knowledge topics

The Brain

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM Professionals

Identify the competing biological parts of the brain.^†
- Central Limbic System (Immediate reward system)
- Prefrontal Cortex (Planning and predictive system)
Explain characteristics of how the Central Limbic System operates, such as:
- Emotional
- Focused on immediate gratification
- Fear of loss
- Automatic
- Quick
- Instinctive, impulsive, intuitive
- Emotional
- Focuses on existing evidence and ignores absent evidence
- Overweighs low probability events
- Neglects ambiguity
- Suppresses doubt
- Responds more strongly to losses than gains
- Frames problems in isolation; does not integrate
Explain operations performed by the Central Limbic System, such as:
- Generates impressions, feelings, intuitions and inclinations (to be used by the Prefrontal Cortex
- Creates patterns in memory for ideas already activated
- Distinguishes surprises from normal
- Infers and invents causes and intentions
- Makes short-term predictions and decisions regarding familiar situations
Explain potential impacts associated with operations performed by the Central Limbic System, such as:
- Reacts to current circumstances using memory, biases, and heuristics, resulting in appropriate decisions being made
- Reacts to current circumstances using memory, biases, and heuristics resulting in inappropriate decisions being made
- Engages System 2 for more detailed and specific processing (when violates world that System 1 maintains)
Explain characteristics of how the Prefrontal Cortex operates, such as:
- Deliberate
- Slower
- Effortful
- Logical
Explain operations performed by the Prefrontal Cortex, such as:
- Uses messages from System 1 to generate beliefs, attitudes, intentions
- Controls thoughts and behaviours
- Follows rules
- Makes comparisons among objects on several attributes to make deliberate choice
Explain potential impacts associated with operations performed by the Prefrontal cortex, such as:
- Endorse Central Limbic System’s judgement and accept it
- Reject Central Limbic System’s judgement, incorporate new information and make decision
Identify constraints that may impact the brain’s ability to make decisions, such as:
- Time
- Information (lack of, overload, incomplete, unknown)
- Knowledge
- Motivation
- Biological circumstances (fatigue, hunger)
- Resilience (to stress and anxiety)
- Quantity of decisions / thoughts / circumstances / emotions occurring simultaneously
- Environmental circumstances (physical environment, time of year, weather)
Identify decisions that are more likely to be made, such as:
- It is simple
- It is related to one topic
- It contains a limited number of choices
- It has minimal ambiguity
- The individual has come to the decision themselves

Thinking, Fast and Slow

Glossary of Verbs (mouse over to see definition)

Define

To state exactly the meaning of
Identify

To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain

To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Compare

To note the similarities and differences between two or more things
Estimate

To determine an approximate value for
Calculate

To find the value using mathematics
Convert

To change from one form or purpose to another
Evaluate

To reach a conclusion or make a judgement through careful study
Interpret

To give the meaning of / to construe or understand / to translate orally

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Financial Planning Body of Knowledge

knowledge topics

The Brain

KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals

Glossary of Verbs (mouse over to see definition)

RELEVANT CASE STUDIES

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM Professionals