Which statement regarding the traits or values of financial advisors is correct?
A. Professionalism is displayed by being competent and knowledgeable.
B. Diligence is displayed by being honest with clients.
C. Objectivity requires respecting clients' privacy.
D. Confidentiality requires the adv...
FP1 FULL PRACTICE EXAM
Which statement regarding the traits or values of financial advisors is correct?
A. Professionalism is displayed by being competent and knowledgeable.
B. Diligence is displayed by being honest with clients.
C. Objectivity requires respecting clients' privacy.
D. Confidentiality requires the advisor to make impartial recommendations. - ✔✔A.
Professionalism is displayed by being competent and knowledgeable.
Professionalism is displayed by being competent and knowledgeable by keeping up to date
regarding key aspects of the financial services industry.
By and large, what statement below is true in regards to the current landscape in Canada for
financial advisors?
A. There has been a dramatic shift to fee based advice as it's perceived as unbiased.
B. The role has shifted to a client driven model where building a strong client relationship is key.
C. The business is now product driven where it's all about selling higher commissioned products.
D. The industry is focusing on reducing costs and finding the most inexpensive investments for
clients. - ✔✔B. The role has shifted to a client driven model where building a strong client
relationship is key.
,The role of the Advisor in the financial services industry has changed in recent years from one
that is product driven to one that is client driven. Reference: Module 1, Section 1
Which statements about the evolution of the role of financial advisors is/are correct?
[I] The financial services industry has moved towards an integrated market and so have advisors.
[II] Advisors have fewer products and services to offer to clients.
[III] Advisors require a greater level of knowledge to recommend sophisticated alternatives to
clients.
A. I only.
B. I and III only.
C. II and III only.
D. I and II only. - ✔✔B. I and III only.
Advisors have to work within a highly integrated financial services market and must possess a
much higher level of knowledge than before to satisfy increasingly sophisticated clients.
Select the first step in the financial planning process.
A. Analyzing a client's data and information.
B. Recommending strategies to meet goals.
C. Establishing a relationship with the client.
,D. Collecting a client's data and information. - ✔✔C. Establishing a relationship with the client.
The first step in the financial planning process is for an advisor to establish a relationship with
the client; everything else follows.
Select the item that would provide you with quantitative data about your new client.
A. Profit sharing plan statement.
B. Risk tolerance assessment.
C. Goal setting questionnaire.
D. Fees and services agreement. - ✔✔A. Profit sharing plan statement.
Only the profit-sharing statement would provide you with quantitative data, i.e. numeric or other
specific data that can be quantified. The other options would provide qualitative data. Reference:
Module 1, Section 2.
Your client's goal is to improve her cash flow. Select the strategy that will be most effective in
helping her to reach her goal.
A. Improve investment return.
B. Reduce flexible expenses and lengthen time frame for investments.
C. Increase income and reduce expenses.
D. Contribute regularly to an emergency fund. - ✔✔C. Increase income and reduce expenses.
, Cash flow is the amount of money available for investment or other purposes. In this scenario,
the client is best able to free up money for investments by increasing the amount of money
coming in (income) and reducing the amount of money going out (expenses). While (b) would
improve cash flow by reducing some expenses, the addition of the increase in income in (c)
makes it more effective.
Kim does not recommend an investment fund to her clients that is heavily promoted by her own
firm's marketing department because her analysis demonstrates that it is not consistent for her
clients' goals. Select the type of responsibility that she is demonstrating.
A. Integrity.
B. Professionalism.
C. Objectivity.
D. Diligence. - ✔✔C. Objectivity.
Kim is fulfilling the responsibility of "Objectivity" which states that an adviser must not make
recommendations that benefit the adviser or the adviser's institution when there are other
products and services that might serve an adviser's clients better. Reference: Module 1, Section
2.
Select the most useful goal for setting investment priorities.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Tulloch. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $20.49. You're not tied to anything after your purchase.
