Exam (elaborations)
FP511 Final Quiz Questions With Latest Answers Graded A+
- Course
- Institution
FP511 Final Quiz Questions With Latest Answers Graded A+
[Show more]
Content preview
FP511 Final Quiz Questions With LatestAnswers Graded A+
Which of the following activities would be appropriate if you were establishing and defining the client-planner relationship or gathering information necessary to fulfill the
engagement?
I. Collecting personal financial information
II. Inquiring about the number of dependents
III. Inquiring about the age or dates of birth of dependents
IV. Determining which stocks to purchase for the client's investment portfolio Answer- The correct answer is I, II, and III. Establishing and defining the client-
planner relationship does not include determining which stocks or investments to purchase. This occurs in the fourth phase of the financial planning process, developing the recommendations.
Which of the following CFP® certificants would likely be considered to be engaged in
financial planning or the material elements of financial planning?
I. Lance, who reviews a life insurance sales brochure with his client, Arthur, and completes a variable life insurance application
II. Nadia, who conducts comprehensive data gathering regarding Jason's investments, life insurance, retirement plans, wills, and trusts and makes recommendations for him Answer- The correct answer is II only. Because Nadia's services involve several of the financial planning subject areas and she is involved in
the elements of financial planning, she is likely providing financial planning. Lance's service to Arthur is limited, and the engagement would likely not be considered financial planning.
According to CFP Board Code of Ethics, Connor, a CFP® professional, is responsible for which of the following?
I. Acting in the client's best interests
II. Avoiding or disclosing and managing conflicts of interest
III. Acting with honesty, integrity, competence, and diligence
IV. Maintaining the confidentiality and protect the privacy of client information Answer- The correct answer is I, II, III, and IV. A CFP® professional must
Act with honesty, integrity, competence, and diligence.
Act in the client's best interests.
Exercise due care.
Avoid or disclose and manage conflicts of interest.
Maintain the confidentiality and protect the privacy of client information. Act in a manner that reflects positively on the financial planning profession and CFP® certification.
Amanda, a CFP® professional, is enjoying an afternoon at her son's school playground when she is approached by Tracy, a fellow parent and teacher at a local elementary school. Their conversation covers specifics about Tracy's personal and financial situation, with emphasis on a recommended investment strategy for her 403(b) account. Amanda is aware that she is providing Financial Advice to Tracy. Identify the correct application of rules from the Code and Standards based on Amanda and Tracy's interaction. Answer- The correct answer is although only Financial Advice has been determined, Amanda must uphold her Fiduciary Duty and must follow the Code of Ethics. As a CFP® professional, Amanda is obligated to uphold the Code of Ethics. In addition, since Financial Advice is occurring, Amanda must act as a Fiduciary, in the best interest of Tracy. The introduction of the Code and Standards specifically states "The Code of Ethics applies at all times, and sets forth principles that guide the behavior of CFP® professionals, with elaboration provided in the Standards."
Bill and Sophia have recently retired and want to travel to Europe and then volunteer
for local mission work. They would also like to meet with Humphrey, their financial planner, to discuss charitable contributions they would like to make to these local missions. Humphrey should determine Bill and Sophia's life cycle phase to be Answer- The correct answer is the distribution phase. The distribution/gifting phase begins subtly when a couple realizes that they can afford to spend on things they never believed possible. The asset accumulation and conservation/protection phases make this phase possible. For many people, there is a period when they are being influenced by all three phases simultaneously, though not necessarily to the same degree.
Whitney is designing her new email template which will reflect her recent certification
as a CFP® professional. Under her name, she has identified herself as a CFP™. In a tagline at the bottom of the template, she advertises herself as a "CFP® expert." According to CFP Board's guidelines regarding how the CFP®" marks may be used, which of the following is CORRECT?
I. Whitney has appropriately identified herself as a CFP™.
II. Advertising herself as a CFP® expert is prohibited by CFP Board. Answer- The correct answer is II only. Statement I is incorrect. Although, Whitney can identify herself as a CFP®, it must be done behind her name, not under it. If Whitney wants to identify herself under her name, she should do so as a ™. Statement II is correct. "CFP®" must always be used with one of CFP Board's approved nouns ("certificant",
"professional", "practitioner", "certification", "mark", or "exam") unless directly following the name of the individual certified by CFP Board. Here, it can be used alone.
Maxine, age 57, would like to retire in 10 years. Currently, her debt is decreasing as her cash flow and net worth are steadily increasing. Based on Maxine's current financial life cycle phase, which of the following goals is she likely to have? Answer- The correct answer is long-term goals, such as investing for retirement. Maxine is in the conservation/protection phase of the financial life cycle. As such, her goals are likely longer-term goals, such as investing to provide for future retirement income. In the accumulation phase of the financial life cycle, clients have only limited discretionary income and, as a result, they are likely to focus on short-term, cost-of-
living goals. Finally, in the distribution/gifting phase, estate planning and capital preservation are usually most important.
Blanca, a CFP® professional, has recently entered into a financial planning engagement with Simon. As his financial planner, which of the following are Blanca's
roles?
I. Analyzing Simon's current financial status
II. Assisting Simon in implementing the financial plan
III. Helping Simon identify financial goals and objectives Answer- The correct answer is I, II, and III. The financial planner is responsible for analyzing clients' financial status, assisting clients in implementing their financial plans, and making recommendations based on the client's goals and objectives.
Candice has referred Rochelle, a CFP® professional, to her brother, Nelson. In their initial meeting, Rochelle explains how she can help Nelson develop a comprehensive financial plan. Which of the following would be Rochelle's roles in a client-planner relationship with Nelson?
I. Assisting Nelson in identifying his goals
II. Analyzing Nelson's current financial status
III. Recommending strategies that will meet Nelson's business goals
IV. Providing documentation Rochelle needs to complete the financial plan Answer- The correct answer is I, II, and III. Rochelle is responsible for helping Nelson with identifying his goals and making recommendations based on those goals. She is also responsible for analyzing Nelson's current financial status. Nelson has the duty to provide documentation Rochelle needs to complete the financial plan.
In 2012, the average cost of a new home in Oakville was $150,000. In 2014 the average cost rose to $210,000. Due to an economic downturn in 2017, the average cost of a new home fell to $185,000, and the reaction to the decreased cost was positive, even though the new average cost was higher than the 2012 average cost of a new home. This behavior is known as Answer- The correct answer is anchoring. When the average cost of a new home rose in 2014 to $210,000, home buyers reset their psychological anchors to that cost. As the price declined in 2017 to
$185,000, the reaction was positive because it was considered in light of the higher 2014 price.
Recently, Fallon, an avid shopper, has heard from her friends that an investment in Shoes-2-You stock was a wise idea because the shoes sold are very stylish. Even though Fallon's financial planner has advised her that investing in this stock is a poor
decision, she invests in it anyway. Her brother, Stanley, congratulates her on her investment because he feels it is a wise investment. Stanley considers himself to be an expert in investments. Unfortunately, he considers his expertise to be much greater than it actually is. In the past, Stanley has taken credit for any investment decisions that have positive returns but blames the economy when an investment does poorly. Considering Fallon's and Stanley's behavior, which of the following statements is CORRECT? Answer- The correct answer is that Fallon's behavior is an example of confirmation bias; Stanley's behavior is representative of overconfidence. Confirmation bias is paying attention to information that supports a
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 EvaTee. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $18.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73773 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now