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Practice Exam FP511 Questions With
Verified Answers
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?
Collecting personal financial information
Inquiring about the number of dependents
Inquiring about the age or dates of birth of dependents
Determining which stocks to purchase for the client's investment portfolio
A)
I and II
B)
I, II, III, and IV
C)
II and III
D)
I, II, and III - 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.
LO 1.1.1
Which of the following CFP® certificants would likely be considered to be engaged in financial
planning or the material elements of financial planning?
Lance, who reviews a life insurance sales brochure with his client, Arthur, and completes a
variable life insurance application
Nadia, who conducts comprehensive data gathering regarding Jason's investments, life insurance,
retirement plans, wills, and trusts and makes recommendations for him
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A)
Neither I nor II
B)
II only
C)
Both I and II
D)
I only - 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.
LO 6.1.1
According to CFP Board Code of Ethics, Connor, a CFP® professional, is responsible for which
of the following?
Acting in the client's best interests
Avoiding or disclosing and managing conflicts of interest
Acting with honesty, integrity, competence, and diligence
Maintaining the confidentiality and protect the privacy of client information
A)
II and IV
B)
I, II, III, and IV
C)
I, III, and IV
D)
I and II - 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.
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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.
LO 1.2.1
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.
A)
Although only Financial Advice has been determined, Amanda must uphold her Fiduciary Duty
and must follow the Code of Ethics.
B)
Tracy is technically not a client and the conversation is occurring outside Amanda's office,
therefore, neither the Fiduciary requirements nor Code of Ethics applies.
C)
While not necessary, due to the lack Financial Planning, Amanda should consider applying
important principles from th - 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."
LO 1.2.2
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
A)
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the asset accumulation phase.
B)
the distribution phase.
C)
the conservation phase.
D)
the protection phase. - 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.
LO 1.1.2
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?
Whitney has appropriately identified herself as a CFP™.
Advertising herself as a CFP® expert is prohibited by CFP Board.
A)
Both I and II
B)
I only
C)
II only
D)
Neither I nor II - 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",
