1. Practice Standards

2. Topic 77: Practice Standards Learning Objectives Describe the Practice Standards employed during each step of the financial planning process. Integrate the Practice Standards in developing and communicating a financial plan for a client.

3. Topic 77: Practice Standards Topics Purpose and application Content Enforcement

4. Topic 77: Purpose and Application The purposes of the Practice Standards of the CFP Board are: To assure that the practice of financial planning by those subject to them is based on agreed upon norms To advance professionalism in financial planning, and To enhance the value of the personal financial planning process. They apply only to CFP® certificants who engage in personal financial planning

5. Topic 77: Content Content Give specificity to each of the steps in the financial planning process Do not prescribe a detailed, step-by-step procedure for doing financial planning Not designed to serve as a basis for legal liability

6. Topic 77: Practice Standards 100-1: Defining the Scope of the Engagement 200-1: Determining a Client’s Personal and Financial Goals, Needs, and Priorities 200-2: Obtaining Quantitative Information and Documents 300-1: Analyzing and Evaluating the Client’s Information 400-1: Identifying and Evaluating Financial Planning Alternative(s) 400-2: Developing the Financial Planning Recommendation(s) 400-3: Presenting the Financial Planning Recommendation(s) 500-1: Agreeing on Implementation Responsibilities 500-2: Selecting Products and Services for Implementation 600-1: Defining Monitoring Responsibilities

7. Practice Standard 100-1 100-1: Defining the Scope of the Engagement Identifying the services that will be provided Disclosing any material conflicts of interest Describing how the planner will be compensated Identifying the specific responsibilities of both the planner and the client Deciding on the time frame of the engagement Discussing any other matters needed to define or limit the engagement’s scope

8. Practice Standard 200-1 200-1: Determining a Client’s Personal and Financial Goals, Needs, and Priorities Prior to any recommendations Mutually define Personal and financial goals Needs and priorities Assess Client’s values, attitudes and expectations Determining the client’s time horizons.

9. Practice Standard 200-2 200-2: Obtaining Quantitative Information and Documents Determine and obtain the quantitative information and documents that are sufficient and relevant. Financial resources, obligations and personal situation. If unable to obtain the information Restrict the scope of the engagement Terminate the engagement

10. Practice Standard 300-1 300-1 Analyzing and Evaluating the Client’s Information Personal Assumptions Retirement age, life expectancy, income needs, etc. Economic Assumptions Inflation, tax rates, investment returns, etc. SWOT Strengths Weaknesses Opportunities Threats

11. Practice Standards 400-1 400-1: Identifying and Evaluating Financial Planning Alternatives What is possible? Recognize areas of expertise and limitations Inclusions of other professionals Consider viable alternatives

12. Practice Standards 400-2 400-2: Developing the financial planning recommendations May be an independent action or a combination of actions Be consistent with previous steps of the financial planning process May differ from those of other practitioners or advisers, yet each may reasonably meet the client’s goals, needs and priorities.

13. Practice Standards 400-3 400-3: Presenting the financial planning recommendations Assist the client in understanding Current situation The recommendation itself Its impact on the ability to meet the client’s goals, needs and priorities. Avoid presenting the practitioner’s opinion as fact. Revisit conflicts of interest Do they meet client’s expectations Is the client willing to act?

14. Practice Standard 500-1 500-1: Agreeing on Implementation Responsibilities Identifying activities necessary for implementation Determine the division of activities between the practitioner and the client Refer and coordinate with other professionals Disclose conflicts of interest, sources of compensation or material relationships if not done prior Indicate the basis on which the practitioner believes the other professional or adviser may be qualified. Share only authorized information Selecting and securing products and/or services. Further disclosure if necessary

15. Practice Standard 500-2 500-2: Selecting Products and Services for Implementation Investigate products or services that reasonably address the client’s needs. Suitable to the client’s financial situation and consistent with the client’s goals, needs and priorities. Must be in the client’s best interest. Products and services may differ from those of other practitioners or advisers. Must reasonably meet the client’s goals, needs and priorities. Further disclosure if necessary

16. Practice Standard 600-1 600-1: Defining Monitoring Responsibilities What is to be monitored by the planner The conditions and frequency the monitoring will occur The methods of communication to the client Source of compensation May require a new agreement letter and further disclosure

17. Topic 77: Enforcement Non-conformity of the Practice Standards can lead to same penalties as Code of Ethics violations