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CFP Cheat Sheet

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Professional Conduct

  • 8% of exam
  • Code Duties Fiduciary Duty Conflicts Conduct Picker

Planning Principles

  • 15% of exam
  • Planning Process Statements Cash Flow TVM

Risk Management

  • 11% of exam
  • Risk Transfer Life Insurance Disability Insurance Picker

Investment Planning

  • 17% of exam
  • Risk Measures Portfolio Bonds Asset Location

Tax Planning

  • 14% of exam
  • Tax Basics Deductions Capital Gains Entity Tax

Retirement Planning

  • 18% of exam
  • Plan Types Distributions Social Security Retirement Picker

Estate Planning

  • 10% of exam
  • Titling Trusts Transfer Tools Estate Documents

Planning Psychology

  • 7% of exam
  • Biases Money Conflict Communication Crisis Events

Quick Facts

  • Exam CFP
  • Credential Certified Financial Planner
  • Questions 170
  • Time 6 hours
  • Sections Two 85-question halves
  • Break 40 minutes
  • Result Pass/fail
  • Provider Prometric
  • Windows March July November

Fiduciary LCF CO

  • Loyalty Care Follow
  • Loyalty: client first Care: prudent Follow: lawful instructions

Fiduciary vs Suitability CO

Fiduciary

  • Client first
  • Care duty
  • Conflicts managed

Suitability

  • Appropriate product
  • Lower bar
  • Product focused
  • Best interest wins

Conduct Picker CO

  • Personal recommendation → Fiduciary duty ( Financial advice )
  • Material conflict → Disclose manage ( Or avoid )
  • Beyond competence → Refer specialist ( Still monitor )
  • Client privacy → Protect data ( Limited sharing )
  • Illegal request → Decline assist ( Follow law )
  • Planning advice → Engagement terms ( Define scope )

Code Duties CO

  • Loyalty Client first
  • Care Prudent professional
  • Instructions Reasonable lawful orders
  • Integrity Honest conduct
  • Competence Know limits
  • Diligence Timely service
  • Confidentiality Protect information
  • Professionalism Reflects positively

Seven Steps PR

  • Understand Identify Analyze Develop Present Implement Monitor
  • Data before advice Monitor after implementation

Planning Process PR

  • Understand Circumstances
  • Identify Select goals
  • Analyze Current course
  • Develop Recommendations
  • Present Explain advice
  • Implement Execute plan
  • Monitor Update progress

Statements PR

  • Assets What owned
  • Liabilities What owed
  • Net worth Assets minus debts
  • Cash inflow Money received
  • Cash outflow Money spent
  • Surplus Positive cash flow
  • Liquidity Cash access

Risk Actions RI

  • Avoid Reduce Retain Transfer
  • Avoid: remove Reduce: control Retain: self-insure Transfer: insure

Insurance Picker RI

  • Temporary income need → Term life
  • Permanent estate need → Permanent life
  • Lost earnings risk → Disability
  • Custodial care risk → LTC
  • High liability risk → Umbrella
  • Longevity risk → Annuity

Risk Transfer RI

  • Avoid Eliminate exposure
  • Reduce Lower severity
  • Retain Self-insure
  • Transfer Buy insurance
  • Deductible Client absorbs first
  • Coinsurance Shared payment
  • Elimination Waiting period

Insurance RI

  • Term life Temporary death benefit
  • Whole life Permanent cash value
  • Universal life Flexible premiums
  • Disability Income replacement
  • LTC Custodial care
  • Umbrella Excess liability
  • Annuity Longevity hedge

Tolerance vs Capacity IN

Tolerance

  • Emotional comfort
  • Questionnaire driven
  • Can change

Capacity

  • Financial ability
  • Goal driven
  • Constraint based
  • Feelings vs ability

Risk Measures IN

  • Alpha Excess return
  • Beta Market sensitivity
  • R-squared Benchmark fit
  • Duration Rate sensitivity
  • Sharpe Risk-adjusted return
  • Standard deviation Total volatility
  • Correlation Movement relationship

Portfolio IN

  • Allocation Asset mix
  • Diversification Reduce unsystematic risk
  • Rebalancing Restore targets
  • Taxable Tax drag matters
  • Traditional Tax-deferred
  • Roth Tax-free qualified
  • Concentration Single-position risk

Deduction vs Credit TA

Deduction

  • Cuts income
  • Bracket dependent
  • Before tax

Credit

  • Cuts tax
  • Dollar impact
  • After calculation
  • Income vs tax

Tax Basics TA

  • Gross income All taxable income
  • AGI Income after adjustments
  • MAGI Modified AGI
  • Deduction Lowers taxable income
  • Credit Lowers tax owed
  • Basis Tax cost
  • Carryforward Future tax use

Capital Gains TA

  • Short-term Ordinary rates
  • Long-term Preferential rates
  • Wash sale Loss disallowed
  • Step-up Death basis reset
  • Recapture Depreciation taxed
  • Harvesting Realize losses
  • NII tax Investment surtax

Traditional vs Roth RE

Traditional

  • Pretax entry
  • Taxable exit
  • RMD applies

Roth

  • After-tax entry
  • Qualified tax-free
  • No owner RMD
  • Tax now or later

Retirement Picker RE

  • Employer plan match → Contribute first
  • High current bracket → Traditional
  • Low current bracket → Roth
  • Self-employed owner → SEP or solo
  • Guaranteed income gap → Annuity option
  • Required withdrawals → RMD schedule

Plan Types RE

  • 401(k) Employee deferral
  • 403(b) School nonprofit
  • 457(b) Government deferred comp
  • SEP IRA Employer funded
  • SIMPLE Small employer
  • Defined benefit Promised pension
  • RMD Required distribution

Estate Order ES

  • Title Beneficiary Will Trust Tax
  • Title: ownership Beneficiary: contracts Will: probate Trust: control

Will vs Trust ES

Will

  • Probate controls
  • Names guardian
  • Death only

Trust

  • Avoids probate
  • Manages assets
  • Lifetime control
  • Court vs contract

Estate Documents ES

  • Will Probate transfer
  • Trust Managed ownership
  • POA Financial agent
  • Health proxy Medical agent
  • Living will Care instructions
  • Beneficiary Contract transfer
  • TOD Account transfer

Beneficiary vs Titling ES

Beneficiary

  • Contract transfer
  • Overrides will
  • Account specific

Titling

  • Ownership form
  • Probate impact
  • Creditor impact
  • Designation vs ownership

Behavioral Finance PS

  • Loss aversion Losses hurt more
  • Anchoring First number sticks
  • Recency Recent events dominate
  • Confirmation Seek agreement
  • Overconfidence Overrate skill
  • Framing Presentation changes choice
  • Crisis Decision capacity impaired

Common Traps

Advice vs marketing

  • Advice triggers fiduciary ≠ Marketing stays general

Disclosure vs management

  • Disclosure informs client ≠ Management reduces conflict

AGI vs MAGI

  • AGI starts limits ≠ MAGI modifies eligibility

Return vs risk

  • Alpha measures excess ≠ Beta measures market risk

Will vs beneficiary

  • Will handles probate ≠ Beneficiary controls contract

Roth vs traditional

  • Roth taxes entry ≠ Traditional taxes exit

Tolerance vs capacity

  • Tolerance is comfort ≠ Capacity is ability

Last Minute

  • 1. Domains: 8 total
  • 2. Retirement is largest
  • 3. Fiduciary for financial advice
  • 4. Conflicts: disclose and manage
  • 5. Use seven planning steps
  • 6. Net worth: assets minus debts
  • 7. Credit beats deduction
  • 8. Duration tracks rate sensitivity
  • 9. Beneficiaries can override wills
  • 10. Crisis impairs decisions