepolicies/funds unittrusts/openendedinvestmentcompanies(OEICS) IndividualSavingsAccounts(ISAs) PermanentInterestBearingShares(PIBS) VentureCapitalTrusts EnterpriseInvestmentSchemes Property(includingroomlettings) Lloydsmembership forestry/woodlands employeeshareschemes privatecompanyinvestment commodities derivatives Offshore rollupfunds distributorandnondistributorfunds currencyfunds offshoreinsurance,OEICandUCITfunds

4.2.4Candidatesshouldknow,understandandbeabletoapplythefollowinglegalaspectsof
trusts: definition certainties relationshipbetweentrusteeandbeneficiary rightsanddutiesoftrustees thefunctionofthetrustdeed creationofatrust statutoryandnonstatutorytrusts theprovisionsoftheMarriedWomensPropertyAct1882 theprovisionsoftheTrusteeAct1925 theLawofPropertyAct1925
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 typesoftrust;base,discretionary,powerofappointment,lifeinterest accumulationandmaintenance,express,implied,constructive,overseas/offshore

4.2.5Candidatesshouldknow,understandandbeabletoapplythefollowinginvestmentaspects oftrusts: theprovisionoftheTrusteeInvestmentAct1961 thepowerscontainedwithinthetrustdeed theownershipofassets apportionmentofcapitalandincome dutyofconversion theobligationtoseekinvestmentadvice 4.2.6Candidatesshouldknow,understandandbeabletoapplythefollowingaspectsoftaxation aspectsoftrusts: theapplicationofIncomeTaxtotrusteesandbeneficiaries theapplicationofCapitalGainsTaxtosettlors,trusteesandbeneficiaries theapplicationofInheritanceTaxtosettlors,trusteesandbeneficiaries calculatesimpleexamplesoftaxliabilitiesforeachoftheabove,basedongivendata theabilityoftruststoregisterforVAT theneedfortrustaccountsandtaxreturns 4.2.7Candidatesshouldknow,understandandbeabletoapplythefollowingaspectsofWillsand intestacy: conditionsforavalidWill Intestacyrules postdeathdeedofvariation Willtrusts rightstodisdain jointtenancyandtenancyincommon provisionsoftheAdministrationofEstatesAct1925. 4.2.8 Candidates should know, understand and be able to apply the uses of trusts for tax
mitigationandwiderFinancialPlanningincluding: certaintyofintention avoidanceordeferraloftaxation usesinfamilyprotection usesinbusinessprotection usesininvestmentstrategy usesinfamilyorbusinesssuccessionplanning usesinpensionplanning
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4.2.9 Candidatesshould know, understand and be ableto apply the use of trusts in establishing
andadministering: personalpensionschemes occupationalpensionschemes unittrusts charitabletrustsandeducationaltrusts taxationimplicationsofeachoftheabove

4.2.10 Candidates should know, understand and be able to apply the importance and use of
compoundinterestindetermining: therelativevalueofonesumtoanother,overtime theaccumulationofmoney,overtime thedepreciationofmoney,overtime

4.2.11 Candidates should know, understand and be able to apply the following aspects of
investmentrisk: absoluterisk relativerisk relativeriskovertime(e.g.,inflation) riskinrelationtoobjective clientfocusedriskattitudes theprobabilityofclientshavingdifferentriskattitudesrelatedtodifferentobjectives riskandreturn(capitalandinterest)

4.2.12 Candidates should know, understand and be able to apply the following aspects of
morbidityandmortalityrisk: applicationtolifeandhealthinsurances underwriting lifestyle occupation thenatureoftheriskthatcanbecoveredandmanaged theimportanceoftheclientsattitude

4.2.13 Candidates should know, understand and be able to apply the following aspects of
investmentportfolioconstruction: theprinciplesofmeetingclientsneedsinportfolioconstruction theprinciplesofbalanceconcentrationanddiversification
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 therelevanceoftime,liquidityandtaxationinselectinginvestmentvehicles commoninvestmentterminologyandmarketpractices

4.2.14 Candidates should be able to demonstrate and apply a detailed knowledge of UK and overseasinvestmentvehiclesinportfolioconstruction: depositbasedinvestments bondsandotherfixedinterestsecurities(governmentandcorporate) packagedinvestmentproducts(insuranceandfriendlysocietypolicies) collectiveinvestmentvehicles(OIECS,investmenttrustsandunittrusts) equities(quotedandunquoted) physicalcommodities(includingfutures) derivatives(futuresandoptions) special tax incentives schemes (enterprise investment schemes and venture capital trusts, enterprisezonesetc.) property(commercial,residentialandholiday) Lloydsinsurancemarketmembership collectibles(antiques,worksofart,etc.) principal retirement planning vehicles (personal and employer sponsored pension funds or similar) 4.2.15Candidatesshouldknow,understandandbeabletoapplytheprinciplesof:
benchmarkingofperformanceobjectives performancemeasurement

4.2.16Candidatesshouldbeabletodemonstratetheneedformonitoringandreviewofportfolio againstclientsevolvingneeds,objectivesandpriorities. 4.3RetirementPlanningforIndividualsandBusinesses

4.3.1Candidatesshouldknow,understandandbeabletoapply:
thelegalframeworkofpensionprovisionforindividualsandemployees therelationshipbetweenprivateandstatepensionprovision thetaxationframeworkofpensionprovisionforindividualsandemployees theprinciplesofcarrybackandcarryforwardofunusedpersonalpensionrelief understandtherelationshipbetween: o retirementannuitypolicies; o personalpensionpolicies; o occupationalpensionschemes.

4.3.2Candidatesshouldknow,understandandbeabletoapplytheuseofpensionstosoletraders,
partnersandthoseinnonpensionableemployment.
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4.3.3Candidatesshouldknow,understandandbeabletoapply:
thelegalframeworkforoccupationalpensions thetaxationframeworkforoccupationalpensions thebasisofapprovalandexemptapproval fundingmethodsandlimits;and investmentprinciplesasappliedtopensionfunds.

4.3.4 Candidates should be aware of the relationship between UK State and private pension
provisionandoverseasstateandprivatepensionprovision.

4.3.5Candidatesshouldknow,understandandbeabletoapplyinrelationtooccupationalpension
schemes: constraintsoncontribution theoptionsavailabletoearlyleavers theoptionsonretirement(normal,earlyandlate) thebenefitlimitsonretirement(normal,earlyandlate) thebenefitlimitsondeathinservice

4.3.6Candidatesshouldhaveaworkingknowledgeofandbegenerallyabletoapply:
the method of transfer and restrictions on transfers between occupational schemes, personalpensionsandretirementannuities theprinciplesoftransfervalueanalysis regulatory requirements concerning assumptions, transfers, opt outs and nonjoiners from occupationalschemes theimplicationsofthePensionAct1995 theimplicationsforpensionprovisionofdivorce thebenefitlimitsandoperationofpublicorformerpublicsectorSuperannuation Schemes (e.g.,CivilService) theimplicationsforpensionprovisionofbusinessinsolvency,saleoracquisition

4.3.7 Candidates should know, understand and be able to apply the eligibility, benefits, funding,
contributions,andinvestmentrulesrelatingto: executivepensionplans smallselfadministeredschemes contractedout/inmoneypurchaseschemes contractedout/infinalsalaryschemes Hybridschemes(moneypurchaseorfinalsalaryunderpin)
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 Mainschemeandfreestandingadditionalvoluntarycontributions fundedandunfundedunapprovedretirementbenefitschemes personalpensionandretirementannuity selfinvestedpersonalpension incomedrawdownandphasedretirement

4.3.8Candidatesshouldknow,understandandbeabletoapplytheuseofproductsandthelegal
andtaxationframeworktomeetaclientsretirementplanningrequirements.

4.4FinancialPlanningfortheBusinessOwner

4.4.1 Candidates should know, understand and be able to apply the legal framework for
businesses: soletrader partnership limitedpartnership cooperative unincorporatedassociation companies(privatelimited,limitedbyguaranteeandpubliclimited) theroleofthememorandumandarticlesorpartnershipdeed therightsanddutiesofdirectors/partnersandshareholders theaccountingrequirementsofsoletraders,partnershipsandlimitedcompanies theformationrequirementsofeachtypeofbusinessentity

4.4.2 Candidates should know, understand and be able to apply the taxation framework for businesses: NationalInsurance VAT IncomeTax CorporationTax CapitalGainsTax 4.4.3Candidatesshouldknowandunderstandthelegalandfinancialimplicationsofbankruptcy
andinsolvency.

4.4.4Candidatesshouldbeabletointerpretbusinessaccountsincluding:
balancesheet profitandlossaccount cashflowforecast operatingbudget
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4.4.5Candidatesshouldknow,understandandbeabletoapply:
theprincipalmethodsofraisingfinance thelegal,taxationandfinancingissuesrelatingtoabusinesssaleorpurchase

4.4.6Candidatesshouldknow,understandandbeabletoapplythekeylegal/taxationprinciples
andproductstobusinessriskprotectionincluding: keypersoninsurance shareprotectioninsurance loanprotection partnershipprotection useoftrusts taxation theneedforcommercialinsurance

4.4.7Candidatesshouldknow,understandandbeabletoapplythekeylegal/taxationprinciplesand
productstobusinesssuccessionplanning.

4.4.8 Candidates should be generally aware of the legal and taxation implications of employing
peopleincluding: employeerights antidiscriminationlegislation employerduties

4.4.9Candidatesshouldknow,understandandbeabletoapplytokeytaxation/legalprinciplesand
productstoemployeebenefitsandremunerationplanningincluding: remunerationplanning pensionschemedesign benefitsinkind medical/dentalplans maternity/paternityschemes shareoptionandprofitrelatedpayschemes cafeteriabenefitplans
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