Hi I am Jaggu. I am CA student. May I know, What types of activities does CFP Board consider "Material Elements of Financial Planning"?
0
0
Answer Now
Comment
Report
1
Answers
Important Note โ Preparing for CA Final?
CAKART provides Indias top faculty each subject video classes and lectures โ online & in Pen Drive/ DVD โ at very cost effective rates. Get video classes from CAKART.in. Quality is much better than local tuition, so results are much better.
Watch Sample Video Now by clicking on the link(s) below โ
For any questions Request A Call Back
CFP Boardโs Disciplinary and Ethics Commission provides the following guidelines to help CFPยฎ professionals determine when their activities are considered financial planning or material elements of financial planning.
The primary factors on which CFP Board relies for determining whether "material elements" exist are:
The client's understanding and intent in engaging the CFPยฎ professional
The degree to which multiple financial planning subject areas are involved
The comprehensiveness of data gathering
The breadth and depth of recommendations
Activities that CFP Board would likely consider to be material elements of financial planning include:
Conducting detailed data-gathering regarding multiple aspects of a client's financial situation
Analyzing a client's data and making recommendations across multiple financial planning subject areas
Providing investment advisory services as defined by the applicable State or Federal regulators
Activities that CFP Board would not likely consider to be material elements of financial planning include:
Opening an account or completing an application
Fact-finding to meet regulatory requirements for suitability such as the "Know Your Customer" rules
Solely providing brokerage and/or insurance products or services
Engaging in activity solely related to the sale of a specific product
Acting as a mortgage broker without providing any other financial services
Completing tax returns without providing any other financial services
Teaching a financial class or continuing education program
The above are examples and should not be considered an all-inclusive list.
These guidelines are designed to be helpful to CFPยฎ professionals in reviewing their activities and determining whether they are providing material elements of financial planning. CFP Boardโs Disciplinary and Ethics Commission also relies on these guidelines when reviewing allegations of misconduct by CFPยฎ professionals.
Question 1-9: How can CFPยฎ professionals determine when a specific service or activity rises to the level of financial planning?
Under CFP Boardโs definition of โfinancial planning,โ as found in the Standards, CFPยฎ professionals are able to determine when they are providing services using the material elements of financial planning by considering, among other things, the degree to which multiple financial planning subject areas are involved. While it is more likely for financial planning to exist when multiple subject areas are involved, in some circumstances a financial planning engagement may exist even when a single subject area is involved.
CFPยฎ professionals should consider whether the clientโs understanding and intent in engaging the CFPยฎ professional would give the client reason to believe the services provided are financial planning. CFPยฎ professionals should also consider the comprehensiveness of their data gathering with a client and the breadth and depth of their recommendations to a client.
When determining whether a financial planning engagement exists, the entirety of a client relationship should be examined. These questions may guide that determination:
Is the CFPยฎ professional involving the steps of the financial planning process in the services provided?
How many financial planning subject areas are involved to meet the client's goals?
With respect to the services provided, what did the CFPยฎ professional communicate to the client?
Financial planning often does not occur in neat boxes but is a process that progresses and evolves over the course of a financial plannerโs relationship with a client. For example, answering a question of a specific nature โ such as โHow much money do I need to set aside each month to send my two-year-old to Notre Dame in sixteen years?โ โ would probably not be considered financial planning. However, answering a broader question that involves multiple aspects of a clientโs situation โ such as โHow much do I need to save so Iโll have a secure retirement?โ โ would likely rise to the level of financial planning because of the expansiveness of the financial considerations involved.