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CFPCM Syllabus
 


CFPCM Certification Education Program Syllabus

Module I - Introduction to Financial Planning
Module II - Risk Analysis & Insurance Planning
Module III - Retirement Planning & Employees Benefits
Module IV - Investment Planning
Module V - Tax Planning & Estate Planning
Module VI - Advanced Financial Planning

Module 1: Introduction to Financial Planning

COURSE DESCRIPTION:
This module would serve as an introduction to Financial Planning. The module would cover the six-step process which includes Financial Planning process, client interactions, time value of money applications, personal financial statements, cash flow and debt management, asset acquisition, education planning, overview of risk management investment planning and retirement planning, special circumstances, plan integration, ethics, and business aspects of Financial Planning.

LEARNING OBJECTIVES:
At the end of this module, a student should be able to:

  • To implement the Financial Planning process, while following the CFPCM Board’s Financial Planning Practise Standards and Code of Ethics and Professional Responsibility.
  • Understand the economic, social, political, and technological environment and be able to determine how Financial Plans should accommodate those environments.
  • Understand the potential goals a client may have, help them enunciate their goals and evaluate strategies to help clients achieve their goals.
  • Understand basic investment topics (including investment types, risk and return, diversification, passive versus active management) and specific investment strategies necessary to allow clients a mechanism to achieve realistic goals.
  • To structure and choose the optimal business format for the delivery of Financial Planning services for services for specific for specific target client markets.

Financial Planning Process

1.Establishing client- planner relationships
 
Explain issues and concepts related to overall Financial Planning process, as appropriate to the client
Explain services provided, the process of planning, documentation required, and disclosure statements
Clarify client’s and CFPCM licensee’s responsibilities and complaint handling mechanisms
 
2.Gathering client data and determining goals and expectations
 
Obtain information from client through interview/questionnaire about financial resources & obligations
Determine client’s personal and financial goals, needs and priorities
Assess client’s values, attitudes and expectations
Determine client’s time horizons
Determine client’s risk tolerance level
Collect applicable client records and documents
 
3.Analyse Client Objectives, Needs and Financial Situation
 
Analysis of relevant information
Need for specialist advice
Issues that require further clarification
 
4. Developing appropriate strategies and presenting the Financial Plan
 
Client's risk tolerance
Assessment of options
Research, analysis and modelling
Draft Financial Plan
Presenting and reviewing the plan with the client
Collaborating with the client to ensure that plan meets the goals and objectives of the client, and revising as appropriate
 
5. Implementing the Financial Plan
 
Assist the client in implementing and recommendations
Coordinate as necessary with other professionals, such as accountants, attorneys, real estate agents, investment advisors, stock brokers and insurance agents
 
6. Monitoring the Financial Plan
 
Monitor and evaluate soundness of recommendations
Review the progress of the plan with the client
Discuss and evaluate changes in client’s personal circumstances, (e.g., birth/ death, age, illness, divorce, retirement)
Review and evaluate changing tax law and economic circumstances
Make recommendations to accommodate new or changing circumstances

General principles
 
7. Regulatory requirements for CFPCM Certificants
 
Registration and licensing
Sources of information
Other relevant legislature requirements
 
8. Ethical and professional considerations in Financial Planning
 
The Code of Ethics and Professional Responsibility
CFPCM licensee’s responsibilities to the public, clients and employers
Client agreements and confidentiality clauses
AFP Practice Standards  

9. Assessment of risk and client behaviour
 
Client attitudes
Client knowledge
Client behaviour
Health of client
Occupation
Hazardous activities
 
10. Cash flow planning
 
Short term cash flow planning
Cash budgeting
Preparing monthly household budgets
Long term cash flow planning
 
11. Budgeting
 
Forecasting
Cash management
Emergency fund planning
Debt management/ users of debt
Liquidity
Monitor and evaluate budgets
Compliance
 
12. Personal use asset management
 
Home equity
Types of mortgages
Buy vs. lease
Refinancing
Hire-purchase, etc.
Consumer loans
Credit cards
 
13. Personal Financial Statement Analysis
 
14. Financial Mathematics
 
Calculate and interpret time value of money
Calculation of annuities
Loan repayment schedule
Inflation- adjusted interest rates
 
15. Economic environment and indicators
 
Inflation/ deflation
Interest rates/yield curves
Equity investment and real return
Government monitory and fiscal policy
The impact of business cycles
Key Indicators – lagging, concurrent and leading
Financial institutions
 
16. Forms of business ownership/ entity relationships
 
Sole proprietorships
Partnerships
Limited liability companies
Trusts
Foundations/ exempt organizations
Professional associations/ corporations
Cooperative societies
Others
 
17. Ways of taking title to property (sole, joint, community, etc.)
 
Characteristics
Implications
 
18. Legal aspects of Financial Planning
 
Contracts
Negotiable instruments
Torts
Professional liability
Fiduciary responsibility
Agency law
Consumer protection
Investor protection

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Module 2: Risk Analysis and Insurance Planning
 
COURSE DESCRIPTION:
This module would cover the knowledge requirements relating to insurance and risk analysis for a CFPCM certification. It introduces students to risk analysis and insurance decisions in personal Financial Planning. Planning for clients’ exposures to mortality, health, disability, property, liability, and long term care risk is emphasized.

LEARNING OBJECTIVES:
At the end of this module, a student should be able to:
 

  • Understand the role of the Financial Planner in the personal risk analysis process.
  • Implement insurance into a comprehensive, integrated Financial Plan.
  • Identify and explain features of private and public insurance available to meet each identified need.
  • Integrate the tax implications into insurance decisions.
  • Evaluate client insurance and risk analysis needs.  



    Risk Analysis

    1. Introduction to Risk Analysis
     
    Meaning of risk
    Basic categories of risk
    Types of pure risk
    Property risk
    Liability risk
    Methods of handling risk
     
    2. Insurance and Risk

    Basic characteristics of insurance – pooling of losses, risk transfer, indemnification
    Requirements of insurable risks
    Difference between insurance and gambling or hedging
    Benefits and costs of insurance to society
    Advantages and disadvantages of insurance in handling risks
     
    3. Risk analysis Process
    Meaning and objective of risk analysis
    Steps in personal risk analysis
    Risk control and risk financing
    Insurance market dynamics and the underwriting cycle
    Loss forecasting using probability and regression analysis, loss distributions, law of large numbers  

    Insurance Concepts

    4. Legal principles in insurance
    Indemnity
    Insurable Interest
    Subrogation
    Utmost good Faith (representation, concealment, and warranty)
     
    5. The Insurance contract
    Requirements of an insurance contract
    Distinct legal characteristics of an insurance contract
    Basic parts of an insurance contract
    Meaning of ‘insured’
    Endorsements/riders
    Common types of deductibles
    Co-insurance – nature, purpose and problems
    Other-insurance provisions
     
    6. Legal Liability
    Intentional Torts
    Absolute Liability
    Law of Negligence
    Special tort liability problems
    Civil justice system
     
    Insurance Policies and Strategies

    7. Identification of life, medical, householders, auto and other property and liability risk exposures
    Gathering data on current insurances
    Identifying client’s insurance needs – life, disability and medical, property, liability, etc.
    Analysis of current insurances
     
    8. Personal property and liability insurance
    Householders insurance
    Motor vehicles insurance
    Motor vehicles insurance and society
    Other liability insurance
    Personal umbrella policy
    Overseas and travel insurance
     
    9. Life insurance needs analysis
    Human life approach
    Needs approach
    Capital needs analysis approach
     
    10. Life insurance policy analysis
    Types of life insurance policies
    Life insurance policy provisions
    Life insurance policy riders
    Types, benefits and risks of life insurance (including use of policy provisions and riders)
     
    11. Life Insurance policy selection
    Determining the cost of life insurance
    Cost comparison method
    Return on savings component
    Taxation of life insurance
    Factors to consider while buying life insurance
     
    12. Annuities
    Difference between annuity and life insurance
    Types of annuities
    Taxation of individual annuities
    Individual Retirement Accounts (IRAs) in the international context
     
    13. Medical insurance
    Medical expenses
    Types of coverage
    Determination of appropriate coverage
    Long-term care insurance
    Personal accident / Disability-income insurance
    Special life insurance benefits
    Factors to consider while buying medical insurance
     
    14. Insurance of business risk
    Key person insurance
    Business assets and liabilities insurance
     
    15. Implementing and reviewing client’s insurance
    Advisor as first-line underwriter.
    Completing application forms
    Frequency of review
    Establishing and implementing changes
    Handling claims and complaints
    Ongoing review
     
    Environment of an Insurance Advisor

    16. Government regulation of insurance
    Insurance Regulatory and Development Authority (IRDA)
    The Insurance Act
    Laws regarding insurance companies in India
    Agents and brokers
    Agency law and procedures for becoming an agent
    Doctrines of waiver and estoppels
    Functions of an agent, personal development and behavioral aspects
    Code of professional ethics and advertisements
     
    17. Insurance Pricing
    Objective of rate making
    Definitions in rate making
    Basis of rating in Indian context
    Rate making in property and liability insurance
    Concept of tariff and market agreement
    Rate making in life insurance
     
    18. Insurance Companies
    Types of insurers
    Rate making
    Underwriting
    Production
    Claim settlement
    Reinsurance
    Investments
    Financial reserves
    Selecting insurance companies

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    Module 3: Retirement Planning and Employee Benefits

    COURSE DESCRIPTION:
    This module would cover the knowledge requirements relating to retirement planning and employee benefits for a CFPCM professional. The emphasis is on the process of wealth creation and the retirement planning and strategies for clients.

    LEARNING OBJECTIVES:
    At the end of this module, a student should be able to:
     

    • Understand the importance of retirement planning for the pre-retirement accumulation period and the actual retirement when the funds are used.
    • Demonstrate the ability to provide a client with an evaluation of retirement needs.
    • Determine legal and tax requirements for a retirement plan to be considered qualified for income tax purposes.
    • Explain types of defined contribution and defined benefits qualified plans.
    • Compare personal savings plans used in the retirement planning process.  
    Introduction to Retirement Planning

    1. Issues in retirement planning
    Importance of retirement planning
    Life expectancy and career stability
    Pre-retirement counseling
     
    2. Wealth creation
    Wealth accumulation and erosion
    Early retirement, living longer than expected, delaying retirement
    Effect of inflation
     
    Retirement Benefits

    3. Types of plans
    Defined benefit plans
    Defined contribution plans
    Defined benefits v/s defined contribution plans, employer’s and employee’s perspectives
    Trends and reasons for transition
    Portability of plans
     
    4. Defined benefit plans
    Gratuity and the Payment of Gratuity Act, 1972
    Leave Salary
    Retrenchment compensation and the Industrial Disputes Act, 1947
    Voluntary Retirement Scheme
    Nature of defined benefit, tax issues in defined benefit plans, age/service requirements, applicability of plans to clients
     
    5. Defined contribution plans
    Statutory provident fund, Provident Fund Act, 1925
    Recognized provident fund, Employee Provident Fund and Miscellaneous Provisions Act, 1952, Employees’ Provident Fund Organization, features, mode of operation and investment norms
    Unrecognized provident fund
    Employees’ Pension Scheme, 1995, features, funding of scheme
    Employees’ Deposit Linked Insurance Scheme, 1976, features, funding of scheme
    Public Provident Fund, features
    Nature of defined contribution, tax issues in defined contribution plans, withdrawal norms, applicability of plans to clients
     
    6. Superannuation and other retirement plans
    Trust funds – fiduciary responsibilities
    Approved superannuation funds
    Employer pension plans and applicability to client
    Private fund managers, investment norms
    Pension plans from mutual funds and insurance companies
    Social security benefits – civil servants, defense personnel and war widows, agricultural workers, destitutes, disaster affected people, etc.
    Retirement plans for self-employed
    Profit sharing plans
     
    7. Group Life and Health Insurance
    Group insurance contracts and characteristics
    Basic underwriting principles and eligibility requirements of group plans
    Group life insurance plans
    Group medical insurance plans and managed care
    Group disability-income plans
    Workers compensation
     
    Retirement Planning and Strategies

    8. Retirement needs analysis
    Determination of financial objectives at retirement
    Estimating retirement expenses
    Calculation of retirement funds available to meet objectives
    Calculation of additional funds needed to meet objectives
     
    9. Retirement income streams
    Employer pension scheme
    Commuted and uncommuted pension, tax treatment, advice on commutation
    Immediate and deferred annuities
    Other income streams and their tax treatment – fixed deposits, rental income, schemes from Indian Savings Organization, monthly income plans
     
    10. Post-retirement counseling
    Investment risk and constraints
    Investment portfolio evaluation, restructuring of investments or debt
    Risk tolerance and attitude to equities
    Client’s health, interests and hobbies, home, vacations, gifting  

    Pension sector reforms

    11. Need for reforms
    Demographic trends
    Coverage of population, organized and unorganized sectors, employment trends
    Un-funded pension liabilities
    Deficiencies in existing schemes
     
    12. Reform proposals
    Project OASIS and its recommendations
    World Bank’s recommendations, multi-pillar reforms, Chilean model
    Pensions Authority
    The role of the state – developmental state (East Asia), welfare state (Europe and North America), minimalist state (Europe and North America)

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    Module 4 : Investment Planning  

    COURSE DESCRIPTION:
    This module includes introduction to Investment Planning, Investment vehicles, investment strategies, Regulation of an investment advisor, Application to clients, etc.
     
    LEARNING OBJECTIVES:
    At the end of this module, a student should be able to:

    • Understand the importance of investment planning in the Financial Planning process, ethical issues for advisors, regulation of advisors.
    • Understand the choice of investment products in terms of their risk-return characteristics.
    • Evaluate investment choices in the context of client's Financial Planning needs.
    • Understand how client investment portfolios are created, monitored and rebalanced based on their objectives and needs.
    • Recommend a portfolio of investment products.
    Introduction to Investment Planning

    1. How investment planning is different from selling investment products
     
    2. Investment risk
    Definition of risk
    Types of risk
    Market risk
    Reinvestment risk
    Interest rate risk
    Purchasing power risk
    Liquidity risk
    Political risk
    Exchange rate risk
     
    3. Measuring risk
    Standard deviation
    Beta

    4. Managing risk
    Diversification
    Diversifiable and un-diversifiable risk
    Product diversification
    Time diversification
    Hedging
     
    5. Returns
    Relationship between risk and return
    Compounding
    Types of returns
    CAGR
    Total returns
    Risk-adjusted returns
    Post-tax returns
    Tax on capital gains
    Tax on income
    Holding period return
    Yield to maturity
     
    6. Investment portfolio
    Risk and return on a portfolio
    Measuring portfolio risk
    Effect of diversification on portfolio risk and return
     
    Investment vehicles

    Concept, structure, returns measurement (income and/or capital gains), tradability, liquidity and legal issues of the following investment vehicles. The objective is to provide an essential understanding of the products from a risk-return perspective, so that proper product recommendations can be made.
     
    7. Small savings
     
    8. Fixed income instruments
    Securities
    Government securities
    Corporate Securities
    Deposits
    Bank deposits
    Corporate deposits
     
    9. Insurance-based investments

    10. Mutual funds
    The concept and role of mutual funds
    Fund structures and constituents
    Legal and regulatory environment
    The prospectus/offer document
    Fund distribution and sales practices
    Accounting, taxation and valuation norms
    Investor services
    Investment management
    Measuring and evaluating mutual fund performance
     
    11. Equity shares
     
    12. Derivatives
    Essential features
    Application to investment portfolios
     
    13. Real estate
    Forms of real estate investment
    Financing real estate
    Costs of buying and maintaining
     
    14. Other investments
    Bullion
    Collectibles
    Precious metals
     
    Investment strategies

    15. Active and passive strategies
    Market timing
    Securities selection
    Maturity selection
    Buy/hold
     
    16. Asset allocation
    Strategic and tactical asset allocation
    Fixed and flexible allocation
    Rebalancing strategies
    Formulae based monitoring and revision of portfolios
     
    Regulation of an investment advisor

    17. The regulatory functions, rules and codes of conduct pertaining to planners
    Banks: RBI
    Mutual funds and collective investment schemes: SEBI
    Equity shares: SEBI
    Derivatives: SEBI
    Grievance mechanisms
     
    Application to clients

    18. Matching investment vehicles to needs of clients
    Asset allocation and portfolio rebalancing according to client needs
    Case studies
    Single persons
    Young couples
    Mature couples with grown children
    Empty nesters

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    Module 5 : Tax Planning & Estate Planning

    COURSE DESCRIPTION:
    This module would cover the knowledge requirements relating to tax planning and estate planning for a CFPCM professional.
     
    LEARNING OBJECTIVES:
    At the end of this module, a student should be able to:

    • Evaluate the appropriateness of tax strategies for individual family situations.
    • Integrate tax planning into the six step Financial Planning process.
    • To understand the universal nature of estate planning needs.
    • To recognize the high level of ignorance regarding estate planning among the general population as well as students.
    • To comprehend the fundamental objective of greater efficiency in wealth transfer.

    Tax Planning Considerations
     
    1. Ethical considerations in tax planning
    Privileged communications
    Dangers of tax evasion
     
    2. Tax compliance matters
    Filing tax returns and documentation
    Advance tax
    The audit process
    Refund of income tax
    Judicial review
     
    3. Taxation terminology
    Inclusions
    Exclusions
    Deductions
     
    Tax Computations
     
    4. Tax calculations and special rules
    Gross income
    Adjusted gross income
    Itemized deductions
    Taxable income
    Tax liability
    Clubbing of Income
     
    5. Tax characteristics of business forms
    Sole proprietorship
    General partnership
    Limited liability companies
    Trusts
    Foundations/exempt organizations
    Professional associations/corporations
    Co-operative Societies
    Others
     
    6. Non Resident Indians (NRIs)
    Residential status of individuals
    Types of accounts for non-residents
    Investment opportunities for non-residents
    Tax implication for non-residents
     
    7. Heads of income                  
    Salaries
    Income from other sources
    Capital gains
    Business/ profession
    House property
    Interest on government securities
     
    8. Capital Gains tax rules
    Determination of gain or loss
    Characterization of gain or loss
    Netting rules
    Indexation benefits
    Capital loss limitations

    Tax Planning Strategies
     
    9. Tax relief
    Exemptions
    Deductions
    Rebates
     
    10. Non taxable transactions (e.g., gifts, estate)
     
    11. Tax management techniques
    Deferral and acceleration
    Maximizations of exclusions and credits
    Managing loss limitations
    Capital asset transactions
    Deductible expenditures of individuals and business forms
     
    12. Interest and penalty taxes and other charges
     

    Failure to file tax return or to pay tax
    Preparer penalties
    Accuracy related penalties
    Fraud/concealment penalties

    Estate Planning
     
    13. Features of trust
    Classification of trusts
    Characteristics of selected trust provisions
    Rule against perpetuities
     
    14. Taxation of trust

    A. Income tax implications of trusts
    Exemptions
    Simple and complex trusts
    Distributable net income
    Tax implications of trusts
    Recommendations and justifications of the most appropriate trust
    Tax issue on retirement plans at death
     
    15. Property documentation
    Sale letter/ power of attorney
    Freehold
    Mutation
    Will
    Succession

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    Module 6 : Advanced Financial Planning

    COURSE DESCRIPTION:
    This module builds upon the foundations in Financial Planning and the knowledge requirements in Modules 2 to 5 to enable the CFPCM professional to construct a comprehensive Financial Plan for a client. Miscellaneous topics are also covered in this module.

    LEARNING OBJECTIVES:
    At the end of this module, a student should be able to:

    • Determining the client’s financial status by analyzing and evaluating the client's information.
    • Developing and preparing a client-specific Financial Plan tailored to meet the goals and objectives of client, commensurate with client’s value, temperament, and risk tolerance.
    • Implement and monitor the Financial Plan.
    Financial Planning Process
     
    1. Establishing client- planner relationships
     
    Explain issues and concepts related to overall Financial Planning process, as appropriate to the client
    Explain services provided, the process of planning, documentation required
    Clarify client’s and certificant’s responsibilities
     
    2. Gathering client data and determining goals and expectations
     
    Obtain information from client through interview/ questionnaire about financial resources and obligations
    Determine client’s personal and financial goals, needs and priorities
    Assess client’s values, attitudes and expectations
    Determine client’s time horizons
    Determine client’s risk tolerance level
    Collect applicable client records and documents
     
    3. Determining the client’s financial status by analyzing and evaluating the client's information

    A. General

    Current financial status (e.g., assets, liabilities, cash flow, debt management)
    Capital needs
    Attitudes and expectations
    Risk tolerance
    Risk management
    Risk exposure

    B. General Needs

    Emergency funds
    Children’s education
    Children’s marriage
    Buying real assets like home, car, durables, etc.
    Future lifestyle needs

    C. Special needs

    Divorce / remarriage considerations
    Charitable planning
    Adult dependent needs
    Disabled child needs
    Education needs
    Terminal illness planning
    Entrepreneurial needs planning

    D. Risk management

    Life insurance needs and current coverage
    Disability insurance needs and current coverage
    Medical insurance needs and current coverage
    Long – term care insurance needs and current coverage
    Homeowners insurance needs and current coverage
    Auto insurance needs and current coverage
    Commercial insurance needs and current coverage
    Other liability insurance needs and current coverage (e.g., umbrella, professional, errors and omissions, directors and officers)

    E. Retirement

    Current retirement plan tax exposures
    Current retirement plans
    Retirement strategies

    F. Employee benefits

    Available employee benefits
    Current participation in employee benefits

    G. Investments

    Current investments
    Current investment strategies and policies

    H. Taxation

    Tax returns
    Current Tax strategies
    Tax compliance status (e.g., estimated tax )
    Current tax liabilities

    I. Estate planning

    Estate planning documents
    Estate planning strategies
     
    4. Analyze Client Objectives, Needs and Financial Situation
     
    Analysis of relevant information
    Need for specialist advice
    Issues that require further clarification
     
    5. Developing and presenting the Financial Plan
     
    A. Developing and preparing a client-specific Financial Plan tailored to meet the goals and objectives of client, commensurate with client’s value, temperament, and risk tolerance, covering:
     
    1. Financial position
     
    Current statement
    Projected statement
    Projected statement with recommendations
     
    2. Cash flow
     
    Projections
    Recommendations
    Projections with recommendations
     
    3. Capital needs at retirement
     
    Projections
    Recommendations
    Projections with recommendations
     
    4. Capital needs projections at death
     
    Recommendations
    Projections with recommendations
     
    5. Capital needs: disability
     
    Recommendations
    Projections with recommendations
     
    6. Capital needs: General needs
     
    Recommendations
    Projections with recommendations
     
    7. Capital needs: special needs
     
    Recommendations
    Projections with recommendations
     
    8. Income tax
     
    Projections
    Recommendations
    Projections with strategy recommendations
     
    9. Employee benefits
     
    Projections
     
    10. Asset allocation
     
    Statement
    Strategy recommendations
    Statement with recommendations
     
    11. Investment
     
    Recommendations
    Policy statement
    Policy statement with recommendations
     
    12. Risk
     

    Assessment
    Recommendations
     
    13. List of prioritized action items
     
    Presenting and reviewing the plan with the client
    Collaborating with the client to ensure that plan meets the goals and objectives of the client, and revising as appropriate
     

    6. Implementing the Financial Plan
     
    Assist the client in implementing and recommendations
    Coordinate as necessary with other professionals, such as accountants, attorneys, real estate agents, investment advisors, stock brokers and insurance agents
     
    7. Monitoring the Financial Plan
     
    Monitor and evaluate soundness of recommendations
    Review the progress of the plan with the client
    Discuss and evaluate changes in client’s personal circumstances, (e.g., birth/ death, age, illness, divorce, retirement)
    Review and evaluate changing tax law and economic circumstances
    Make recommendations to accommodate new or changing circumstances
     
    Miscellaneous Topics
     
    8. Internet Resources
     
    Internet usage and application
    Transactions over the net
    Issues of security
    Financial Planning using the Internet
     
    9. Foreign exchange issues for individuals
     
    Foreign Exchange Management Act (FEMA)
    Currency risk management
     
    10. Financial Planning for special needs and clients
     
    Individual life cycle
    Financial Planning for unmarried clients, single parents, widows/widowers, etc.
    Financial Planning for returning Non Resident Indians
    Other special needs and options (e.g., divorce, bankruptcy)

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