300-1: Analyzing and Evaluating the Client's Information
A financial planning practitioner shall analyze the information to
gain an understanding of the client's financial situation
and then evaluate to what extent the client's goals,
needs and priorities can be met by the client's resources
and current course of action.
Explanation of this Practice Standard
Prior to making recommendations to a client, it is necessary
for the financial planning practitioner to assess the client's
financial situation and to determine the likelihood of reaching
the stated objectives by continuing present activities.
The practitioner will utilize client-specified,
mutually agreed upon, and/or other reasonable assumptions.
Both personal and economic assumptions must be considered
in this step of the process. These assumptions may include,
but are not limited to, the following:
- Personal assumptions, such as: retirement age(s), life expectancy(ies),
income needs, risk factors, time horizon and special needs; and
- Economic assumptions, such as: inflation rates, tax rates and
Analysis and evaluation are critical to the financial
planning process. These activities form the foundation for determining
strengths and weaknesses of the client's financial situation and
current course of action. These activities may also identify other
issues that should be addressed. As a result, it may be appropriate
to amend the scope of the engagement and/or to obtain additional
Original version, January 1, 2000. Updated version, January 1, 2002.
Relationship of this Practice Standard to CFP Board's Code of Ethics and Rules of Conduct
This Practice Standard relates to CFP Board's Code of Ethics
and Rules of Conduct through Principle 2 - Objectivity,
Principle 3 - Competence, Principle 7 -
Diligence and Rules 1.4, 4.1, 4.4, 4.5.
Anticipated Impact of this Practice Standard
Upon the Public
The public is served when objective analysis and evaluation
by a financial planning practitioner results in the client's
heightened awareness of specific financial planning issues.
This Practice Standard
is intended to increase the likelihood
of achieving the client's goals and objectives.
Upon the Financial Planning Profession
Objective analysis and evaluation enhances the public's
recognition of and appreciation for financial planning
and increases the confidence in financial planning
practitioners who provide this service.
Upon the Financial Planning Practitioner
Analysis and evaluation helps the practitioner establish
the foundation from which recommendations can be made that
are specific to the client's financial planning goals, needs
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