CFP Exam Professional Conduct and Regulation
What is the primary purpose of the Gramm-Leach-Bliley Act (GLBA) in the context of financial services? The primary purpose of the Gramm-Leach-Bliley Act (GLBA) is to enhance consumer privacy and protect personal financial information held by financial institutions. The GLBA mandates that financial institutions establish privacy policies and practices to safeguard consumers’ nonpublic personal information […]
CFP Exam Risk Management and Insurance Planning
What are the essential elements of a liability insurance contract, and how do they differ from other types of insurance contracts? Liability insurance contracts typically include four essential elements: offer, acceptance, consideration, and legal purpose. Unlike property insurance, which primarily covers physical assets, liability insurance focuses on protecting the insured from claims resulting from injuries […]
CFP Exam General Principles of Financial Planning
What are the key differences between corporate bonds and municipal bonds in terms of taxation and risk? Corporate bonds are issued by companies and are subject to federal and state taxes on interest income, while municipal bonds are issued by state and local governments and often provide tax-exempt interest income at the federal level, and […]
CFP Exam Investment Planning
What are the key differences between growth and value investing, and how do these strategies align with the current regulatory environment in the United States? Growth investing focuses on companies expected to grow at an above-average rate compared to their industry or the overall market. Investors in growth stocks prioritize capital appreciation over dividends. In […]
CFP Exam Tax Planning
What is the significance of the federal estate tax exemption, and how does it impact estate planning strategies? The federal estate tax exemption allows individuals to transfer a certain amount of wealth without incurring federal estate taxes. As of 2023, this exemption is set at $12.92 million per individual. This exemption is crucial in estate […]
CFP Exam Estate Planning
What are the limitations and responsibilities of agents under a Power of Attorney in estate planning? Agents under a Power of Attorney (POA) have specific limitations and responsibilities that are crucial for effective estate planning. The agent must act in the best interest of the principal, adhering to the fiduciary duty which requires loyalty, care, […]
CFP Exam Retirement Savings and Income Planning
What are the tax implications of a Solo 401(k) for self-employed individuals? A Solo 401(k) allows self-employed individuals to contribute both as an employee and as an employer, maximizing their retirement savings. Employee contributions are made on a pre-tax basis, reducing taxable income for the year. For 2023, the employee contribution limit is $22,500, with […]