Practice standards - (300-1)

300-1 : Analyzing and evaluating the clients information

A Financial Planning practitioner shall analyze the information to gain an
understanding of the clients financial situation and the evaluate to what extent the client's
goals, need and priorities can be met by the clients resources and current course of action.
Prior to making recommendations to a client, it is necessary for the financial planning
practitioner to assess the client's financial situation and to determine the likelihood of
reaching the stated objectives by continuing present activities.
The practitioner will utilize client-specified, mutually agreed upon, and/or other reasonable
assumptions. Both personal and economic assumptions must be considered in this step of the
process. These assumptions may include, but are not limited to, the following:
Personal assumptions, such as: retirement age(s), life expectancy(ies), income needs, risk
factors, time horizon and special needs; and
Economic assumptions, such as: inflation rates, tax rates and investment returns.
Analysis and evaluation are critical to the financial planning process. These activities form the
foundation for determining strengths and weaknesses of the client's financial situation and
current course of action. These activities may also identify other issues that should be addressed.
As a result, it may be appropriate to amend the scope of the engagement and/or to obtain
additional information.
Islamic input : Apply the principles of
1. The Essentials (Al-Daruriyyah)
2. The Complementary (Al-Hajiyyah)
3. The Embellishments (Al-Tahsiniyyah)

A Financial Planning Practitioner shall be able to identify, analyze and evaluate the following
factors surrounding the clients financial status:-
The implications of a clients current and projected net worth and cash flow statements
Relevant tax issues and related implications to the clients
Economic, financial and social factors relevant to clients situation
Clients risk management and insurance situation
Clients retirement situation
Clients estate
Clients investment situation
As such the Financial Planning Practitioner shall possess broad general knowledge to enable him
to analyse and evaluate competently the above-mentioned areas of concern to address the
Clients goals, preferences and risk tolerance and should reflect anticipated future changes.
In a nutshell a CFP Certificant shall understand the comprehensive and integrated nature of
financial planning and how various areas of a Clients financial life interact.
Analysis and evaluation are critical to the Financial Planning process. These activities form the
foundation for determining strengths and weaknesses of the Client's financial situation and
current course of action. These activities may also identify other issues that should be addressed.
As a result, it may be appropriate to amend the scope of the engagement and/or to obtain
additional.
At this stage, the Financial Planning Practitioner shall produce and provide the Client, in a clear
and reasonable manner, an evaluation of the Clients status that identifies areas of strengths and
vulnerability, comparing them against the Clients goals, plans, restrictions and assessment of
financial risk tolerance.


Relationship to the Code
This Practice Standard relates to the Code through:-
Principle 2 - Objectivity, Rules 201 and 202;
Principle 3 - Competence, Rule 302;
Principle 7 - Diligence, Rule 701.

Principle 2 states that "A CFP Certificant shall be objective in providing Professional services to
Clients." Rule 201 states that "A CFP Certificant shall exercise reasonable and prudent
professional judgment in providing Professional services." And Rule 202 states that "A Financial
Planning Practitioner shall act in the interest of the Client."
Principle 3 states that a CFP Certificant shall provide services to Clients competently and
maintain the necessary knowledge and skill to continue to do so in those areas in which the CFP
Certificant is engaged." Rule 302 states that "A CFP Certificant shall offer advice only in those
areas in which the CFP Certificant has competence. In areas where the CFP Certificant is not
professionally competent, the CFP Certificant shall seek the counsel of qualified individuals
and/or refer Clients to such parties."
Under Principle 7, Rule 701 states that "A CFP Certificant shall provide services diligently."

Anticipated Impact Upon the Public
The public confidence and trust is served when a Financial Planning Practitioner is competent
and possesses skill to analyse and evaluate the Clients financial status.
Impact Upon the Financial Planning Profession
Compliance with this Practice Standard is on par with international standards of Professional
good practice acceptable to international council standard.
Impact Upon the Financial Planning Practitioner
The process of analysis and evaluation of the Client's relevant information and documents help
determine the focus on the specific tasks that need to be accomplished. Ultimately, this will
facilitate the Financial Planning Practitioner to develop appropriate recommendations for his
Client.

3002-2 : Time Line
A Financial Planning Practitioner shall be able to prepare a timeline of Clients life events
taking into account the Clients situation and intentions as defined in the objectives.
As such the Financial Planning Practitioner shall possess a general knowledge of significant
events and circumstances in life that may cause an individual to seek advice and an
understanding of their financial implication, the analytical skills necessary to prepare a time line
of a Clients life events and be able to integrate economic, financial and social factors in
preparing the timeline of events.

Relationship to the Code
This Practice Standard relates to the Code through:-
Principle 2 - Objectivity, Rules 201 and 202;
Principle 3 - Competence, Rule 302;
Principle 7 - Diligence, Rule 701.

Principle 2 states that "A CFP Certificant shall be objective in providing Professional services to
Clients." Rule 201 states that "A CFP Certificant shall exercise reasonable and prudent
professional judgment in providing professional services." And Rule 202 states that "A Financial
Planning Practitioner shall act in the interest of the Client."
Principle 3 states that a CFP Certificant shall provide services to Clients competently and
maintain the necessary knowledge and skill to continue to do so in those areas in which the CFP
Certificant is engaged." Rule 302 states that "A CFP Certificant shall offer advice only in those
areas in which the CFP Certificant has competence. In areas where the CFP Certificant is not
professionally competent, the CFP Certificant shall seek the counsel of qualified individuals
and/or refer Clients to such parties."
Under Principle 7, Rule 701 states that "A CFP Certificant shall provide services diligently."

Anticipated Impact Upon the Public
The public confidence and trust is served when a Financial Planning Practitioner is competent to
be able to prepare a timeline of Clients life events taking into account the Clients situation and
intentions as defined in the objectives.
Impact Upon the Financial Planning Profession
Compliance with this Practice Standard is on par with international standards of professional
good practice acceptable to international council standard.
Impact Upon the Financial Planning Practitioner
The timeline prepared help a Financial Planning Practitioner to focus on the specific tasks that
need to be accomplished within time frame reasonable expected by the Client.

Assessing clients risk profile
Practitioner shall produce and provide the client, in a clear and reasonable manner, an evaluation
of the clients status that identifies areas of strengths and vulnerability, comparing them against
the clients goals, plans, restrictions and assessment of financial risk tolerance.
Risk tolerance is the ability to endure negative return on investment
A rational man is one who is risk averse for the same expected return, he will choose the least
risky investment and vice-versa. This is the norm.
The clients net worth position is the arbiter of financial risk tolerance not some questionnaire
to measure a persons trait of risk.

E-G-A vis a vis shariah
The E-G-A practice standards are based on 4 principle i.e objectivity, fairness, competence and
diligence and these are all Islamic.
The professional and agreed to by the client is also an Islamic contract. It is an ijarah al-amal
(leasing of professional service).
The general advice on takaful, Islamic investment, zakat, Islamic estate and waqf when
determining the clients goals, needs, and priorities are all nasihah. Ad-din nu nasihah religion
is sincere advice.