RFP Module 1 - Financial Planning Fundamentals and the Planning Process
Module 1 is the foundation module of the RFP programme. It tests whether you can run a planning engagement end to end: the six-step process, the professional standard of care that governs it, and the basic arithmetic that turns a client's wish into a funded goal. Questions at this level are rarely about which product to buy; they are about sequencing, scope, disclosure and documentation.
The process is a sequence, not a menu
- Establish and define the relationship - agree the scope of work, the fee basis, each party's responsibilities, and how long the engagement runs. Put it in writing.
- Gather data - quantitative (cash flow, net worth, policies, tax position, existing retirement savings) and qualitative (goals, priorities, attitude to risk, health, family obligations).
- Analyse and evaluate - test the current position against the stated goals and quantify the gap.
- Develop and present recommendations - offer options with trade-offs, in language the client actually uses.
- Implement - only with client consent, coordinating lawyers, tax agents and product providers as needed.
- Monitor - fix a review cycle and trigger points (job change, inheritance, market shift).
The professional standard
Put the client's interest first, disclose remuneration and any conflict between fee and commission, keep information confidential, stay within your competence, and refer out when a matter belongs to another profession.
Worked example
A 38-year-old says: "I want to retire at 60 with RM500,000 in today's money - which fund should I buy?" The weak answer names a fund. The Module 1 answer reframes the request: 22 years to retirement; at 5% inflation the real target is RM500,000 × 1.05^22 ≈ RM1.46 million. Only then can a required contribution rate and an asset allocation be derived - and only after cash flow, existing assets, EPF or pension entitlements and risk attitude are known. The recommendation comes fourth, not first.
Traps that cost marks
- Recommending a product before data gathering is complete.
- Confusing risk tolerance (willingness) with risk capacity (ability to absorb loss).
- Quoting a future sum without stating the inflation and return assumptions behind it.
- Leaving the engagement scope vague, which invites scope creep and liability.
- Treating the plan as a one-off document and skipping the monitoring step.