E G A D I M

Establish client/planner relationship

Gather client data/goals/expectations

Analyze client status

Develop financial plan

Implement financial plan

Monitor financial plan

Recession definition & duration

 Depression duration

Recession definition = 6 months of declining GDP

Recession duration = 6 months / 2 quarters

Depresssion duration = 18 months / 6 quarters

Recession: 6 Months / Depression: 6 Quarters

Federal Reserve Goals

1)  Maintain economic growth

2)  Maintain price levels

3)  Maintain employment levels

Federal Reserve Tools to influence

money supply and interest rates:

1) Reserve Requirement - % of deposits held in cash

2) Discount Rate - Overnight interest rate to banks

3) Open Market Operations - Buy/Sell Treasuries

4) Excess Reserves - Amounts held @ the Fed in excess of Reserve Requirement

Debts NOT Discharged via Chapter 7:

Student loans

3 years of back taxes

Alimony

Child Support

Debts related to fraud

Assets exempt from creditors in a bankruptcy:

1) Contributory traditional & Roth IRA's, up to $1 million

2) Qualified plans & converted IRA's, unlimited exemption

Bankruptcy types:

Chapter 7 = Liquidation

Chapter 11 = Reorganization

Chapter 13 = Adjustment of Debt

Debt payment ratio limits:

Consumer debt: <20% of NET income

Housing debt: <28% of GROSS income

Total debt: <36% of GROSS income

Housing expense ratio:

PITI (Principal+Interest+Taxes+Insurance)

Monthly Gross Income

Should be < 28%

Housing & Other Debt Ratio:

PITI + Other Recurring Debt Payments

Monthly GROSS Income

Should be < 36%

Pell GRANT features:

1) Need based

2) Expected Family Contribution determines amount

3) Only undergraduates qualify

Mortgage interest deduction limits:

1)  Primary residence: Max loan =$1,000,000

2)  HELOC:  Max loan = $100,000

Lifetime Learning Credit -

Features & Limitations:

Tax credit of 20% up to $10,000 of qualified expenses.

Maximum credit is $2,000 per year per family.

Credit can be claimed unlimited number of years.

Code of Ethics Principles:

Integrity

Competence

Objectivity

Confidentiality

Fairness

Professionalism

Diligence

I Can Obtain CFP Designation!

SEC Registration Exceptions:

Teachers

Accountants

Brokers

Lawyers

Engineers

TABLE

SEC Registraton Exemptions:

< Fifteen clients

Insurance companies

National Exchange Reps

Home State

FINES - Acronym

(What does the SEC impose on violators?   FINES!)

Accredited Investor Criteria:

1)  $1 million net worth - exclusive of residence

2)  $200,000 income - single

3)  $300,000 income - married

4)  4 year review of net worth to retain accreditation

1-2-3-4 criteria

Risk Management Steps:

Determine objective of program

Identify risk exposures

Evaluate risks & probability of loss

Determine alternatives to manage risk

Implement the program

Evaluate, monitor & review

D-I-E-D-I-E  (Don't Insure Everything X 2)

Types of Authority / Indicators

Apparent / No Authority Actually Exists

Implied / Business Cards, Letterhead, Co. Sign

Express / Agency Agreement

Life Insurance Dividend Options

Cash TRAP

Cash - Paid to Insured/Owner

Term coverage - One year (5th dividend option)

Reduce premiums

Accumulate @ interest

Paid-up additional coverage

Life Insurance Non-Forefeiture Options

 C - R - E

Cash - Reduce - Extend

Cash Surrender Value

Reduced Paid-Up

Extended Term

HSA Maximum Contribution

$3,050 - Single

$6,150 - Family

$1,000 - Catch up for age 55+

Medicare Deductible / Coinsurance Amounts

$141.50 is the key

$141.50 = SNF Coinsurance / day (days 21-100)

$141.50 X 2 = $283 = Hosp. Coins (days 61 -90)

$283 X 2 = $566 = Hosp. Coins (days 91 -150)

$566 X 2 = $1,132 = Deductible per benefit period

Taxation of Disability Insurance Premiums & Benefits

Premiums paid by EE (post-tax):

Not deductible to EE, Benefits are tax free to EE

Premiums paid by ER:

Deductible to ER, Benefits are taxable to EE

Premiums paid by EE (pre-tax):

Benefits are taxable to EE

Homeowner Insurance - Basic Perils

Acronym & Definitions

VVV WEATHR FSL

VVV = Volcano / Vandalism / Vehicles

WEATHR = Wind / Explosion / Aircraft / Theft / Hail / Riot

FSL = Fire / Smoke / Lightning

Risks / Hazards / Perils

Definitions

Risks - Types of insurable loss (death, car accident, fire)

Hazards - Conditions that increase likelihood of loss

Moral - Character flaw leading to false claims of loss

Morale - Indifference to loss

Physical - Icy roads, poor lighting

Perils - Conditions that caused an actual loss

Social Security - Benefit Reductions

for Early Retirement @ Age 62

Full retirement age = 65 (Born <1938) = 20% Reduction

Full retirement age = 66 (Born '43 - '54) = 25% Reduction

Full retirement age = 67 (Born >1960) = 30% Reduction