CFP Singapore cheat sheet

Six-step financial planning process: establish and define the client-planner relationship; gather client data including goals; analyse the client's current financial situation; develop the financial plan; present the plan; implement; monitor and review.

Fiduciary duty requires the planner to place the client's interest above the planner's own; disclosure of conflicts, remuneration and capacity must occur before advice is given.

Know your client (KYC) rule: collect identity, financial objectives, risk tolerance, time horizon, dependants, income, assets, liabilities and existing insurance before any recommendation.

Suitability versus appropriateness: a recommendation must suit the client's objectives and circumstances, and the product must be appropriate for the client's knowledge and experience.

Singapore regulators relevant to planners: MAS (licensing, conduct, FAA and SFA), CPF Board (retirement schemes), IRAS (tax), SDIC (deposit insurance) and FSC (dispute resolution).

Representatives must hold the relevant CMFAS modules (e.g. M1, M5, M6, M8, M9, M9A, HI) for the products they advise on, and complete continuing professional development hours annually.

Conflict-of-interest handling hierarchy: avoid, then disclose, then manage with controls such as independent review; commission disclosure must be in dollar terms where required.

Documentation rule: the fact-find, risk profile, recommendations, rationale and client acknowledgement form the client file; records are retained per firm policy and regulatory minimum periods.

Review triggers: change in income, marital status, dependants, health, job, tax residency, market conditions or product terms; otherwise a scheduled review at least annually.

Human life value approach: capitalise the client's net future earnings (income less self-maintenance) over the working life, discounted at a chosen rate, to size the death benefit.

Needs approach: death benefit = final expenses + debts + education fund + income replacement for dependants - existing assets - existing insurance.

Emergency fund target is 3-6 months of household expenses; 6-12 months where income is variable or single-income.

Hospitalisation and surgical cover in Singapore is integrated with MediShield Life; Integrated Shield Plans use a deductible and co-insurance, with riders used to reduce the co-payment.

Disability income benefit should cover 60-80% of gross income; key definitions to compare are the occupation definition (own, any, suited) and the waiting or elimination period.

Critical illness plans pay a lump sum on diagnosis of a covered condition; compare number of conditions, severity staging, survival period and multi-claim structures.

Term versus whole life: term has no cash value and lower premium for a given sum assured; whole life or investment-linked plans bundle savings but cost more per unit of cover.

Premium funding principle: match policy currency and term to the liability; avoid over-insuring low-probability risks and under-insuring high-severity ones such as death and disability.

Trust nomination under the Insurance Act lets the policy proceeds bypass the estate and probate; a will can also create a testamentary trust for minor beneficiaries.

Risk-return link: expected return rises with risk; standard deviation measures total volatility, beta measures sensitivity to the market, and the Sharpe ratio divides excess return by standard deviation.

Modern portfolio theory: diversification reduces unsystematic risk; the efficient frontier plots portfolios with the highest expected return for each level of risk.

Asset allocation typically explains the majority of a portfolio's return variability; strategic allocation follows the IPS and tactical tilts are short-term deviations.

Correlation coefficient ranges from -1 to +1; combining assets with correlation below +1 lowers portfolio volatility without lowering expected return proportionally.

Compounding: future value = present value x (1 + r)^n; rule of 72 approximates doubling time as 72 divided by the annual percentage return.

Real return approximately equals nominal return minus inflation; use real returns when the goal is stated in today's dollars.

Time horizon drives risk capacity: short horizons need capital preservation, long horizons can bear equity volatility and illiquidity.

Collective investment schemes in Singapore are authorised or recognised by MAS; ETFs may be listed and traded like shares, and unit trusts are priced at forward NAV.

Performance measurement: time-weighted return removes the effect of cash flows to judge the manager; money-weighted return (IRR) reflects the investor's actual experience.