Financial Planning Process and Professional Standards
What the domain tests
This domain tests whether you can run a repeatable, documented planning engagement and behave like a professional, not a product salesperson. Expect questions on the six-step process, scope, disclosure, fiduciary duty, and the limits of the RFP designation.
Core process
- Establish and define the relationship: written engagement, scope, fees or commissions, client responsibilities.
- Gather data: goals, cash flow, balance sheet, risk tolerance, tax status, family facts.
- Analyze: ratios, gaps, assumptions.
- Develop and present the plan: alternatives and trade-offs.
- Implement: coordinate with licensed specialists.
- Monitor: review triggers, not a one-time sale.
Professional standards
Competence, confidentiality, integrity, objectivity, disclosure of conflicts, suitability, and documentation. The RFP is a designation; selling insurance, securities, or funds requires the relevant Insurance Commission, SEC, or BSP license.
Worked example
A client is offered a variable life policy. The adviser would earn a 20% commission. The adviser discloses the commission in writing, compares the policy with term insurance plus a low-cost fund, and documents why the VUL fits the client's goal. Reasoning: disclosure removes concealment but does not replace suitability; the recommendation must survive a cost and need comparison.
Traps
Skipping data gathering; implying the RFP is a product license; giving oral recommendations without a file note; promising returns; accepting compensation without disclosure.