1). Identify the disclosure requirement that may be delivered either verbally or in writing when Financial Advice is delivered or within a Financial Planning engagement.
1. Privacy Policy
2. Engagement Letter
3. Payment Arrangement
4. Material Conflicts of Interest
2). According to the Practice Standards, all of the following are approved methods of documentation except
1. CRM software
2. voice memos
3. handwritten notes
4. emails
3). In the data-gathering process, quantitative data may include all of the following except
1. Section 401(k) statements
2. Insurance policies
3. Income tax returns
4. Personal goals and objectives
4). Identify information that may be acquired during the client data-gathering process.
I. A partnership agreement
II. Realistic investment return assumptions
III. Copies of disability income insurance policies
IV. Section 401(k) statements
1. I and IV
2. II and III
3. I, III, and IV
4. I, II, III, and IV
5). If the practitioner is unable to obtain sufficient and relevant quantitative information and documents to form a basis for recommendations, the practitioner must do which of these?
I. Restrict the scope of the engagement.
II. Terminate the engagement.
1. I only
2. II only
3. Either I or II
4. Neither I nor II
6). the goal-related action(s) that occurs in Step 2 of the Practice Standards.
I. Identifying Potential Goals
II. Selecting and Prioritizing Goals
III. Collaboration to establish personal and economic assumptions
IV. Discussion of unrealistic goals
1. I only
2. I and II
3. II, III, and IV
4. I, II, III, and IV
7). Identify the CORRECT statements regarding financial strengths and weaknesses.
I. Inadequate retirement savings is considered a financial weakness.
II. Very general financial goals are considered a financial strength.
III. Determining financial strengths and weaknesses is an objective process.
IV. The lack of a valid will is considered a financial weakness if a will is necessary to protect the interest of heirs.
1. I only
2. I and IV
3. III and IV
4. I, II, III, and IV professional, created a financial plan
8). Mateo, a CFP® professional, created a financial plan for his client, Emma, a single mother, who asked him to provide recommendations regarding her retirement. During that meeting, Mateo asked Emma if she would like a life insurance analysis. Emma declined, saying she was currently only interested in investing for her retirement. In the letter of engagement, signed by both parties, Mateo noted this. After discussing Emma’s retirement goals, needs, and priorities, and gathering her retirement information, Mateo set another appointment with Emma in which he would present a financial plan for her. Several weeks later, Mateo met with Emma to discuss her financial plan. In it, he provided two recommendations: (1) that Emma purchase an annuity to save for her retirement, and (2) that she purchase a life insurance policy so her young children would be financially secure in the event of her death. Neither recommendation was discussed in the plan. Emma advised Mateo that she does not like annuities as an investment and restated that she’s not interested in life insurance. How were Mateo’s recommendations in the plan inconsistent with the Practice Standards, Step 4: Developing the Financial Planning Recommendations?
I. He failed to adequately define the scope of his engagement with Emma.
II. He did not offer alternatives to the annuity for Emma’s retirement investment.
III. He did not stay within the scope of the engagement by recommending life insurance for Emma.
IV. In the plan, he failed to explain how the recommendation is designed to maximize the potential of Emma meeting her retirement goals.
1. I and III
2. I, II, and III
3. II, III, and IV
4. I, II, III, and IV
9). Sophia, a CFP® professional, is meeting with Eric and Emily to review the two recommendations included in their financial plan. The first recommendation discussed by Sophia was for Eric and Emily to “purchase term life insurance because it is inexpensive.” When asked why she was suggesting they purchase term life insurance, Sophia responded, “Because you both need it.” Sophia then moved on to talk about her second recommendation that the couple deposit an additional $500 per month in Eric’s 401(k) plan. She showed Eric and Emily a report assuming a 10% interest rate illustrating the retirement income they would receive if they deposited the additional funds. The couple told Sophia that they would do this because they wanted the security of a guaranteed monthly income during retirement. Which of Sophia’s actions did not align with the Practice Standards, Step 5: Presenting the Financial Planning Recommendations?
I. Sophia’s recommendation to “purchase term life insurance” was not clear enough.
II. Sophia did not provide Eric and Emily with pertinent facts to make an informed decision.
III. Sophia’s response regarding the reason she was recommending term insurance was adequate.
IV. Sophia should have advised the couple that the income assumed a 10% interest rate and was not guaranteed.
1. II and III
2. III and IV
3. I, II, and IV
4. I, II, III, and IV
10). Analyze this scenario. Bari, a CFP® professional, is providing Financial Advice to her client, Jamal. After considering Jamal’s goals, family medical history, tax situation, and financial resources, she develops a financial plan that includes a recommendation for Jamal to purchase disability income insurance. Which statement regarding implementation responsibilities is CORRECT?
I. Bari is not responsible for implementing this planning recommendation because it only involves the purchase of a single product.
II. Bari must explain to Jamal the responsibilities she has in implementing the recommendations and the responsibilities that Jamal and any third party may have with respect to implementation.
III. If Bari and Jamal have not excluded implementation responsibilities from the Engagement, Bari must recommend one or more disability insurance policies to Jamal and help him select a policy that will meet his needs.
IV. If Bari and Jamal have not excluded implementation responsibilities from the Engagement, Bari must identify and analyze policies designed to implement the recommendations and must consider advantages and disadvantages of the disability product relative to reasonably available alternatives.
1. I and II
2. II and III
3. II, III, and IV
4. I, II, III, and IV
11). Which of the following statements is CORRECT regarding financial planning?
I. The financial planner is responsible for implementing the client’s Financial Planning recommendation(s) unless specifically excluded from the Scope of Engagement.
II. The practitioner must communicate to the client any limitations on the scope of the engagement.
III. Recommendations must be written and prepared in a clear, understandable manner.
IV. Unrealistic goals must be discussed.
1. I only
2. I, II, and III
3. II, III, and IV
4. I, II, III, and IV
12). Kevin and Gina, ages 45 and 43, respectively, have engaged Mei, a CFP® professional, to help them develop their financial plan. All of the following should be considered when developing Kevin and Gina’s financial plan except
1. their current position in the life cycle.
2. their values, goals, and objectives.
3. their ability to provide referrals.
4. their financial position.
13). A person in the conservation or protection phase of the financial life cycle is likely to have which of the following goals?
Long-term goals, such as investing for retirement
Short-term goals, such as saving for a down payment on a home
Long-term goals, such as education planning and preservation of capital
Short-term goals, such as protection and maintenance of current lifestyle
14). Which of the following uses of the CFP® certification marks is CORRECT?
I. John Doe, C.F.P.
II. John Doe, a CFP
III. John Doe, CERTIFIED FINANCIAL PLANNER™
IV. John Doe, CFP®
IV only
I and III
II and IV
III and IV
15). As a member of a team of financial advisors, a financial planner’s responsibilities for a client typically includes which of the following?
I. Helping the client identify financial goals
II. Preparing tax returns for a small-business owner client
III. Analyzing the client’s current financial status
IV. Monitoring whether the client is following the plan after implementation
I and III
III and IV
I, III, and IV
I, II, III, and IV
