Blog
Who is an Investment Advisor?
Which of the following individuals need to register with the SEC under the Investment Advisers Act of 1940? Adam who retired last year from a big brokerage house but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing. Belinda who writes weekly investment articles for…
The Myth of High Income Taxes on Social Security Income
Good to Know You and your clients are planning their after-tax retirement income. Your client is apprehensive about how much of their retirement income will be siphoned off by Federal income tax in retirement. For many, if not most, clients you have great news. The combination of Social Security income (SSI) tax breaks and standard…
Book Value versus Market Cap
Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: How is a company’s book value different from the market cap? Instructor Response: Book value is an accounting concept generally based upon the acquisition costs of and the legally binding amounts of liabilities. It is the amount of cash that would be left over if all…
Calculating Realized Compound Yield on a Bond
An investor bought a bond at par that matures in 15 years. The bond pays an annual coupon of $120 and the reinvestment rate is 7%. What is the realized compound yield of this bond? 8.01% 9.71% 11.00% 12.10% CLICK TO REVEAL ANSWER Expand B is the answer. One would anticipate a realized compound yield…
Economic Uncertainty and Client Outlook
CFP® Certificants in the News How will geopolitical conflicts, elevated inflation, staggering Federal deficits, and high interest rates impact client expectations for 2024? Counterintuitively, a March 19, 2024 CFP Board news release announced an “overwhelmingly positive” client outlook for 2024. Referring to the pie chart below, over 9 of every 10 clients of CFP® practitioners…
Social Security Retirement Benefits
Course: Insurance PlanningLesson 10: Social Security Student Question: This question (below) doesn’t quite make sense to me. Could you clarify why the correct answer is D? Robin Elizabeth qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive which of the following? A) Both $250…
Selecting an Appropriate Trust
Which of the following trusts should Jason establish in his Will to provide for his son Gaven’s living expenses until Gaven reaches age 65 if Gaven is currently a 30-year old unemployed aspiring actor? 2503(b) trust 2503(c) trust Crummey trust Totten trust CLICK TO REVEAL ANSWER Expand A is the answer. The 2503(b) trust would…
New CFP Board Sanctions and Guidelines
Good to Know CFP Board is changing the way CFP® Certificants and Candidates for CFP® Certification are disciplined (sanctioned) for violations of the Code of Ethics and Standards of Conduct. The new guidelines will be effective on July 1, 2024. In many cases the new potential sanction is more severe than previous sanctions but in…
Dependent Care Assistance Plan
Course: Retirement PlanningLesson 9: Building Retirement Wealth by Maximizing Fringe Benefits Student Question: Is a Dependent Care Assistance Plan (DCAP) funded by an Flexible Spending Account the same thing as a Dependent Care FSA? If not, could you provide some additional info as to how the two would work together (could an individual utilize both…