AFP case studies
AFP · Put your knowledge to work in context.
The AFP (Associate Financial Planner) designation belongs to the family of financial planning credentials administered in national jurisdictions by members of the global Financial Planning Standards Board network. In India, that body is FPSB India, which describes itself as dedicated to setting and maintaining professional standards in financial planning, with a mission to develop qualified professionals and promote ethical financial advice. AFP is positioned as an entry-to-intermediate credential: it suits people building or early in a financial planning career - paraplanners, bank and insurance advisors, relationship managers, and graduates moving toward the full CFP certification - who need demonstrated competence before taking on holistic client work. Preparation is built on two pillars. Topics on this exam: Financial Planning and Ethics and Professional Standards. The AFP case studies are 5 cases and about 2,240 words.
1The Rollover Recommendation
Your client, Maya, age 52, has $320,000 in her former employer's 401(k). She wants to roll it into an IRA to access a broader range of investments. The 401(k) has low-cost institutional funds (average expense ratio 0.10%) and a stable value fund yielding 3.5%. The IRA you recommend has an average expense ratio of 0.75% and an advisory fee of 0.80% annually.
501 words, about 3 min2The Undisclosed Referral Fee
You are a financial planner. A local attorney, John, frequently refers clients to you for financial planning. In a casual conversation, John mentions that he would appreciate a 'thank you' for the referrals and suggests that you pay him $500 for each client he sends who becomes a client. You estimate that John has referred 10 clients in the past year, and 6 became clients.
366 words, about 2 min3The Aggressive Allocation for a Near-Retiree
Your client, Robert, is 63 and plans to retire in 2 years. He has 800,000 in his 401(k) and 200,000 in a taxable brokerage account. His current allocation is 80% stocks and 20% bonds. He states that he wants to maximize growth because he is worried about outliving his money.
524 words, about 3 min4The Conflicting Gift
You are a financial planner. A long-time client, Mrs. Jones, gives you a 5,000 gift card to a luxury store as a thank-you for your help over the years. Your firm's policy allows accepting gifts up to 100 in value.
351 words, about 2 min5The Suitability of an Annuity Recommendation
Your client, Lisa, age 58, has 500,000 in a variable annuity (VA) with a guaranteed minimum income benefit (GMIB) rider. The VA has an annual fee of 2.5% (including the rider). She is considering surrendering the VA to invest in a lower-cost portfolio of index funds (estimated 0.20% expense ratio). The surrender charge is currently 5% and decreases by 1% each year until it disappears in 5 years.
498 words, about 2 min