College for Financial Planning. Internship Guidelines for the Registered Paraplanner Program

Transcription

1 College for Financial Planning Internship Guidelines for the Registered Paraplanner Program 7141

2 This publication may not be duplicated in any way without the express written consent of the publisher. The information contained herein is for the personal use of the reader and may not be incorporated in any commercial programs, other books, databases, or any kind of software or any kind of electronic media including, but not limited to, any type of digital storage mechanism without written consent of the publisher or authors. Making copies of this material or any portion for any purpose other than your own is a violation of United States copyright laws. The College for Financial Planning does not certify individuals to use the CFP, CERTIFIED FINANCIAL PLANNER, and CFP (with flame logo) marks. CFP certification is granted solely by Certified Financial Planner Board of Standards, Inc. to individuals who, in addition to completing an educational requirement such as this CFP Board-Registered Program, have met its ethics, experience, and examination requirements. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP, CERTIFIED FINANCIAL PLANNER, and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. At the College s discretion, news, updates, and information regarding changes/updates to courses or programs may be posted to the College s website at or you may call the Student Services Center at

3 Table of Contents Internship Guidelines for the Registered Paraplanner Program... 1 Introduction... 1 Foundations in Financial Planning Course Work... 1 Internship... 2 Internship Requirements... 3 Summary... 10

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5 Internship Guidelines for the Registered Paraplanner Program Introduction T he Registered Paraplanner SM or RP Program consists of three distinct components: (1) the Foundations in Financial Planning education course, which introduces financial planning concepts, terminology, strategies, and product categories; (2) a skills-based internship; and (3) completion of a designation application, which requires adherence to standards of professional conduct, terms and conditions, as well as a self-disclosure requirement. This guide seeks to assist the supervisor and student in structuring and evaluating the internship. Foundations in Financial Planning Course Work The Foundations in Financial Planning course is a survey course covering the basics of financial planning. Upon enrolling, students receive comprehensive study materials developed by the College for Financial Planning. The study materials direct the student s progress through the program, presenting reading, key terminology, review questions, answers to review questions, a self-study examination, and a multiple-choice workbook (available through the Student Portal). When the student enrolls in the program, he or she must schedule to test through the College s computer-based testing system. The examination consists of 75 multiple-choice questions. To be considered successful on the examination, the student must achieve a score of at least 70%. The course tuition does not include any testing or Internet access fee charged by our contract testing centers. Internship Guidelines for the Registered Paraplanner Program 1

6 Internship The internship required for completion of the Registered Paraplanner Program is designed to demonstrate practical application of the concepts presented in the Foundations in Financial Planning course. The internship must be completed over a minimum of three months full-time or the equivalent part-time (500 hours), during which time the student must show mastery of a set of basic skills, including: communication; datagathering; utilizing financial planning software; constructing financial statements; and performing a preliminary analysis of client information. These basic skills were selected for inclusion in the internship because they are relevant in a wide variety of financial planning practices, and they represent important knowledge that a paraplanner must possess if he or she is to effectively assist a financial planner in the delivery of services to clients. The skills acquired by the paraplanner during the internship are not intended to represent the gamut of skills that may be desirable in each individual practice; rather, they represent a base of skills on which the paraplanner may build to suit the needs of the employer. The Foundations in Financial Planning course is designed for completion through self-study, minimizing the role of third parties (i.e., the supervisor) in assisting the student in understanding course content. The College for Financial Planning provides students with instructional materials and technical assistance, and then assesses their understanding of materials through the administration of a comprehensive proctored examination. Conversely, the internship requires substantial involvement from the student s supervisor. For the most part, it is the supervisor who provides the instruction relating to the required skills, and it is the supervisor who verifies that the student has successfully mastered these skills. The combined efforts of the student, the supervisor, and the College enable the student to attain the conceptual knowledge and practical skills essential to performing the paraplanner function in a financial planning practice. 2 Internship Guidelines for the Registered Paraplanner Program

7 Upon the completion of the internship, the student must submit an experience verification form on which the supervisor attests to mastery of the basic internship skill requirements. After the College reviews and accepts the student s designation application, the student receives a certificate of completion from the Registered Paraplanner Program and is authorized to use the Registered Paraplanner SM or RP marks for a twoyear period. Continued use of the marks is subject to ongoing renewal requirements. Internship Requirements The experience verification form described above is available through the Student Portal. The minimum qualifications include adequate communication skills, familiarity with and ability to use financial planning software, the ability to read and extract information from the client s financial documents for data-gathering purposes, the ability to construct personal financial statements, and the ability to review and analyze information to identify basic strengths and weaknesses in the client s financial situation. Because assessment of these skills may be subjective, more detailed information is provided below to help supervisors determine the student s level of performance with regard to each of the five qualifications. Communication Skills The paraplanner s job requires substantial interaction with clients and other office personnel. Therefore, the ability to communicate well, both orally and in writing is critical. In assessing the student s oral communication skills, the supervisor should consider ability to organize thoughts, clarity of expression, appropriate use of nonverbal communication (gestures, eye contact, use of space, etc.) reflective language (voice tone and volume), good listening skills, and proper use of feedback. In assessing the student s written communication skills, the supervisor should consider grammar, spelling, tone, and clarity of expression. Internship Guidelines for the Registered Paraplanner Program 3

8 Use of Financial Planning Software Many software packages are currently available, and it is recognized that understanding one software package will not enable the paraplanner to use all packages. However, learning at least one package used by the employer assists the paraplanner by providing a basis for understanding and being able to operate other packages that they may encounter in the future. In assessing the student s familiarity with and ability to use at least one type of financial planning software, the supervisor should consider the student s understanding of the terminology used in the various programs, ability to accurately enter the data needed, and his or her proficiency in running relevant programs and creating reports used in the financial planning practice. Gathering Information The College for Financial Planning considers data gathering to be one of the first steps of the financial planning process. Defining the financial paraplanner s role in data gathering prior to plan development has been subject to debate among financial planners. Some choose to include the financial paraplanner in all data-gathering interviews with the client, some divide interviewing responsibilities with the paraplanner, and a very few might exclude the paraplanner. Thus, the third requirement of the internship, the ability to read and extract information for datagathering purposes from the client s financial documents, addresses this task. As part of this internship requirement, the paraplanner must show familiarity with using the data survey form, an instrument frequently used in financial planning practices to gather and organize data so that it can be easily read and analyzed by the paraplanner before constructing a financial plan. Data survey forms used by planning practices vary depending upon the nature and needs of the practice. If financial planning software is used in the practice, the data survey form usually corresponds to the requirements or features of the software package. 4 Internship Guidelines for the Registered Paraplanner Program

9 In assessing the student s level of mastery with respect to the data-gathering requirement for the internship, the supervisor should consider the student s comprehension of the terminology and concepts presented on the firm s data survey form; his or her ability to locate, read, and understand the documents submitted by the client that address the areas needed for completion of the form; and his or her skill in extracting information from these documents to accurately complete the data survey form. The study materials for the Foundations in Financial Planning course include a sample data survey form that may be used as a guide for the types of information that the student should be able to gather from financial documents (see the Appendix in Module 1). However, to complete this portion of the internship, the student is encouraged to use the standard data survey form of the practice by which he or she is employed. Ideally, the form should include, at a minimum, the topic areas covered in the data form presented in the study materials. If the employer s data survey form does not include these topic areas, the supervisor should still make his or her evaluation based on the employer s form. Construction of Personal Financial Statements Personal financial statements are essential to the financial planner in evaluating the client s current financial position. Once adequately trained, the financial paraplanner may assist the financial planner by constructing personal financial statements from client information, including the statement of financial position (balance sheet) and the cash flow statement (income statement). The Foundations in Financial Planning course presents basic formats for each of these financial statements. In fulfilling this portion of the internship requirement, students may use either the format presented in the course or the format used by their employer. Many financial planning software programs generate financial statements on the basis of information input by the paraplanner or other staff members. However, to ensure comprehension of basic accounting Internship Guidelines for the Registered Paraplanner Program 5

10 principles, the student must be able to manually construct both a statement of financial position and a cash flow statement for completion of the internship. Reviewing and Analyzing Information Although the bulk of responsibility for analyzing client data rests with the financial planner, the paraplanner may assist the planner by performing a cursory analysis of client information to identify the more apparent strengths and weaknesses in the client s financial situation. This is helpful for two reasons: it enables the planner to focus on the more complex financial problems facing the client, and it allows the paraplanner to develop a greater understanding of the client s financial situation and, therefore, the recommendations made by the planner. With such an understanding, the paraplanner is better able to assist clients as needed with the implementation of recommendations. For purposes of the internship, the student should be able to perform a basic analysis of general planning issues, as well as risk management, investment, income taxation, retirement, and estate planning issues. The depth of analysis required in each of these areas is described below. 1. General Considerations Emergency fund. Most financial planners recommend that the client set aside sufficient cash reserves to cover any emergencies impacting the client s financial situation. One accepted rule of thumb is that the client should have three to six months of living expenses placed in liquid assets (cash/cash equivalents). Using the statement of financial position and the cash flow statement, the student should be able to calculate the appropriate range of funds to be placed in liquid assets for a given client and determine whether the client currently has adequate liquid resources in light of the range established. Available resources. The student should be able to determine the resources potentially available to meet client goals. Available 6 Internship Guidelines for the Registered Paraplanner Program

11 resources may be defined as discretionary income and assets that can be repositioned. Savings/investments outflow is often considered discretionary income. Anticipated inflows such as salary increases, life insurance proceeds, and inheritances potentially are available resources, as are fixed obligations that are about to end (car payments, day-care costs, etc.). On the statement of financial position, lump sums that are not allocated for specific client objectives (emergency fund, retired funds, etc.) also may be considered as available resources. Spending/savings pattern. Most planners recommend that the client save or invest 5% to 10% of earned income. The student should be able to ascertain the client s level of saving and investing by analyzing the cash flow statement. In addition, the student should be equipped to evaluate the magnitude of consumer debt and miscellaneous expenditures (those that the client is unable to account for). The student should also be able to ascertain whether the client appears to be living within his or her means by evaluating the cash flow statement and the statement of financial position. Sources of income. The student should be able to determine what sources of income are available for the client by analyzing the cash flow statement. He or she should be able to identify potential financial difficulties that might occur if one or more sources of income were to become unavailable in the future. Fixed obligations. The student should be able to determine the extent to which fixed obligations limit the amount of funds available to attain client goals. Liabilities. The student should be able to evaluate the amount of consumer debt and determine the ratio of debt to assets. Internship Guidelines for the Registered Paraplanner Program 7

12 2. Coverage of Risk Exposures Life insurance. For the purposes of the internship, the student is not expected to determine the amount of life insurance required by a client. However, he or she should be able to assess, in general, whether life insurance is needed and/or whether the appropriate types of life insurance are in place, given the client s financial resources available, personal situation, and needs in the event of premature death. Health insurance. In analyzing the client s medical insurance, the student should be capable of evaluating whether the client has insurance that covers medical expenses incurred outside of hospitalization as well as those covered during hospitalization. In addition, the student should identify deductible amounts and types, annual and lifetime benefit limits, coinsurance provisions, and stop-loss amounts. The student also should be able to analyze the client s need for disability coverage and any disability insurance available to the client. In analyzing disability insurance, the student should consider the definition of disability, the length of the elimination period, the benefit amount, and renewability provisions. Property and liability insurance. In analyzing the adequacy of property insurance, the student should be able to review the use assets listed on the statement of financial position to determine those that are not covered by insurance or that are not covered adequately. Homeowners policies should be analyzed to determine if coverages are adequate in relation to the replacement cost of the dwelling, the value and types of personal property, and the client s liability exposure. In addition, the student should be able to evaluate the appropriateness of the deductible amount. In analyzing the client s automobile insurance, the student should consider the appropriateness of the collision/comprehensive coverage and deductible amounts and the adequacy of the liability coverage. 8 Internship Guidelines for the Registered Paraplanner Program

13 3. Investment Program The student should review the client s investment program to determine whether the investments appear to be adequately diversified and whether they are appropriate for the client s risk tolerance level and objectives. 4. Income Tax The student should be able to review the client s tax returns, note deductions and credits currently being used by the client to reduce taxation, and identify those that may be available in the future. For example, the paraplanner may note that the client has child care expenses but has not used child care credit, or that the client has incurred substantial medical expenses and may be able to deduct a portion of these expenses. The student should be able to determine whether the client has any of following common types of nonbusiness expenses and whether these expenses have been used to reduce taxation in the past: IRA contributions to qualified plans for self-employed individuals, or SEP contributions Alimony payments made Medical expenses Charitable contributions Mortgage interest State and local income taxes, personal/real property taxes Expenses for child care, care of disabled dependent/spouse 5. Retirement Program In analyzing the client s retirement program, the student should be able to note the sources of retirement income available to the client and comment on the adequacy of these resources to fulfill the client s retirement needs. Internship Guidelines for the Registered Paraplanner Program 9

14 6. Estate Planning The student should be able to evaluate in a general way the appropriateness of existing methods of estate transfer, noting whether the client has a will, when the will was drafted, and the most recent review date. In addition, beneficiary designations on insurance and retirement arrangements should be checked to determine appropriateness. Summary The goal of professional training is to ensure that an employee s knowledge, usually attained through traditional methods, enhances his or her ability to perform on the job. The best means of doing this is to structure an opportunity for the application of that knowledge. The Registered Paraplanner Program facilitates the training of financial planning support staff by presenting comprehensive technical information, testing the individual s knowledge of those materials, and then requiring reinforcement and practice through a skills-based internship. Upon completion of the Registered Paraplanner Program, individuals are capable of assisting the financial planner on a more advanced level in providing financial services to clients. Students and supervisors using these guidelines are invited to submit additional suggestions to help others achieve the goals of the internship. Questions are welcomed, as well. Suggestions or questions may be forwarded to Michael B. Cates, CFP at: College for Financial Planning Administrative Offices 9000 E. Nichols Ave., Suite 200 Centennial, CO or by phone or , at or mike.cates@cffp.edu. 10 Internship Guidelines for the Registered Paraplanner Program

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