Other courses:
CPA Certified Profesional Account
CFA: Certified Finacial Analyst
CTP: Certified Tax Preparer >> Diploma In taxation course
Certified Business consultant
MUtufual Fund Distributor
CFP: Certified Finacial Planner
Insurance Agent, Insurance Broker (pay some fees to IRDA yearly basis)
1st-way CFP Certification process in India regular 12th /degree
- Choose Self-study or Authorized Education Partner (EP) for training.
- Register at NSE India https://www.ncfm-india.com and obtain NCFM number.
- Register as a Student Member of FPSB India
- Pay the fee 13,800 (as on 2019) DD favor of FPSB India payable at Mumbai.
- Upload Minimum qualification Certificate 12th Class PAN passport etc.
- FPSB Verifies Documents & Payment and activates within 14 days.
- Student can take the Exam 30 days after the activation
The Examination Fee shall be Rs 4,138/- per Examination
1. Risk Analysis & Insurance Planning (Exam 1)
2. Retirement Planning & Employee Benefits (Exam 2)
3. Investment Planning (Exam 3)
4. Tax Planning & Estate Planning (Exam 4)
The 4 Modules are ae above.
after this module student has to completed 5th Advanced Financial Planning to become a CFP.
Renewal fee 7089* onward every year.
The 2nd way for professional Challenge status
CA / Intermediate level, CFA (US), ICWA, CAIIB, CS, LLB, Ph.D., M.Phil, PG, Licentiate/Associate/ Fellowship of Life Insurance, Actuary, FFSI & FLMI from LOMA, Civil Service Examinations by UPSC.
2nd step:
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CSP Challenge status Pathway
3rd Phase Ethics
Signed Declaration for adherence to FPSB India’s Code of Ethics & Rules of Professional Conduct
4th step CFP Modul exam
5.Advanced Financial Planning Exam 5
5th FInal CFP Certification
Exam pattern & pass percentage marks (75/150)
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CFP Renewal process
CFP need to earn at least 15 CE Points (based on categories like submission of articles, speaking assignments, attending seminars and events, undertaking quizzes, attaining certifications & qualifications etc during 1 year )
Renewal Fee: 7,080
CFPCM Renewal Form: have to submit online.
CE: Continuous Education, CD continuos documentation etc.
Syllabus
Exam 1 – 4 Revised Syllabus to be Effective from 1st February, 2013 – 22.02.2013
- Theoretical testing knowledge,
- Theoretical testing clarity of concepts,
- Numerical testing
- advanced analytical skills, strategy evaluation & synthesis,
Module 1
30 marks 20% in 150 marks (in every 4 modules)
Section I: The 6-Step Financial Planning Process
Theoretical (predominantly) testing clarity of
concepts or
13.33%
1 – 4
2.67%
Nature of Test Items
2 items: 1 mark each
1 item : 2 marks
and topics covered:
1.1 Establish and Define the Relationship with
the Client
1.1.1. Explain the client the purpose of Financial Planning, the role of Financial
Planner and his/her Professional Competencies.
1.1.2. Discuss Financial Planning needs and expectations of the client with respect to
Financial Planning Components
1.1.3. Determine whether the Practitioner can meet client‟s needs with regard to the
financial planner competencies
1.1.4. Define the scope of engagement including services to be provided including
monitoring responsibilities
1.2 Collect Client’s Information
1.2.1. Collect quantitative and qualitative information
1.2.2. Assess client‟s values, attitudes and expectations
1.2.3. Assess the client‟s level of knowledge and experience with financial matters
1.3 Analyze Client’s Financial Status, Risk
Profile and Determine Financial Goals
1.3.1. Analysis of client‟s background and current financial status
1.3.2. Assess the client‟s objectives, needs and priorities
1.3.3. Determine client‟s risk tolerance level by ascertaining risk appetite and risk
capacity
1.3.4. Identify client‟s personal and financial goals, needs and priorities through
interview/questionnaire
1.3.5. Define client‟s time horizon for each goal
1.4 Develop Financial Planning
Recommendations and Present them to
the Client
&
1.4.1. Identify and evaluate Financial Planning Alternatives to meet client‟s goals
and objectives
1.4.2. Develop the Financial Planning Recommendations
1.4.3. Present and discuss the Financial Planning Recommendations with the client
1.4.4. Obtain the feedback from client and revise the Recommendations as
necessary
1.4.5. Provide documentation of Plan Recommendations
1.4.6. Confirm client‟s acceptance on Recommendations
1.5 Implement Client’s Financial Planning Recommendations
1.5.1. Agree on implementation responsibilities
1.5.2. Assist the client in selecting products and services for implementation
1.5.3. Coordinate as necessary with other specialists
1.6 Monitor and Review the Client’s Situation
1.6.1. Review performance and progress of the plan with the client
1.6.2. Discuss and evaluate changes in client‟s personal circumstances (e.g. birth/
death, age, illness, divorce, retirement) affecting/modifying goals
1.6.3. Review, evaluate changing tax laws and economic circumstances
1.6.4. Assess impact of rise/fall in interest rates on financial goals
1.6.5. Make recommendations to accommodate new or changing circumstances
1.6.6. Provide ongoing services to client
Section II: Financial Management- General Principles and Behavioral
Finance
and topics covered:
2.1 Brief Overview to Financial Markets
2.1.1. Capital Markets- Primary and Secondary
2.1.2. Market Indices and Parameters
2.1.3. Money Market
2.1.4. Derivatives Market
2.1.5. Foreign Exchange market
2.1.6. Commodity Market
2.1.7. Services- Life and non Life
2.2 Debt Management
2.2.1. Debt- Purpose, needs and responsibilities
2.2.2. Long Term Debt vs. Short Term Debt
2.2.3. Fixed Rate vs. Variable Rate Mortgages
2.2.4. Consumer loans
2.2.5. Refinancing
2.2.6. Hire- purchase
2.2.7. Credit cards
2.2.8. Leasing
2.3 Personal Financial Statement Analysis
2.3.1. Cash inflows and outflows- Cash Management
2.3.2. Income and expenditure statement
2.3.3. Budgeting and forecasting
2.3.4. Monitoring budgets and provisions for savings
2.3.5. Personal Balance Sheet and Net Worth
2.4 Forms of Business Ownership/ Entity
Relationships
2.4.1. Sole Proprietorship
2.4.2. Partnership Firm
2.4.3. Limited Liability Partnership
2.4.4. Limited liability companies
2.4.5. Trusts
2.4.6. Foundations/ exempt organizations
2.4.7. Cooperative societies
2.5 Concepts in Behavioral Finance
2.5.1. Prospect Theory
2.5.2. Herd Behavior
2.5.3. Anchoring and Contrarian Investing
2.5.4. Mental Accounting and Gambler’s Fallacy
2.6 Behavioral Finance- Investor Psychology
2.6.1. Value Investing and Behavioral Finance
2.6.2. Role of emotions in financial decision making – Common errors
2.6.3. Skewness of Asset Allocation due to cultural or historical bias
2.6.4. Basic investment style and its drawbacks
2.7 Economic Environment Analysis
2.7.1. Demand and Supply
2.7.2. Inflation and Recession
2.7.3. Deflation and stagflation
2.7.4. Interest rates/yield curves
2.7.5. Equity investment and real return
2.7.6. Government Monitory and Fiscal Policies
2.7.7. The impact of business cycles
2.7.8. Impact of global economic environment
2.7.9. Impact of global factors on Foreign Exchange Rate
2.7.10. Key indicators- leading, lagging and concurrent
Section III: Financial Mathematics
and topics covered:
3.1 Calculation of Returns
„Grade 1,3 & 4 ‟
3.1.1. Nominal Rate of Return
3.1.2. Effective Rate of Return
3.1.3. Internal Rate of Return (IRR)
3.1.4. Internal Rate of Return irregular cash flows (XIRR)
3.1.5. Compounded Annual Growth Rate (CAGR)
3.1.6. Real Rate of Return
3.1.7. Rate of Return after adjusting taxes
3.1.8. Analysis of Return
3.2 Time Value of Money
„Grade 3 ‟
3.2.1. Present Value
3.2.2. Net Present Value
3.2.3. Future Value
3.3 Loan Calculations
„Grade 3 & 4 ‟
3.3.1. EMI calculation
3.3.2. Loan Restructuring- Present value of future payments
3.3.3. Loan Repayment Schedules
3.3.4. Repayment Schedules with Varying Interest Rates
3.3.5. Amortization
3.3.6. Home Equity
3.3.7. Refinancing Cost
3.3.8. Fixed EMI vs. Fixed Tenure
3.4 Total Assets, Net Worth and Financial Ratios
„Grade 3 & 4‟
3.4.1. Net Worth and its Components
3.4.2. Liquidity Ratios
3.4.3. Debt to Income Ratio, Debt to Financial Assets, Debt to Total Assets
3.4.4. Savings Ratio
Section IV: FPSB India’s Financial Planner Code of Ethics, Professional Responsibility and Model Rule of Conduct
and topics covered:
4.1 The Code of Ethics and Professional Responsibility
„Grade 1 & 2‟
4.1.1. Code of Ethic 1 – Client First
4.1.2. Code of Ethic 2 – Integrity
4.1.3. Code of Ethic 3 – Objectivity
4.1.4. Code of Ethic 4 – Fairness
4.1.5. Code of Ethic 5 – Professionalism
4.1.6. Code of Ethic 6 – Competence
4.1.7. Code of Ethic 7 – Confidentiality
4.1.8. Code of Ethic 8 – Diligence
4.2 Ethical and Professional Considerations
in Financial Planning
„Grade 1 & 2‟
4.2.1. CFPCM Professional‟s responsibilities towards clients and public at large
4.2.2. Client agreements and confidentiality clauses
4.2.3. Model Rules of Conduct for CFPCM Professionals
4.2.4. CFP marks usage for CFPCM Certificant
4.2.5. Other relevant legislative requirements and responsibilities
Section V: Regulatory Environment Related to Financial Planning
5.1 Regulation Relating to Individuals
5.1.1. Contracts
5.1.2. Negotiable Instruments
5.1.3. Torts
5.1.4. Professional Liability and Fiduciary Responsibility
5.1.5. Agency law
5.1.6. Consumer Protection Law
5.1.7. Family Laws-Divorce
5.1.8. Indian Succession Act
5.2 Function, Purpose and Regulation of
Financial Institutions
5.2.1. Banks
5.2.2. Brokerage companies
5.2.3. Insurance companies
5.2.4. Mutual fund companies
5.2.5. Credit Rating Agencies
5.2.6. Non Banking Financial Companies
5.3 Other Relevant Regulation
5.3.1. Indian Companies Act- 1956
5.3.2. Indian Partnership Act- 1932
5.3.3. Limited Liability Partnership Act- 2008
5.3.4. Foreign Exchange Management Act- 1999
5.3.5. Disclosure and Investor Protection Guideline, 2000 issued by SEBI (DIP
Guidelines)
5.3.6. Prevention of Money Laundering Act-2002 (PMLA)
Module III (Exam 2) – Retirement Planning and Employee Benefits (RPEB)
Section I: Employee Benefits and Superannuation Benefits
and topics covered:
1.1. Employee Benefits
1.1.1. Salary and Bonus
1.1.2. Reimbursement of expenses- Medical, etc.
1.1.3. Health benefits
1.1.4. Group insurance
1.1.5. Other allowances- Leave Travel Allowance (LTA), Transport Allowance, etc.
1.1.6. Loan facility- Concessional loans
1.2. Superannuation Benefits and Schemes
1.2.1. Gratuity provisions
1.2.2. Superannuation Funds – Tax Benefit to Employers and Employees
1.2.3. Benefits – on retirement, Voluntary retirement and Death
1.2.4. Leave Encashment- Tax free limits
1.3. Defined Benefit Plans and Limitation
1.3.1. Characteristics of Defined Benefit plans
1.3.2. Workmen Compensation Scheme
1.3.3. Employees Deposit Linked Insurance Scheme
1.3.4. Applicability and withdrawal norms of Defined Benefit plans
1.3.5. Taxability of Defined Benefit plans
1.4. Defined Contribution Plans
1.4.1. Characteristics of Defined Contribution plans
1.4.2. Employees Provident Fund- Types, EPF rules, modes of operation and investment
norms
1.4.3. Employees Pension Scheme- Features, funding of scheme, EPS Rules
1.4.4. Employees State Insurance
1.4.5. Central Government Employees Group Insurance Scheme
1.4.6. Applicability and withdrawal norms of Defined Contribution plans
1.4.7. Taxability of Defined Contribution plans
Section II: Life Cycle Analysis, Retirement Needs and Factors in Planning
2.1. Introduction to Retirement Planning
2.1.1. Significance of Retirement Planning
2.1.2. Purpose and need of Retirement Planning
2.1.3. Role of Financial Planner in Retirement Planning
2.1.4. Importance of starting early
‘Grade 3&4’
2.2. Analysis of Client’s Life Cycle
2.2.1. Early earning stage and Established earning stage
2.2.2. Stability and Visibility of Earnings
2.2.3. Pre-retirement phase (Accumulation) and Post-retirement phase (Distribution)
2.2.4. Life expectancy vs. Retirement age
2.2.5. Early retirement vs. Delaying retirement ‘Grade 3’
2.2.6. Post-retirement activities and goals
2.2.7. Risk of living longer than expected
‘Grade 4’
2.3. Factors Considered in Retirement Planning
2.3.1. Nature of income- Salaried, Business or Self-employed
2.3.2. Standard of living
2.3.3. Time horizon
2.3.4. Inflation rate- Accumulation and Distribution stages ‘Grade 2&4’
2.3.5. Profile of Assets sustainable through retirement
2.3.6. Income generation potential of fixed assets
2.3.7. Liquidity aspects of fixed and other assets
2.3.8. Profile of financial and other liabilities near retirement age ‘Grade 3’
2.4. Analysis of Client’s Retirement Needs
„Grade 2,3 & 4‟
2.4.1. Determine financial objectives on Retirement
2.4.2. Estimate household expenses on Retirement
2.4.3. Corpus estimated for funding post-retirement needs ‘Grade 3’
2.4.4. Alternative arrangements for supplementing retirement corpus ‘Grade 4’
2.4.5. Consider escalated medical expenses post-retirement ‘Grade 4’
2.4.6. Charitable activities and social work ‘Grade 4’
2.5. Wealth Creation- Factors and Principles
2.5.1. Income and savings ratio
2.5.2. Allocation of savings to asset classes
2.5.3. Consistency in savings and monitoring
2.5.4. Taking strategic advantage of opportunities in various Asset Classes
2.5.5. Overall effective yield and tax aspects
2.5.6. Wealth protection and Erosion of wealth
Section III: Creation and Sustenance of Retirement Fund- Risk Profiling,
Strategies Adopted and Modified through Life Stages
3.1. Retirement Planning Process
3.1.1. Ascertain client‟s household expenses continuing through retirement
3.1.2. Estimate average expected inflation rate pre and post-retirement
3.1.3. Estimate client‟s expenses post-retirement
3.1.4. Ascertain income from fixed assets post-retirement
„Grade 3&4‟
3.1.5. Estimate client couple‟s life expectancy
3.1.6. Estimate corpus to be accumulated ‘Grade 3&4’
3.1.7. Ascertain client‟s current sources of income and saving potential
3.1.8. Prioritize investible surplus in various financial goals including retirement
3.1.9. Ascertain risk profile of client and changes with life stages
3.1.10. Ascertain risk capacity as per age and asset profile
‘Grade 3&4’
3.1.11. Ascertain client‟s Asset Allocation to create retirement corpus ‘Grade 3&4’
3.1.12. Optimize rate of return from the chosen Asset Classes
‘Grade 3&4’
3.2. Pre-retirement Strategies
3.2.1. Step increase in investment while maintaining asset allocation
3.2.2. Alter allocation strategically to capitalize on asset classes anomalies
3.2.3. Alter asset allocation through life stages to retirement
3.2.4. Provision for contingency fund creation close to retirement
3.2.5. Rebalance accumulated funds in line with defined Asset Allocation
3.2.6. Use of Small Savings Schemes in transitioning to retirement
3.2.7. Hunt for a suitable annuity product to transfer fund near retirement
3.3. Post-retirement Strategies
3.3.1. Allocate corpus to annuity/other products for regular income stream
3.3.2. Reverse Mortgage facility to supplement retirement income – Fixed Annuity
3.3.3. Reverse Mortgage facility – Lump sum payment and Credit line
3.3.4. Retrenchment of expenses, if any
3.3.5. Choice of annuities – Life vs. Certain, and withdrawal strategy
3.3.6. Government sponsored regular income schemes- Senior Citizens Savings Scheme,
Post Office Monthly Income Scheme
3.3.7. Appropriate asset allocation for income generation
3.3.8. Manage contingency funds and supplement them
Section IV: Provident Fund and Pension Schemes
4.1. Public Provident Fund
4.1.1. Features of Public Provident Fund (PPF) scheme
4.1.2. Applicability and subscription norms of PPF scheme
4.1.3. Loan and withdrawal facility in PPF scheme
4.1.4. PPF – Systematic accumulation for retirement funds ‘Grade 3&4’
4.1.5. Tax advantage of PPF scheme
4.2. New Pension System (NPS)
4.2.1. Features of New Pension System (NPS)
4.2.2. Applicability and subscription norms
4.2.3. Accounts and schemes available under NPS
4.2.4. Investment approaches in NPS – Active and Auto choices
4.2.5. Tax benefits under NPS
4.2.6. Withdrawals norms and other benefits
4.2.7. Functions of Pension Funds managers and NPS Trust
4.3. Pension Plans from Mutual Funds and
Insurance Companies
4.3.1. Pension plans from insurance companies: Unit Linked Pension Plans
4.3.2. Pension plans from Mutual Funds: Systematic investment/withdrawal
4.3.3. Immediate annuities vs. Deferred annuities
4.3.4. Annuities- Period certain, Life certain and Life with period certain ‘Grade 3&4’
4.3.5. Taxation of annuities- On subscriptions and receipts
4.4. Reverse Mortgage to Supplement Post-
retirement Expenses
4.4.1 Features of Reverse Mortgage
4.4.2 Lump sum withdrawal
4.4.3 Reclaiming property in Reverse Mortgage arrangement
Section V: Pension Sector Reforms and Regulatory Framework of
5.1. Pension Sector Reforms
5.1.1. Demographic trends and coverage of population
5.1.2. Mandatory contributory system
5.1.3. Institutional Framework
5.1.4. Investment architecture
5.1.5. Operational processes, products and distribution
5.1.6. State Governments, Autonomous Bodies and Un-organized Sector
5.1.7. The Project of OASIS Report
5.2. Regulatory Framework of Retirement
Solutions
5.2.1. Payment of Gratuity Act- 1972
5.2.2. Workmen‟s Compensation Act- 1923
5.2.3. Provident Fund and Miscellaneous Provisions Act- 1952
5.2.4. Provident Funds Act- 1925
5.2.5. Employee‟s Deposit Linked Insurance Scheme- 1976
5.2.6. Employee‟s Pension Scheme-1995
5.2.7. Pension Fund Regulatory and Development Authority (PFRDA) 2003
5.2.8. New Pension System (PFRDA)
Module IV (Exam 3) – Investment Planning (IP)
Section I: Investment Products Universe and their Applications
1.1. Fixed Income Instruments
1.1.1. Government Securities – Fixed and variable coupon rates, zero coupon bonds
1.1.2. Corporate Bonds, PSU Bonds and Debentures
1.1.3. Term Deposits – Bank, Post office and Corporate deposits
1.1.4. Small Saving Schemes – National Savings Certificate (NSC), Public Provident
Fund (PPF), Post Office Monthly Income Scheme (POMIS), Senior Citizens
Savings Scheme (SCSS)
1.1.5. Money Market Instruments – Treasury Bills, Commercial Paper, Certificate of
Deposit, etc.
1.1.6. Suitability of regular income generation from Investment Portfolio
1.2. Mutual Fund Products
1.2.1. Money Market Mutual Funds (MMMFs) and Liquid Fund Schemes
1.2.2. Debt Fund, Gilt Fund, Fixed Maturity Plan (FMP), etc.
1.2.3. Equity Fund – Diversified equity schemes, Large cap/ Mid cap/ Small cap
funds, Sectoral funds and Index funds
1.2.4. Hybrid Funds / Balanced Mutual Fund schemes and Monthly Income Plans
(MIPs)
1.2.5. Exchange Traded Funds (ETFs) – Index and Sectoral Index ETFs
1.2.6. Gold ETFs and Other commodity ETFs
1.2.7. Funds investing in Overseas Securities and Arbitrage Funds
1.2.8. Distribution and Sales practices of Mutual Fund schemes
1.3. Equity Market
1.3.1. Major Stock Exchange Indices – Sensex and Nifty, their basis and composition
1.3.2. Concept of investing in equity shares – Shareholder Rights
1.3.3. Equity shares – Blue-chip, Growth and high dividend yield shares
1.3.4. Stock Trading
1.3.5. Market performance analysis and Technical analysis of indices
1.3.6. Stocks- Fundamental and Technical Analysis
1.3.7. Portfolio Management Scheme (PMS)
1.3.8. Market Correction – Value correction and Time correction
1.3.9. Understanding Earnings Growth Cycle
1.3.10. Understanding Capital Cycle
1.3.11. Understanding Secular Bull and Bear Cycles
1.4. Derivatives and Commodities
1.4.1. Essential features of Derivatives
1.4.2. Futures and Options – Call Option and Put Option
1.4.3. Commodity Investments – Futures, Physical stock, ETFs, etc.
1.4.4. e-Gold, e-Silver, etc.
1.5. Foreign Exchange Market
1.5.1. Functions of the Foreign Exchange Market and Participants
1.5.2. Determinants of Exchange Rates
1.5.3. Speculative and Hedging instruments – Futures, Options, Interest Rate
Swaps, etc.
1.6. Real Estate and other Investments
1.6.1. Forms of Real estate- Land, Residential and Commercial
1.6.2. Interplay of cost of credit, rentals and tax benefits on Realty Investments
1.6.3. Ways to gain long-term capital appreciation and steady income steam
1.6.4. Real Estate Investment Trusts (REITs) and Real Estate Mutual Funds (REMFs)
1.6.5. Art and Antiques
1.6.6. Venture Capital Fund (VCF) and Private Equity (PE) investment
1.6.7. Structured Products
Section II: Risk Profiling of Products and Investors- Asset Allocation
Determination
Theoretical (predominantly) testing clarity of concepts or
Numerical testing basic skill sets:
Numerical testing analytical skills & synthesis:
Total weight to Exam 3
17.33%
Nature of Test Items
3 items: 1 mark each
2 items: 2 marks each
5 items: 3 marks each
1 item : 4 marks
and topics covered:
2.1. Types of Investment Risks
2.1.1. Market Risk – Systematic and Unsystematic
2.1.2. Inflation Risk
2.1.3. Interest Rate Risk
2.1.4. Purchasing Power Risk
2.1.5. Liquidity Risk
2.1.6. Reinvestment Risk
2.1.7. Exchange Rate Risk
2.1.8. Regulatory Risk
2.1.9. Investment Manager (Alpha) Risk
2.1.10. Business Risk
2.2. Product Profiling in terms of inherent
Risk and Tenure
2.2.1. Short-term products – Low returns with capital protection
2.2.2. Medium-term products – Inflation beating with reasonable capital appreciation
2.2.3. Long-term products – Managed risk for wealth creation in the long-term
2.3. Risk Profiling of Investors
„Grade 1&2‟
2.3.1. Understanding investor‟s investment psychology and investment behavior
2.3.2. Risk based on investor‟s life stage
2.3.3. Risk based on investor‟s earnings, income generation and assets
2.3.4. Risk Tolerance – Risk Capacity and Risk Appetite
2.3.5. Classifying investors as per their risk profile
2.3.6. Matching products to investor‟s profile and tenure of goals
2.4. Asset Allocation- Financial Assets
„Grade 3 & 4‟
2.4.1. Asset Allocation – Base of Investment Planning
2.4.2. Asset Classes – Equity, Debt, Cash, Precious metals
2.4.3. Expected Rate of Return
2.4.4. Goal specific Asset Allocation
2.4.5. Asset Allocation changes when approaching goals
2.4.6. Selection of asset mix according to client’s goals
2.5. Types of Asset Allocation Strategies
2.5.1. Strategic Asset Allocation
2.5.2. Tactical Asset Allocation
2.5.3. Life Stage based Asset Allocation
Section III: Goal-based Investment Planning, Measuring and Managing
Risks, Analysis of Returns
Theoretical (predominantly) testing clarity of concepts or
Numerical testing basic skill sets:
Numerical testing analytical skills & synthesis:
Total weight to Exam 3
25.33%
Nature of Test Items
3 items: 1 mark each
2 items: 2 marks each
5 items: 3 marks each
4 items: 4 marks each
and topics covered:
3.1. Investment Planning to achieve Financial
Goals
3.1.1. Goal specific Investment Portfolio vs. Common Investment Pool
3.1.2. Selection of Products and Product Diversification
3.1.3. Additional lump sum investments vs. Systematic staggered investments
‘Grade 3&4’
3.1.4. Monitoring progress in investment portfolio for goal achievement
‘Grade 3&4’
3.1.5. Addressing risk aversion
3.1.6. Avoiding speculation
3.1.7. Protecting portfolio erosion
3.2. Measuring Risk
„Grade 3 & 4‟
3.2.1. Expected Returns from a Goal Portfolio
3.2.2. Beta and Portfolio Beta
3.2.3. Variance, Semi-variance and Covariance
3.2.4. Standard Deviation including Standard Deviation of portfolio
3.2.5. Correlation and Correlation Coefficient
3.3. Diversification Strategies
3.3.1. Types of Diversification – Horizontal, Vertical, Geographical, cross border
3.3.2. Diversifiable and non-diversifiable risk
3.3.3. Nature of products used for diversification
3.3.4. Time diversification
3.3.5. Effect of diversification on portfolio risk and return
‘Grade 3&4’
3.3.6. Hedging
3.4. Analysis of Returns
„Grade 3 & 4‟
3.4.1. Power of Compounding
3.4.2. Time Weighted Return vs. Rupee Weighted Return
3.4.3. Real (Inflation Adjusted) vs. Nominal Rate of Return
3.4.4. Effective vs. Nominal Rate of Return
3.4.5. Holding Period Return (HPR)
3.4.6. Compounded Annual Growth Rate (CAGR) and Internal Rate of Return (IRR)
3.4.7. Yield to Maturity (YTM), Yield to Call and Current Yield
3.4.8. Performance Analysis of stocks – Dividend Yield, Earning per Share (EPS)
3.4.9. Market valuation ratios – Price to Earnings Ratio (P/E), Price to Book Value
(P/B)
3.4.10. Market P/E ratios – Undervalued or Overvalued markets
3.4.11. Security Valuation- Dividend Discount Model (DDM)
3.4.12. Analysis of Growth, Dividend Payout and Reinvestment options (MF
Schemes)
3.4.13. Measurement and Evaluation of Portfolio Performance
Section IV: Investment Strategies and Portfolio Management
Theoretical (predominantly) testing clarity of concepts or
Numerical testing basic skill sets:
Numerical testing analytical skills & synthesis:
Total weight to Exam 3
17.33%
Nature of Test Items
4 items: 1 mark each
2 items: 2 marks each
2 items: 3 marks each
3 items: 4 marks each
and topics covered:
4.1. Active Investment Strategies
„Grade 1,2 & 3‟
4.1.1. Dynamic management of Asset Allocation across classes
4.1.2. Frequent churning of portfolio to book profits/losses
4.1.3. Hunting for gains from investing in temporarily undervalued sectors/stocks
4.1.4. Speculation, Hedging and Arbitrage Strategies
4.1.5. Options and Futures
4.1.6. Market timing
4.1.7. Securities selection
4.1.8. Investment Style – Value vs. Growth
4.2. Passive Investment Strategies
„Grade 2,3 & 4‟
4.2.1. Buy and Hold strategy
4.2.2. Index Investing
4.2.3. Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP) and
Systematic Transfer Plan (STP)
4.2.4. Value Averaging Investment Plan (VIP)
4.3. Investment Portfolio Management
„Grade 2,3 & 4‟
4.3.1. Relationship between Risk and Return
4.3.2. Risk and return on a portfolio – Sharpe, Treynor and Jensen‟s Ratio
4.3.3. Capital Asset Pricing Module (CAPM)
4.3.4. Capital Market Line (CML) and Security Market Line (SML)
4.3.5. Modern Portfolio Theory (MPT)
4.3.6. Monte Carlo Simulation for portfolio optimization
4.4. Revision of Portfolio
„Grade 1,2,3 & 4‟
4.4.1. Benefits of Revision
4.4.2. Periodic review and revision of portfolio
4.4.3. Portfolio Rebalancing ‘Grade 3&4’
4.4.4. Buy and Hold policy, Constant Mix policy and Portfolio Insurance policy
4.4.5. Portfolio upgrading
Section V: Regulatory Aspects- Investment Products and Investment
Advisory
Theoretical testing clarity of concepts:
Total weight to Exam 3
8%
Nature of Test Items
8 items: 1 mark each
2 items: 2 marks each
and topics covered:
5.1. Regulatory
Oversight
of
Financial
Products and Services
5.1.1. Reserve Bank of India (RBI) Act-1934
5.1.2. Securities and Exchange Board of India (SEBI) Act-1992
5.1.3. Securities Contract Regulation (SCR) Act-1956
5.1.4. Foreign Exchange Management Act-1999
5.1.5. Disclosure and Investor Protection Guideline issued by SEBI
5.1.6. Grievance Mechanisms, SEBI Ombudsman Regulations-2003
5.1.7. Right to Information (RTI) Act-2005
5.1.8. Forward Contacts (Regulation) Act-1952
5.1.9. SEBI Investment Advisers Regulations, 2013
5.2. Other Entities Facilitating Market Play and
Intermediation
5.2.1. Major Stock Exchanges – National Stock Exchange (NSE) and Bombay Stock
Exchange (BSE)
5.2.2. Major Commodity Exchanges – National Commodity and Derivatives Exchange
Limited (NCDEX), Multi Commodity Exchange of India Limited (MCX-SX),
National Multi Commodity Exchange of India Limited (NMCEIL)
5.2.3. Depositories – National Securities Depository Ltd. (NSDL) and Central
Depository Services Ltd. (CDSL)
5.2.4. Primary and Secondary Market Intermediaries – Merchant Bankers,
Stock Brokers, Individual Financial Advisors (IFAs), Investment Advisers,
CERTIFIED FINANCIAL PLANNERSCM professionals
Module V (Exam 4) – Tax Planning and Estate Planning (TPEP)
Section I: Features of Indian Tax System and Direct Taxes
1.1. Features of Indian Tax System
1.1.1. Three-tier federal structure of Taxation – Union Government, State
Governments and Urban/Rural Local Bodies
1.1.2. Direct and Indirect Taxes
1.1.3. Predominance of Indirect Taxes
1.1.4. Tax-induced distortions on investment and financing decisions
1.2. Indian Direct Tax structure
1.2.1. Central Board of Direct Taxes (CBDT)
1.2.2. Income-tax (IT) Act,1961 and Income Tax Rules (ITR),1962
1.2.3. Wealth Tax Act-1957
1.2.4. Finance Act
1.2.5. Judicial precedents – Tax tribunals and the Courts
1.3. Tax Compliance Matters
1.3.1. Tax Returns and Procedure of Assessment
1.3.2. ITR Forms, Filing dates and Documentation
1.3.3. E-filing of Income Tax Returns
1.3.4. Advance tax and due dates
1.3.5. Tax Deducted at Source (TDS)
1.3.6. Interest and Penalties
1.3.7. Fraud/concealment penalties
1.3.8. Tax Refund
1.4. Residency Rules
1.4.1. Residential status of an individual
1.4.2. Residential status of other taxable entities
1.4.3. Indian income and Foreign income
1.4.4. Tax incidence for different taxpayers
Section II: Personal Taxation and Business Taxation- Computation and Tax
Efficiency
and topics covered:
2.1. Salary Income
„Grade 1,2 & 3‟
2.1.1. Gross Salary Income – Basic pay, Bonus, Allowances, Retirement benefits and
Perquisites
2.1.2. Treatment of various Allowances
2.1.3. Perquisites – Valuation and Taxability
2.1.4. Treatment of Retirement Benefits and Voluntary Retirement Scheme (VRS)
2.1.5. Profit in lieu of Salary
2.1.6. Deductions from Salary
2.2. Income from House Property
„Grade 2, 3 & 4‟
2.2.1. Basis of charge and applicability
2.2.2. Self Occupied and Let out House Property
2.2.3. Determination of Gross and Net Annual Value
2.2.4. Deductions and Special provisions
2.3. Income from Business or Profession
„Grade 2 & 3‟
2.3.1. Scope of Income and its computation
2.3.2. Deductible and Inadmissible Expenses
2.3.3. Deemed Income and Special Provisions
2.3.4. Tax Shelter and Tax Holidays
2.4. Capital Gains in Transfer of Capital Assets
„Grade 1, 3 & 4‟
2.4.1. Nature of Capital Gain – Short Term or Long Term depending on capital asset
and holding period
2.4.2. Application of Cost Inflation Index (CII) in computing indexed cost of
Acquisition/renovation
2.4.3. Computation of Capital Gains/Losses
2.4.4. Netting rules and carry forward of capital losses
2.4.5. Exemptions in Capital Gains
2.5. Income from Residuary Sources and Tax
Calculation Rules
2.5.1. Income from Other Sources – Chargeability, Exemptions and Deductions
2.5.2. Clubbing of Income
2.5.3. Deductions under Chapter VI-A
2.5.4. Taxable income
2.5.5. Tax liability
2.6. Tax Characteristics of Business Forms
2.6.1. Sole Proprietorship
2.6.2. Partnership Firm
2.6.3. Hindu Undivided Family (HUF)
2.6.4. Association of persons (AOP)
2.6.5. Cooperative Societies
2.6.6. Trusts
2.6.7. Companies
2.6.8. Others
Section III: Taxation of Various Financial Products and Transactions,
Tax Planning Strategies
and topics covered:
3.1. Tax Implications for Non-resident Indians
(NRIs)
3.1.1. Exempt Income of Non-resident Indians (NRIs)
3.1.2. Special provisions on certain transactions
3.1.3. Double Taxation Relief
3.2. Tax Planning – Various Avenues and
Techniques
3.2.1. Need and Importance of Tax Planning
3.2.2. Tax Planning vs. Tax Evasion and Avoidance
3.2.3. Tax Planning vs. Tax Management
3.2.4. Deferral of tax liability
3.2.5. Maximizations of exclusions and credits
3.2.6. Managing loss limitations ‘
3.2.7. Deductible expenditures of individuals and business forms
3.3. Taxability of Various Financial Products
3.3.1. Provident Fund and Small Savings Schemes – Contribution, Interest,
Withdrawal and Terminal value
3.3.2. Equity shares – Listed and unlisted
3.3.3. Equity Transactions – stock market and off market
3.3.4. Equity oriented products – Equity schemes of Mutual Funds, ETFs, ELSS, etc.
3.3.5. Debt products – Bonds, Debentures, Government Securities, Income schemes
of Mutual Funds including Fixed Maturity Plans (FMPs) ‘Grade 3 & 4’
3.3.6. Income distribution and dividends on various investment products
‘Grade 3 & 4’
3.3.7. Securities Transaction Tax (STT) and Dividend Distribution Tax (DDT)
3.3.8. Life and Health Insurance products, Unit Linked Insurance Plans (ULIPs), Unit
Linked Pension Plans (ULPPs), etc.
3.3.9. Annuities, Pension Products and Reverse Mortgage Scheme
3.4. Taxation of Various Financial Transactions
„Grade 2, 3 & 4‟
3.4.1. Transaction in the nature of Gifts/Prizes/Winnings
3.4.2. Agricultural Income
3.4.3. Cash payment over a specified limit
3.4.4. Dividend and Bonus stripping provisions – shares, MF schemes including with
reinvestment option
3.5. Wealth Tax
3.5.1. Chargeability
3.5.2. Clubbing of Assets
3.5.3. Exemptions in respect of Assets
3.5.4. Valuation of Assets
Section IV: Estate Planning Process, Strategies and Taxation Aspects
and topics covered:
4.1. Estate Planning Overview
4.1.1. The concept of Estate Planning
4.1.2. Purpose and Need of Estate Planning
4.1.3. Risks and Drawbacks involved in Estate Planning
4.1.4. Hindu and Indian Succession Act
4.1.5. Succession – Testate and Intestate
4.2. Estate Planning Process
„Grade 2, 3 & 4‟
4.2.1. Collect comprehensive information and examine circumstances to set Estate
planning goals
4.2.2. Determine value of client‟s estate and liquidity aspects
4.2.3. Estimate cost of transfer and other expenses
4.2.4. Develop a plan of transfer
4.2.5. Implement plan and review periodically
4.3. Methods of Estate Planning
4.3.1. Will
4.3.2. Trust
4.3.3. Insurance
4.3.4. Gift
4.3.5. Power of Attorney
4.3.6. Transfer of property and partition ‘Grade 3’
4.4. Will
4.4.1. Characteristics and Contents of a Will
4.4.2. Types of Will – Unprivileged, Privileged, Joint, Mutual and Conditional
4.4.3. Legal requirements and Testamentary capacity
4.4.4. Modifying or revoking a Will
4.4.5. Probate Process
4.5. Powers of Attorney
4.5.1. Use and purpose
4.5.2. Types – General and Special
4.5.3. Revocation
4.5.4. Role of the executor
4.6. Trust Structure for Efficient Transfer
„Grade 2, 3 & 4‟
4.6.1. Trust structures for Tax Efficiency
4.6.2. Trust structure to align strategic objectives of the settler
4.6.3. Trust Perpetuities
4.6.4. Trust as Pass-through entity
4.6.5. Lower taxes on future earnings and capital gains
4.6.6. Direct acquisition of assets – Benefit of Stamp duty and Capital gains tax
4.6.7. Distributable net income
Section V: Vehicles of Estate Planning- Features
5.1. Intra-Family Business and Property
Transfer
5.1.1. Estate planning for family business
5.1.2. Forms of family business ownership
5.1.3. Calculating the value of the family business
5.1.4. Transfer of Business and inter-generation wealth transfer
5.1.5. Forms of property transfer – joint tenancy and tenancy-in-common
5.1.6. Offshore trusts and regulatory requirements
5.1.7. „Asset protection‟ and „Creditor protection period‟
5.2. Trusts – Characteristics & Regulation
5.2.1. The Indian Trust Act-1882
5.2.2. Classification of Trust – Revocable/Irrevocable and Simple/Complex
5.2.3. Characteristics of Trust – Discretionary and Determinate
5.2.4. Different types of a family trust
5.2.5. Family Trust V/s Will
5.2.6. Parties to Trust
5.2.7. Hybrid Trusts
5.2.8. Cancellation (Extinguishing) and Revocation of Trust
5.2.9. Other Provisions
Section – I: Financial Planning Process, Practice Standards, and professional responsibility
Sub-section 1: Financial Planning
1.1 The 6-Step Financial Planning Process
1.2 Client engagement rules, conflict resolution, and documentation
1.3 Financial Planning Practice Standards
1.4 Financial Planner Code of Ethics and Professional Responsibility, Model Rules of
Conduct
1.5 CFP Mark Usage
Sub-section 2: Financial situation analysis,
basic risk profiling and factors in financial
prudence
2.1. Risk Profiling of the client
2.2. Asset profiling, its allocation, liquidity and returns profile
2.3. Financial behavior and financial decision making
2.4. Debt Management
2.5. Personal Financial Statement Analysis
2.6. Net Worth and Financial Ratios
2.7. Loan schedules
2.8. Allocation of resources, cash flow to laid down goals
2.9. Basic and goal-specific asset allocation
Section – II: Risk Analysis and Insurance Planning
Sub-section 1: Insurance as a risk mitigation
tool, its outreach, legal aspects and
provisions
1.1 Insurance concepts and perception of risk
1.2 Assessment and identification of risk exposure
1.3 Types of personal risk covers – Assets, Life, Health
1.4 Insurance contracts and their legal discharge
1.5 Insurance provisions and basis of valuation
Sub-section 2: Risk assessment and basis of various risk covers
2.1 Assessment and identification of risk exposure
2.2 Selection of insurance products – purpose, type, coverage and duration
2.3 Basis of various risk covers – reinstatement
2.4 Individual health insurance and family health protection covers
2.5 Critical illness and disability covers
2.6 Various business specific covers
Sub-section 3: Insurance needs analysis, sufficiency and efficiency of coverage
3.1 Analysis of insurance needs
3.2 Economic value of human life
3.3 Coverage of expected future income stream
3.4 Replacement of future expenses of survivors
3.5 Risk cover based on future expenses, financial liabilities and major financial
goals
3.6 Methods of taking cover to ensure maximum insurance efficiency
Section – III: Retirement Planning and Employee Benefits
Sub-section 1: Assessment of retirement needs and options at various life stages of a client
1.1 Retirement solutions appropriate to the life stage of the client
1.2 Time horizons pre-and-post-retirement
1.3 Profile of fixed and financial assets on retirement
1.4 Income generating potential of various assets
1.5 Other income streams supporting retirement expenses
1.6 Assessment and analysis of various pension instruments available – Annuities,
NPS, PPF, EPF
1.7 Consistent savings towards retirement and its monitoring
Sub-section 2: Accumulation and management of retirement corpus; factors influencing decisions
2.1 Critical assessment of all parameters – economic and client-specific
2.2 Financial objectives on retirement and correct estimation of corpus
2.3 Retirement corpus to accommodate charity, gifts during survival and
bequeathing
2.4 Monitoring of allocated savings to the retirement corpus
2.5 Estimation of required rate of return and risk management
2.6 Estimation of withdrawal rate and possible retrenchment
2.7 Management of retirement funds near retirement with focus on capital
protection
2.8 Choosing the right annuity product on retirement and diversifying income
streams
2.9 Tax efficiency of retirement income streams
2.10 Reverse mortgage as a possible retirement income alternative
2.11 Case for preponing or postponing retirement
Section – IV: Investment Planning
Sub-section
1: Understanding various products and their profile for goal based investing
1.1 Investment products – Fixed income, equity, mutual funds, derivatives,
commodities, small savings, etc.
1.2 Investment risks associated with various products
1.3 Risk profiling of products suited to client‟s profile and goal
1.4 Real Estate as an asset category and investment class
Sub-section 2: Asset allocation, measurement of portfolio risk and returns
2.1 Investing funds in the appropriate Asset Allocation
2.2 Changing asset allocation with change in life stages
2.3 Monitoring progress of investment portfolio
2.4 Measurement of portfolio risks and returns
2.5 Valuation of securities
2.6 Performance analysis of securities, market and portfolios
Sub-section 3: Investment strategies; goal-
based
portfolio
construction,
analysis,
rebalancing and optimization
3.1 Goal-specific investing in strategic asset allocation
3.2 Monitoring of investment portfolio to assess goal achievement
3.3 Analysis of portfolio returns
3.4 Investment strategies – active and passive
3.5 Systematic investments and Value averaging methods
3.6 Investment styles
3.7 Ascertaining appropriate return to meet goals and devise diversified portfolio
3.8 Income generating potential of portfolios
3.9 Portfolio rebalancing
3.10 Portfolio optimization
3.11 Systematic redemption of portfolio near goals
Section – V: Tax Planning and Estate Planning
Sub-section 1: Tax incidence and relative tax
efficiency; Understanding and execution of
succession strategies
1.1 Comparative tax advantage of various investment products
1.2 Tax compliances
1.3 Tax incidence of various transactions
1.4 Tax efficiency in the transfer of assets
1.5 Characteristics and efficiency of various Estate vehicles
1.6 Provisions of Hindu and Indian Succession Act
1.7 Succession efficiency of all asset transactions
1.8 Estate planning for family business and family trust
Sub-section 2: Tax structure of investment,
portfolio, business forms, status, etc.
2.1 Taxability of various securities transactions
2.2 Tax adjusted returns of investments
2.3 Residency rules and taxation aspects of various status
2.4 Treatment of allowances and perquisites
2.5 Incidence of capital gains and their taxation
2.6 Carry forward and netting of capital gains
2.7 Tax structure of business forms
2.8 Trust structure for Estate planning and tax efficiency
Sub-section 3: Tax liability of various income
of clients, business income, investment
income and capital gains, transaction deals
3.1 Tax aspects of redemption from investments, portfolios
3.2 Tax liability computation of individual clients
3.3 Tax liability computation of business forms
3.4 Income from house property – self-occupied and rented house
3.5 Taxability of mutual funds – income, capital gains of debt schemes including
dividend reinvestment options
3.6 Bonus and dividend stripping rules while computing capital gains
3.7 Taxability of off-market transaction
