1 of 49
Term
Harry and Deidre Salinger are both age 59 and plan to work to age
65. They have been filling their "bucket list" with all of the things they
plan to do in retirement and are really looking forward to getting
started on it, but are also concerned about outliving their money.
They have saved diligently in their company's 401(k) plan. In addition
to the 401(k)s, the Salingers each have variable universal life
insurance policies with $50,000 of cash value. They maintain their
checking and savings accounts at the bank where Deidre works, and
have a total of $35,000 in those two accounts.
The Salingers have asked you to guide them regarding their asset
allocation in the 401(k) plans and whether they can afford to retire at
65 and do the things on their bucket list. Which of the following is
the most important piece of additional information that you will
need to gather to assist them with these issues?
A. Investment risk tolerance
B. Summary of current income and expenses
C. Copy of their tax return
,D. Whether either of their employers offers continuation of health
insurance benefits for retirees
Give this one a try later!
Solution: The correct answer is D
Choice D is correct, naming an individual with special needs to a trust that
provides distributions for only health, education, maintenance, and support will
not effect the child's ability to qualify for federal or state benefits.
Choice A is incorrect as leaving assets through the will likely disqualify Millan for
federal and or state benefits.
Choice B is incorrect, the income generated from a revocable trust can
jeopardize income based benefits.
Choice C is incorrect, documents should be created naming a current guardian
in addition to Milly being a minor. Concern may also include the grandmother as
guardian as her age and longevity may not allow for time as a guardian.
Solution: The correct answer is A.
In order to determine the appropriate asset allocation, you must have an
understanding of the client's risk tolerance. Risk tolerance is also necessary
to make assumptions regarding investment return, which will affect the
analysis of whether they can afford to retire at age 65 and live the kind of
lifestyle they desire. Answers B and C are other items of information you
will need to gather to complete the financial plan, but in terms of the
question being asked, A is the most important piece of additional
information. D would be least important because if they retire at age 65 as
planned they will be eligible for Medicare.
Solution: The correct answer D.
D is correct under the revised Candidate Fitness Standards effective July 2012,
and as stated in the CFP Board Code and Standards E.3.l. His name will also be
included in a press release disclosing the bankruptcy. A is incorrect because that
was the prior requirement before the standards were revised. B is incorrect
because two or more bankruptcies are on the presumptive bar list. C is incorrect
because the Board must still be informed and will take the proactive measures
listed in Item D to ensure proper disclosure. Jonathan should also make written
disclosure of this event, but that alone is not sufficient.
, Solution: The correct answer is A.
The best answer is A. Mary can continue with the client. The principle of integrity
allows for differences of opinions with client relationships. However without the
client and planner agreeing to an outcome Selecting and Implementing Actions,
Products, or Services (Practice standard 6.d) would be inappropriate.
Don't know?
2 of 49
Term
Regulation Z, issued by the Federal Reserve Board, is a part of the
Consumer Credit Protection Act. Regulation Z requires that:
A. Lenders must disclose the items purchased.
B. Lenders must be given a "cooling off" period.
C. The dollar amount of finance charges and the annual percentage
rate be disclosed.
D. The length of time to pay the debt be disclosed.
Give this one a try later!
Solution: The correct answer is D.
Exceptions do not come under the jurisdiction of the Investment Advisor's Act
and need not register as investment advisors.
Solution: The correct answer is C.
Options "A", "B", and "D" are exposures for an employer even when the employee
has already accepted Workers Compensation.
, Solution: The correct answer is B.
A, C and D are integration factors provided by CFP Board's Financial Planning
and the Application of Practice Standards for The Financial Planning Process (4 a,
b and c).
Solution: The correct answer is C.
With the advent of Regulation Z, consumers were able to see the actual
cost (including finance changes) that they were paying in any transaction
they were making.
Don't know?
3 of 49
Term
Which of the following is required of a CFP® certificant engaging in
financial planning with their client?
A. Act as a fiduciary
B. Forgo commissions associated with selling or placing a financial
product
C. Address all of the core financial planning subject areas
D. Document all steps in the planning process with a written financial
plan
Give this one a try later!
Solution: The correct answer is B.
All of the reasons above fall under Duties Owed to Clients under the CFP® Board
Code and Standards.
Term
Harry and Deidre Salinger are both age 59 and plan to work to age
65. They have been filling their "bucket list" with all of the things they
plan to do in retirement and are really looking forward to getting
started on it, but are also concerned about outliving their money.
They have saved diligently in their company's 401(k) plan. In addition
to the 401(k)s, the Salingers each have variable universal life
insurance policies with $50,000 of cash value. They maintain their
checking and savings accounts at the bank where Deidre works, and
have a total of $35,000 in those two accounts.
The Salingers have asked you to guide them regarding their asset
allocation in the 401(k) plans and whether they can afford to retire at
65 and do the things on their bucket list. Which of the following is
the most important piece of additional information that you will
need to gather to assist them with these issues?
A. Investment risk tolerance
B. Summary of current income and expenses
C. Copy of their tax return
,D. Whether either of their employers offers continuation of health
insurance benefits for retirees
Give this one a try later!
Solution: The correct answer is D
Choice D is correct, naming an individual with special needs to a trust that
provides distributions for only health, education, maintenance, and support will
not effect the child's ability to qualify for federal or state benefits.
Choice A is incorrect as leaving assets through the will likely disqualify Millan for
federal and or state benefits.
Choice B is incorrect, the income generated from a revocable trust can
jeopardize income based benefits.
Choice C is incorrect, documents should be created naming a current guardian
in addition to Milly being a minor. Concern may also include the grandmother as
guardian as her age and longevity may not allow for time as a guardian.
Solution: The correct answer is A.
In order to determine the appropriate asset allocation, you must have an
understanding of the client's risk tolerance. Risk tolerance is also necessary
to make assumptions regarding investment return, which will affect the
analysis of whether they can afford to retire at age 65 and live the kind of
lifestyle they desire. Answers B and C are other items of information you
will need to gather to complete the financial plan, but in terms of the
question being asked, A is the most important piece of additional
information. D would be least important because if they retire at age 65 as
planned they will be eligible for Medicare.
Solution: The correct answer D.
D is correct under the revised Candidate Fitness Standards effective July 2012,
and as stated in the CFP Board Code and Standards E.3.l. His name will also be
included in a press release disclosing the bankruptcy. A is incorrect because that
was the prior requirement before the standards were revised. B is incorrect
because two or more bankruptcies are on the presumptive bar list. C is incorrect
because the Board must still be informed and will take the proactive measures
listed in Item D to ensure proper disclosure. Jonathan should also make written
disclosure of this event, but that alone is not sufficient.
, Solution: The correct answer is A.
The best answer is A. Mary can continue with the client. The principle of integrity
allows for differences of opinions with client relationships. However without the
client and planner agreeing to an outcome Selecting and Implementing Actions,
Products, or Services (Practice standard 6.d) would be inappropriate.
Don't know?
2 of 49
Term
Regulation Z, issued by the Federal Reserve Board, is a part of the
Consumer Credit Protection Act. Regulation Z requires that:
A. Lenders must disclose the items purchased.
B. Lenders must be given a "cooling off" period.
C. The dollar amount of finance charges and the annual percentage
rate be disclosed.
D. The length of time to pay the debt be disclosed.
Give this one a try later!
Solution: The correct answer is D.
Exceptions do not come under the jurisdiction of the Investment Advisor's Act
and need not register as investment advisors.
Solution: The correct answer is C.
Options "A", "B", and "D" are exposures for an employer even when the employee
has already accepted Workers Compensation.
, Solution: The correct answer is B.
A, C and D are integration factors provided by CFP Board's Financial Planning
and the Application of Practice Standards for The Financial Planning Process (4 a,
b and c).
Solution: The correct answer is C.
With the advent of Regulation Z, consumers were able to see the actual
cost (including finance changes) that they were paying in any transaction
they were making.
Don't know?
3 of 49
Term
Which of the following is required of a CFP® certificant engaging in
financial planning with their client?
A. Act as a fiduciary
B. Forgo commissions associated with selling or placing a financial
product
C. Address all of the core financial planning subject areas
D. Document all steps in the planning process with a written financial
plan
Give this one a try later!
Solution: The correct answer is B.
All of the reasons above fall under Duties Owed to Clients under the CFP® Board
Code and Standards.
