Certified Financial Planner (CFP) Examination
Practice Test Exam
1. A CFP® professional prepares an Engagement Letter for a
client. The letter details a one-time fee and clearly states the
Scope of Engagement, including the information to be collected
and the types of recommendations to be provided. Does the
CFP® professional have a responsibility to monitor and update
the financial plan after implementation?
A. Yes, because the CFP® professional always has the
responsibility to monitor and update under the Financial
Planning Practice Standards, regardless of the Scope of
Engagement.
B. No, because the CFP® professional is compensated by a one-
time fee instead of an ongoing fee.
C. Yes, unless there is an explicit limitation concerning
monitoring in the Scope of Engagement.
D. No, because the Engagement Letter does not explicitly state
the CFP® professional will monitor the financial plan.
Correct Answer: C
,Rationale: A CFP® professional is required to monitor and
update a financial plan unless specifically excluded from the
Scope of Engagement. Even if compensated by a one-time fee,
the responsibility remains unless explicitly limited .
2. Arya, a CFP® professional, recommends a local registered
investment adviser (RIA) to her clients from a firm-approved
list. Arya receives a fee from the RIA when clients retain their
services. What is Arya required to do when making this
recommendation?
A. Arya is not required to take any action because the clients
are not paying Arya or her firm the fee.
B. Arya is required to independently investigate at least three
local RIA firms on the firm-approved list to determine the best
fit for the clients.
C. Arya is required to immediately disclose the compensation
that will result from the recommendation if the clients retain
the local RIA.
D. Arya must enter a written Engagement with the clients
before recommending an RIA firm.
,Correct Answer: C
Rationale: Under the Code and Standards, a CFP® professional is
obligated to disclose referral fees. Arya may reasonably rely on
her firm's due diligence, and a written engagement is not
required to refer other persons .
3. A CFP® professional must provide written notice of
reportable matters to CFP Board within a set number of
calendar days of both the initiation and conclusion of the
reportable matter. What is the latest period that will fulfill the
requirement?
A. Ten days
B. Thirty days
C. Forty-five days
D. Sixty days
Correct Answer: B
Rationale: The CFP Board requires written notice of reportable
matters within thirty calendar days of both the initiation and
conclusion of the matter .
, 4. Which of the following is NOT a requirement of the CFP
Board's Fiduciary Duty?
A. Acting in the client's best interest
B. Avoiding conflicts of interest entirely
C. Disclosing material conflicts of interest
D. Exercising professional judgment
Correct Answer: B
Rationale: The fiduciary duty requires acting in the client's best
interest, disclosing conflicts, and exercising professional
judgment. It does not require eliminating all conflicts of interest
entirely, as some conflicts may be unavoidable. However, any
material conflicts must be disclosed and managed appropriately
.
5. A CFP® professional is using the term "fee-only" in their
marketing. Under CFP Board rules, this means:
A. The professional charges a flat fee for services
Practice Test Exam
1. A CFP® professional prepares an Engagement Letter for a
client. The letter details a one-time fee and clearly states the
Scope of Engagement, including the information to be collected
and the types of recommendations to be provided. Does the
CFP® professional have a responsibility to monitor and update
the financial plan after implementation?
A. Yes, because the CFP® professional always has the
responsibility to monitor and update under the Financial
Planning Practice Standards, regardless of the Scope of
Engagement.
B. No, because the CFP® professional is compensated by a one-
time fee instead of an ongoing fee.
C. Yes, unless there is an explicit limitation concerning
monitoring in the Scope of Engagement.
D. No, because the Engagement Letter does not explicitly state
the CFP® professional will monitor the financial plan.
Correct Answer: C
,Rationale: A CFP® professional is required to monitor and
update a financial plan unless specifically excluded from the
Scope of Engagement. Even if compensated by a one-time fee,
the responsibility remains unless explicitly limited .
2. Arya, a CFP® professional, recommends a local registered
investment adviser (RIA) to her clients from a firm-approved
list. Arya receives a fee from the RIA when clients retain their
services. What is Arya required to do when making this
recommendation?
A. Arya is not required to take any action because the clients
are not paying Arya or her firm the fee.
B. Arya is required to independently investigate at least three
local RIA firms on the firm-approved list to determine the best
fit for the clients.
C. Arya is required to immediately disclose the compensation
that will result from the recommendation if the clients retain
the local RIA.
D. Arya must enter a written Engagement with the clients
before recommending an RIA firm.
,Correct Answer: C
Rationale: Under the Code and Standards, a CFP® professional is
obligated to disclose referral fees. Arya may reasonably rely on
her firm's due diligence, and a written engagement is not
required to refer other persons .
3. A CFP® professional must provide written notice of
reportable matters to CFP Board within a set number of
calendar days of both the initiation and conclusion of the
reportable matter. What is the latest period that will fulfill the
requirement?
A. Ten days
B. Thirty days
C. Forty-five days
D. Sixty days
Correct Answer: B
Rationale: The CFP Board requires written notice of reportable
matters within thirty calendar days of both the initiation and
conclusion of the matter .
, 4. Which of the following is NOT a requirement of the CFP
Board's Fiduciary Duty?
A. Acting in the client's best interest
B. Avoiding conflicts of interest entirely
C. Disclosing material conflicts of interest
D. Exercising professional judgment
Correct Answer: B
Rationale: The fiduciary duty requires acting in the client's best
interest, disclosing conflicts, and exercising professional
judgment. It does not require eliminating all conflicts of interest
entirely, as some conflicts may be unavoidable. However, any
material conflicts must be disclosed and managed appropriately
.
5. A CFP® professional is using the term "fee-only" in their
marketing. Under CFP Board rules, this means:
A. The professional charges a flat fee for services
