Mapping of Syllabus CFP CM Certification Program. Critical Abilities mapped to Exam Specification

Mapping of Syllabus – CFP

CM

Certification Program

Critical Abilities mapped to Exam Specification

Education Standards of CFP Certification Program

• The body of knowledge to cover learning outcomes in the Financial Planner

Competency Profile

−

Financial Planner Abilities

−

Financial Planner Professional Skills

−

Financial Planning Body of Knowledge

• To deliver Financial Planning to a client, a financial Planning professional needs to

combine the ability to carry out the tasks of financial planning, by using appropriate

professional skills, and drawing on knowledge of financial planning matters.

• The Financial Planning Functions of Collection, Analysis and Synthesis are

mapped on the following Financial Planning abilities:

 Financial Management

 Asset Management

 Risk Management (Insurance)

 Tax Planning

 Retirement Planning

 Estate Planning

Slide 3

Education Standards of CFP Certification Program

• Acceptable coursework should provide around 600 hours of education delivery and

study:

−

240 hours of classroom or equivalent, plus

−

1.5 multiplier factor for preparatory and additional study (240 x 1.5 = 360 + 240

base hours = 600 total hours)

• Coursework should be set at the European Qualification Framework (EQF) level 6

or equivalent. Level is defined as follows:

Knowledge

Skills

Competence

Example

Advanced knowledge of a field of work or study, involving a critical understanding of theories and principles. Advanced skills, demonstrating mastery and innovation, required to solve complex and

unpredictable problems in a specialized field of work or study.

Manage complex technical or professional activities or projects, taking

responsibility for decision-making in unpredictable work or study contexts; take responsibility for managing professional development . Honours Bachelor Degree, Vocational University German State-certified Engineer, Business Manager and Designer .

Pattern of Question Bank Exam 1/2/3/4

Section-I Section-II Section-III Section-IV Section-V No. of

Items Marks No. of Items Marks No. of Items Marks No. of Items Marks No. of Items Marks

M a rks C a te gory 1 12 12 7 7 4 4 6 6 9 9 2 5 10 2 4 2 4 3 6 3 6 3 0 0 6 18 6 18 2 6 0 0 4 0 0 1 4 6 24 3 12 0 0 Total 17 22 16 33 18 50 14 30 12 15

The weights of individual parts in each of Exam 1 – 4 along with distribution of marks is :

Percentage Distribution

Section -I Section-II Section -III Section -IV Section -V

No. of Items 22% 21% 23% 18% 16%

Marks 15% 22% 33% 20% 10%

Total Items: 77 / Total Marks : 150

Testing of Competency – Exam Specification and Pattern

Part II, III & IV cover 62% of total items which account for 75% of total marks.

Testing of Competency – Exam Specification and Pattern

Pattern of Question Bank Exam 1/2/3/4

Section-I Section-II Section-III Section-IV Section-V No. of

Items Marks No. of Items Marks No. of Items Marks No. of Items Marks No. of Items Marks

M a rks C a te gory 1 12 12 7 7 4 4 6 6 9 9 2 5 10 2 4 2 4 3 6 3 6 3 0 0 6 18 6 18 2 6 0 0 4 0 0 1 4 6 24 3 12 0 0 Total 17 22 16 33 18 50 14 30 12 15 Mark Categories Segregation of question items (nos.) Total Question items Marks breaku p MarksTotal

1 mark Introduction Module 10 38 10 38

Component Module 28 28

2 marks Introduction Module_{Component Module 12}3 15 ₂₄6 30 3 marks Introduction Module_{Component Module 12}2 14 ₃₆6 42 4 marks Introduction Module_{Component Module} 2₈ 10 ₃₂8 40

Total 77 150

3&4 Marks Category:

24 items (31% of total items) 82 marks (55% of total marks)

Testing of Competency – Exam Specification and Pattern

Indicative Difficulty Grade and Mapping of Exam Duration

The mark categories would broadly determine the nature of question items contained in those categories along with a commensurate difficulty grade.

Marks

Category Significance Grade itemsTotal marksTotal Weight(%) _Time/Per Expected Item

Total Expected

Time 1-mark Theoretical testing _knowledge ‘Grade _1’ 38 38 25% _seconds35 _Minutes22

2-mark Theoretical (predominantly) testing clarity of concepts or Numerical testing basic skills

‘Grade

2’ 15 30 20% seconds90 Minutes23

3-mark Numerical testing analytical

skills

‘Grade

3’ 14 42 28% seconds150 Minutes35

4-mark

Numerical testing advanced

analytical skills, strategy evaluation & synthesis

‘Grade

4’ 10 40 27% seconds240 Minutes40

Skills Development and Exam Mapping

Theoretical related to Introduction to Financial Planning

Theoretical Areas covered under “Introduction to Financial Planning” and asked to the extent of 20% in each of Exam 1 – 4 are:

Financial Planning Process

Code of Ethics and Professional Responsibility Model Rules of Conduct

CFP marks usage

Brief Overview to Financial Markets Economic Environment Analysis Behavioral Finance

12 marks

Pattern of Question Bank – 20% of ‘Introduction FP” Module embedded in Exam 1/2/3/4

Section-I Section -II Section -III Section -IV Section -V No. of

Items Marks No. of Items Marks No. of Items Marks No. of Items Marks No. of Items Marks

M a rks C a te gory 1 2 2 4 4 1 1 2 2 1 1 2 1 2 0 0 0 0 1 2 1 2 3 0 0 1 3 1 3 0 0 0 0 4 0 0 0 0 2 8 0 0 0 0 Total 3 4 5 7 4 12 3 4 2 3

Skills Development and Exam Mapping

Numerical related to Introduction to Financial Planning

Numerical Areas covered under “Introduction to Financial Planning” and asked to the extent of 20% in each of Exam 1 – 4 are:

14 marks

Time Value of Money calculations

Personal Financial Statement Analysis – Cash Flow Management Loan Schedules and Refinancing of Loans

Net Worth Calculation

Computation of Returns– CAGR, IRR, XIRR, etc. Savings Ratio and Liquidity Ratios

Pattern of Question Bank – 20% of ‘Introduction FP” Module embedded in Exam 1/2/3/4

Section-I Section -II Section -III Section -IV Section -V No. of

Items Marks No. of Items Marks No. of Items Marks No. of Items Marks No. of Items Marks

M a rks C a te gory 1 2 2 4 4 1 1 2 2 1 1 2 1 2 0 0 0 0 1 2 1 2 3 0 0 1 3 1 3 0 0 0 0 4 0 0 0 0 2 8 0 0 0 0 Total 3 4 5 7 4 12 3 4 2 3

Critical Areas – Financial Planning Abilities

Numerical problems testing Analytical skills, Advanced Analytical skills, Strategy Evaluation & Synthesis

Section II:

Insurance provisions – basis- Depreciation, Market/Reinstatement value Cost-benefit Analysis and Claim Settlement

1. Risk Analysis & Insurance Planning

68

marks

Economic value of human life

Replacement of future income of the insured

Replacement of expenses and financial liabilities of the family Provision in life cover of certain financial goals/ liabilities Review of coverage for changes in income, assets /liabilities Investment Linked Insurance and Insurance Linked Annuities Return on Savings Component

18 marks

Section IV:

Basis of property cover - Reinstatement, book or market value Personal umbrella policy- Mortgage cover

Critical Areas – Financial Planning Abilities

Numerical problems testing Analytical skills, Advanced Analytical skills, Strategy Evaluation & Synthesis 2. Retirement Planning & Employee Benefits

Section II:

Pre-retirement (Accumulation) & Post-retirement phase (Distribution), Early retirement vs. Delaying retirement, Risk of living longer, Income generation using fixed assets, Supplementing retirement income through other sources.

68

marks

Estimate Retirement Corpus, Ascertain client’s Asset Allocation in accumulation phase, Optimize rate of return from chosen Asset Classes, Step increase in investment, Rebalance accumulated funds in line with defined Asset Allocation, annuity product to transfer fund near retirement, Reverse Mortgage.

18 marks

Section IV:

PPF - Systematic accumulation for retirement corpus, Immediate vs. Deferred annuities, Annuities - Period certain, Life certain and Life with period certain.

Critical Areas – Financial Planning Abilities

Numerical problems testing Analytical skills, Advanced Analytical skills, Strategy Evaluation & Synthesis 3. Investment Planning

Section II:

Asset Allocation, Expected Rate of Return, Goal specific Asset Allocation, Asset Allocation changes near the goals, Selection of asset mix according to client’s goals.

68

marks

Additional lump sum vs. Systematic staggered investments, Monitoring portfolio progress for goals, Portfolio Beta, Variance, Semi-variance & Covariance, Standard Deviation, Correlation and Correlation Coefficient, Effect of diversification on portfolio risk & return, Yield to Maturity, Dividend Discount Model, Analysis of Growth, Dividend Payout & Reinvestment options (MF Schemes).

18 marks

Section IV:

Systematic Investment Plan, Systematic Withdrawal Plan and Systematic Transfer Plan, Risk and return on a portfolio - Sharpe, Treynor and Jensen’s Ratio, Capital Asset Pricing Module (CAPM).

Critical Areas – Financial Planning Abilities

Numerical problems testing Analytical skills, Advanced Analytical skills, Strategy Evaluation & Synthesis 3. Tax Planning and Estate Planning

Section II:

Salary – Allowances, Perquisites and Deductions, Income from Self Occupied/Let out House Property, Capital Gains – Long Term/Short Term, Indexed cost of acquisition/renovation and exemptions, Income from Other Sources - Chargeability, Exemptions, Deductions & Tax Liability, Clubbing of Income, Deductions under Chapter VI-A.

68

marks

Deferral of tax liability, Taxability of Equity, Debt and Insurance products, Transaction in the nature of Gifts/Prizes/Winnings, Dividend and Bonus stripping provisions, Agricultural income and Wealth tax

18 marks

Section IV:

Estate Planning, Determine value of client’s estate and liquidity aspects, Trust structures for Tax Efficiency and Trust as Pass-through entity.

CFPCM_{, CERTIFIED FINANCIAL PLANNER}CM _{and are certification marks owned outside the U.S. by}

Financial Planning Standards Board Ltd. Financial Planning Standards Board India is the marks licensing authority for the CFP marks in India, through agreement with FPSB Ltd.

Financial Planning Standards Board India 702, 7th Floor, Leela Business Park

Andheri Kurla Road, Andheri (E) Mumbai – 400059 Phone: +91 22 61712424, Fax: +91 22 61712444 Email: [email protected], Website: www.fpsbindia.org