Welcome

Expectations of Students Before class Read relevant materials and complete Plan Development boxes Remedial review not included but you have access to materials Attend class, bring your questions, and actively participate, or listen to recordings. Class is based on practical application and strategies Call if you have questions!

For Optimal Performance The quality of your Internet-streamed session depends on your connection: Reboot your PC before each session to refresh memory. Directly connect to the Internet. Delete cookies and temporary Internet files each week. Close other programs while attending your live online class. Before each session, in your live class, go to Meeting then Audio Setup Wizard to adjust your settings. These steps resolve 90% of issues.

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Session 1 Financial Planning Process & Financial Computations CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Financial Plan Development Course Session 1 Financial Planning Process & Financial Computations

Start Recording This class is being recorded so you may review it at a future time.

Meet the Clients Our clients: David & Nancy Dudella David, executive Nancy, part-time assistant, early 40s one daughter, freshman in college no other family Your client: Jim & Anne Dowler Jim, manager Anne, administrator 5-year-old son, Matt Live near parents

How it Will Work Dudella: I will Dudella: You will Dowler: You will Review case/raise potential issues Discuss/illustrate recommendations Show completed plan development sections so you can compare Provide sample executive summary Illustrate plan presentation Dudella: You will Discuss issues and recommendations in class Review calculations on Dudella so you know how to do Dowler case Dowler: You will Complete plan development sections to stay on track Build your executive summary modeled after Dudella Submit two weeks prior to oral

Practical Process of Real Planning Complete plan in software Develop final recommendations Test out recommendations Summarize Goals and Issues, net worth, cash flow, assumptions for client review Enter info in software Back to client for missing info Fact Find Engagement Letter First Meeting Review and repeat Implement Present to clients First meeting: gather some information and make agreement for engagement Craft engagement letter & needed information list Conduct fact-finding session. Enter information into software ASAP & identify issues Send summary of goals and issues, net worth, cash flow, assumptions and list of still missing information so client is auditing your input. 99% of time, client WILL come back with changes. Correct entry issues and analyze. Software only analyzes big issues. Use checklists to avoid missing important issues. Identify additional needed information or ideas you want the client to be considering. Have more than one approach so the client feels they have control. (Learn about choice architecture!) Identify which issues to address and which to postpone based on cash flow and impact on clients’ lives. Play “what if” with solutions. Try them out in the software by copying the plan. (It’s critical to understand the software difference between scenarios and copying.) See which strategy has the greatest impact on financial security and retirement. Think about why the client may object and utilize software to show the difference to the client if needed. Finalize strategies and write recommendations packet. Incorporate praise and areas they don’t need to worry about first. Call clients prior to meeting to find out if anything has changed. This “primes” the client for meeting and lets you confirm both will be there (if married) and if the second appointment time still works. Ask if there are any additional questions or concerns that they have thought about that you should consider. The planning process gets clients thinking, which can lead to changes in their goals and new questions. Avoid starting to present your plan, just to find out they are simplifying their lives as a result, perhaps selling their house and moving!

CFP Board of Standards Checklist Working through the materials, ask yourself if you are complying with these rules. Evaluate whether the Dudella case is complying!

CFP Board Checklist continued Learn the specific Practice Standards and requirements. A significant number of questions on the comprehensive test are on this component.

Meet the Dudella Family Case studies don’t provide all the answers you receive in real life; learn to live with what you get. What is important here? Goals? Concerns? Red flags? Refer to Appendix A for the full document for easy reading!

Income The pay stub will tell you more. If you ask David and Nancy, you’ll hear that David makes $120,000 and Nancy makes around $30,000. The pay stub will tell you more. Get W2s in addition to the pay stubs for clearer picture. Even then, you’ll get surprises. What does the pay stub tell you? What questions do you have? What calculations do you need to do? Can you calculate taxes from this? Goals? Concerns? Red flags?

Dudella Expenses What calculations do you need to do? What’s missing? What story does this tell? Goals? Concerns? Red flags?

Net Worth Net worth compiled through questions and statements they provide. What does it tell you? What calculations do you need to complete? Goals? Concerns? Red flags?

Dudella Risk Management & Benefits Questions? What discussions are needed before you complete their plan? What assumptions do you need to discuss? Goals? Concerns? Red flags? Appendix A 133–134

Next Steps – Appendix A At end of fact-finding session, confirm the information and the process. By reconfirming the process and explaining it in detail again, you will: create a firm client commitment to the process create trust by demonstrating professionalism and that you care about getting it right for them reinforce expectations avoid future problems

Summarizing Goals & Concerns What is the benefit of this process? To you To client To compliance requirements What are the drawbacks? When you read this, can you deliver what is promised? Pages 135-137

Dudella Assumptions Page Why give these to the client? What questions or concerns would you have about these assumptions? How much would changing inflation change your plan?

Review Your Clients’ Letter (pp. 4-5) What issues will you address? (Hint: use this as a checklist to make sure you address them all in your executive summary!) What questions do your clients’ financial facts raise for you? What questions do you have about the assumptions you will be making? Raise your questions about the base case information now!

Next Class Be prepared to discuss TIP Chapter 2: Client Cash Flow section Plan Development Boxes 1 – 5 * Debt (pp. 27 - 29) * Mortgage (p. 31) * Cash Flow (p. 32) * Savings (p. 34) TIP Work through these sections prior to the class. You will be able to get feedback and make sure you are on track!

CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Financial Plan Development Course Session 1 End of Slides