hey there welcome to jumpstart University Dominique here with another video to help you become a successful Financial professional so if you're a career changer or an aspiring Financial professional be sure to stay tuned as we talk about how to tackle cfp exam questions by the way if you're searching for a community of like-minded individuals that are poised to make an impact on the financial services industry you're going to want to visit jumpstartcoachinglab.com to learn more about all that we're doing to help you make the leap into this great profession and if you're not subscribed to the best channel on the internet to help you learn about everything that there is about this industry what are you waiting for hit that subscribe button okay let's talk about cfp exam the cfp certification examination covers six major topic areas including financial planning the financial planning process rather risk management and Insurance employee benefits Investments tax planning and management and retirement planning I know that's a lot the exam is comprised of about 170 multiple choice questions included in their principal knowledge topics and get all this online at cfp.net and you're going to be answering three different types of questions typically the Standalone question these short scenarios and then case studies so that's the exam more about that later probably in a separate video leave some stuff down in the comments let me know if you want to go through that kind of stuff but today we're going to talk about breaking down these exam questions so I want to dissect a couple of sample questions from the cfp boards website to show you what they're testing for and how to best answer these questions okay now since this exam is constructed for people with three to five years of experience uh I'm hoping that what this video is going to do is for those that have been studying this material and just going through it I'm hoping that my Fusion of real life experience together will provide some additional context for you so if this is your first time seeing this material don't worry we're going to take it one step at a time okay let's get started okay so here we are at the cfp boards website and where I am let's just move this down a little bit so you can see so you know home get certified certification process exam about the exam exam format now when you're on this page if you scroll down you will see that there is there are 10 sample questions and that's where we're going to go right there okay so we'll go into there and you're going to have to accept this disclaimer and acknowledgment feel free to read that and we can go next let's um and before we get there what I would like to do is I would like to kind of give you an acronym that I thought was particularly helpful for me when I was using this uh or when I was taking the exam so I like to look at like this read I know that makes like probably zero says to you of course read the exam right yeah read the exam question Dominic I tell you get it but read recall that's what the r stands for recall the information being asked you're going to read to understand what is being asked you have to know what is being asked at first okay then e evaluate the data being given don't make any extra assumptions just take what they have in the question apply apply the concepts to the question at hand you got to use what you have available whether that's the formula sheet or whatever there's stuff inside the stem of the question that they're giving you and then D decide on the best answer okay so based on that we're going to read the question and we're going to highlight some things and we're going to go through the possible solutions so Harold and Mary Ann Miller are a married couple in their early 40s with three children ages 7 10 and 12. I think that's important um Harold earns 350 000 per year as a general counselor of the mid-size I.T firm and Mary Ann is a homemaker Okay so they have major assets of 1.5 million cash and 1 million in stock options they have done no estate planning I think that's important we'll mark that Harold has life insurance of two times his set his salary from his employer hero plans on working full-time until age 62. Harold has the potential to receive more options and restrict the stock based on company performance but has requested that this not be included in his assets for now given the uncertainty College Planning is of great concern to the Millers currently they have no plan in place I think that's important also they estimate that they will need 150 000 for each child in current dollars to fund their education also important the Millers have instructed a biller a budget rather and have determined that their household expenses are currently 12 000 per month after taxes assume that the Millers are in the 35 federal tax bracket and six percent state tax bracket okay so we got two uh we got this scenario here we got two questions and we need to find out from the information that they gave there which is probably way too much as they usually do um what is the most important things to answer these questions so let's start with number one the Millers would like to set aside money to cover all of the required funding for their children's education they are not confident that children will be able to handle money by age 21 which of the following is most appropriate for the Millers okay so I'm going to pause right here you think about this question and we'll play a little Jeopardy music or something like that and then we'll come back and break it down [Music] foreign [Music] [Applause] [Applause] [Music] [Applause] [Music] [Applause] [Music] now the Millers would like to set aside uh this money to cover all their education so let's let's kind of break down these answers what we do need to know is what all these accounts do now the the utmea is going to be an issue with custody because at age 21 when they used to reached the age of majority the Millers the parents are never going to no longer have control over these accounts and if they are worried about their children not being able to handle money at age 21 that is an automatic no okay Coverdale education savings account also known as the educational IRA has contribution limits and if we got 150 000 per child that's 450 000 I don't remember the contribution limits but they're not that high uh so that is probably one thing to note that that's probably going to be off the table uh the last two here so these are probably the best answers let's kind of discern between the like if you couldn't if you didn't really know about those at least you got a 50 50 chance but let's kind of break this down a little bit more the 529 is probably going to be the most uh the qualified savings plan is going to be the most Broad covering not just tuition but other expenses also so that would be my choice the D is only is going to allow you the same contribution limits so you can get all the money in but it's just going to be tuition so it won't be you know any other stuff like you know room and board and if they need other things that fall into the the scope of them going to college so I would select C that would be my answer okay let's go ahead and do number two too because I think the way to do this is if I show Solutions it's going to show all of them okay so let's get to number two given the facts above what is the most important piece so given the facts above of question number one and the scenario that we'll be given okay so keep that in mind what is the most important piece of the plan that the Millers should Implement first okay so think about your best answer and we'll play a little Jeopardy music again and then we'll break down the uh the different choices here [Music] [Applause] thank you foreign real quick Jeopardy music okay um established wisdom guardianship let's revisit that I think that's a really good answer you know just just glancing over all of these that would probably be my best answer okay exercise stop boxes stock options uh not so much he's already uncertain about what they would be they've got plenty of liquidity there's really no reason to do that so that's off the table diversify cash Investments that could be something that they need to do is it primary though because we've already kind of established what is the greatest concern College Planning so it's not Diversified in their their Investments necessarily so this might be something that comes down the line but not necessarily right now so I would take that off the table also establish an irrevocable life insurance trust in eyelid eyelets are primarily going to be used for estate planning purposes which is also something that they said they've done no State planning and maybe that comes later however knowing the current exemptions in 2022 when this video was done they got plenty of exemption before they have to worry about estate tax right so that's off the table also so I'm gonna say a is going to be the best thing because if you establish a will with guardianship where you're going to have is if something happened to them before these kids got mature enough to handle this wealth then they would have somebody that was making these decisions for them making sure that the The Miller's wishes you know Marianne and Harold were carried out especially when it comes to the number one priority of what College Planning okay so in the scope of everything that we've talked about I think those are the best answers so let's look at the solutions all right so we got number we got number one right and for a lot of the reasons that we said the rationale says 529 plans allows for the family to save for all qualified costs not just tuition like we mentioned utma account causes loss of control at the age of majority like we also mentioned the education Ira or the Coverdale would not be able to fully fund education contribution limits so I could remember the limits but I just knew that there were some and so you know when you're when you can't remember stuff like that you haven't written down on the formula you just think about okay 529 I know you can have higher limits Coverdale lower limits so if they want to save a lot for college it's probably going to be the five to nine and not the Coverdale okay and then prepaid tuition plan only covers tuition so like we said okay let's move on to number two that's also correct given the fact that they have done no Estate Planning and are concerned about what would happen to their children this should be addressed first okay um B and C are also important but should be done afterwards see so so like we said these are not immediate priorities at least the client dictates what the media priorities are by the way not the rubric that you've learned or will learn in the financial planning process the client's going to come to you with their customized needs and that's what you need to build the plan around so this question really focuses on that and I like that because that's real life planning um there are no facts in the case that justified D is an immediate need so there we go all right so let's um give you some final thoughts and hopefully you enjoyed that all right now hopefully that was helpful for you just remember the acronym read okay recall the information being asked evaluate the data being given apply the concepts to the question at hand and then decide on the best answer okay now I know this could be tough especially if it's more than your first time doing it second third time but remember follow your review program there's a reason that these review programs work uh I I will say that without my review program I probably would not have passed the first attempt on the exam but do exactly what they say okay the discipline of this is going to is going to be I don't know it's going to be revolutionary for you because you'll be able to pass the exam now if you enjoyed this I'm going to be doing something very similar with a colleague of mine Mr Gary oh Clement who's been teaching the cfp review for nearly 15 years and I'm gonna tell you I really consider Gary the the goat the greatest of all time for this stuff and he and I like I said we'll be doing something very similar at the first annual jumpstart Community Day of gratitude on November 5th so for details on that look down in the description for the registration you have to register although it's free uh or you can just join the mailing list for the things that will be coming out to promote the event okay so just go to www.jumpstartcoachinglab.com newsletter you can do either one of those things and they'll both get you there okay now if you found this video helpful hit that like button and share it with all your your friends all the people that you're studying for the exam with your Study Buddies make sure that they know that this uh a video exists okay I'll see you later my friend bye-bye