CFP Singapore flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fiduciary duty

A legal and ethical obligation to act in the client's best interest ahead of the planner's own, requiring disclosure of conflicts, remuneration and any limitation in capacity to advise.

Know your client rule

The requirement to collect and document a client's identity, objectives, financial position, risk tolerance, time horizon and dependants before making any recommendation or product sale.

Suitability assessment

The judgement that a recommended product fits the client's stated objectives, financial circumstances and risk tolerance, supported by documented rationale in the client file.

Fact-find purpose

A structured record of quantitative data such as income, assets and liabilities plus qualitative data such as goals and attitudes, forming the evidence base for the financial plan.

CMFAS examinations

Singapore modular competency examinations set by the Institute of Banking and Finance that representatives must pass for the regulated activities and products they advise on.

MAS regulatory role

The Monetary Authority of Singapore licenses and supervises financial advisers and capital markets intermediaries, issues conduct rules and enforces the Financial Advisers Act.

Conflict of interest disclosure

Revealing commissions, inducements and other benefits in a form the client can understand, so the client can judge whether advice is influenced by remuneration.

Monitoring and review step

The final planning stage where progress against goals is checked, the plan is updated for changed circumstances and the review schedule is agreed with the client.

Client file retention

Records of fact-finds, risk profiles, recommendations, rationale and client acknowledgements must be kept for the period set by firm policy and regulation.

Financial adviser licence

A licence granted by MAS to a firm to provide financial advisory services; individual representatives act under the firm's licence after meeting entry requirements.

Human life value method

An insurance sizing method that capitalises the insured's net future earnings, being income less personal consumption, over the remaining working life at a discount rate.

Needs approach insurance

Sizing cover as final expenses plus debts plus dependants' income and education needs, minus existing assets and existing insurance proceeds.

Emergency fund rule

Hold three to six months of household expenses in liquid, capital-stable assets; extend to six to twelve months for variable or single-source income.

MediShield Life

Singapore's universal basic national health insurance scheme administered by CPF Board, covering large hospital bills and selected costly outpatient treatments for all residents.

Integrated Shield Plan

A private hospitalisation plan built on MediShield Life, offering higher ward class or private cover, subject to deductibles, co-insurance and premium age bands.

Deductible and co-insurance

The fixed amount the insured pays first and the percentage share paid thereafter; together they determine out-of-pocket cost before the insurer pays the balance.

Own occupation definition

A disability definition that pays a benefit if the insured cannot perform the material duties of their own specific occupation, the most favourable of the three definitions.

Elimination period

The waiting time from disability onset before income benefits begin; a longer period lowers premium but requires larger personal reserves.

Critical illness cover

A lump-sum policy paying on diagnosis of a covered severe condition, with terms varying by condition count, severity staging and survival period requirements.

Term versus whole life

Term insurance provides pure protection with no cash value at lower cost; whole life combines protection with cash value but costs more for the same sum assured.

Trust nomination

A nomination under the Insurance Act placing policy proceeds in trust for named beneficiaries, so the money bypasses the estate and probate on the insured's death.

Insurable interest

A legal requirement that the policyholder would suffer financial loss from the insured event, preventing speculation on another person's life or health.

Standard deviation

A statistical measure of total volatility showing how widely returns vary around their average; a higher figure indicates a wider spread of outcomes.

Beta coefficient

A measure of a security's sensitivity to market movements; a value above one means the asset is expected to move more than the market.

Sharpe ratio

Excess return above the risk-free rate divided by standard deviation, expressing return earned per unit of total risk taken.

Efficient frontier

The set of portfolios offering the highest expected return for each level of risk; portfolios below it are inefficient given available diversification.

Correlation coefficient

A value between minus one and plus one describing how two assets move together; lower or negative correlation improves the diversification benefit.

Rule of 72

A shortcut estimating the years needed to double capital as 72 divided by the annual percentage return, ignoring compounding precision.

Real versus nominal return

Nominal return is stated before inflation; real return adjusts for it and should be used when goals are expressed in today's purchasing power.

Investment policy statement

A written document setting objectives, risk tolerance, asset allocation ranges, liquidity needs, time horizon and review rules that govern the portfolio.

Time-weighted return

A performance measure that removes the effect of client cash flows, used to judge the manager's skill rather than the investor's timing decisions.

Money-weighted return

An internal rate of return that accounts for the size and timing of contributions and withdrawals, reflecting the investor's actual realised experience.