TEST BANK FOR FP511 UPDATE|COMPREHENSIVE FREQUENT MOST-TESTED QUESTIONS
AND VERIFIED ANSWERS/SOLUTIONS|GET IT 100% ACCURATE!!
A client who has become more concerned about losing what she has than in
accumulating more is most likely in which financial life cycle phase?
Conservation/protection phase
The answer is conservation/protection phase. Clients generally become more risk averse in
the conservation/protection phase and become aware and pay attention to risks they
ignored in the asset accumulation phase.
In developing a client-planner relationship, a CFP® certificant is allowed to do, or is
governed by, which one of the following?
A CFP® certificant is not prevented from advertising the size, scope, and areas of
competence of their financial planning practice.
The answer is a CFP® certificant is not prevented from advertising the size, scope, and
areas of competence of their financial planning practice .The size, scope, and areas of
competence of a financial planning practice are appropriate types of information to be used
in advertising. All of the other statements violate the rules and principles.
According to the rules established by CFP Board, which of the following uses of the
certification marks are CORRECT?
Frank Smith, C.F.P.
Frank Smith, CFP®
Frank Smith & Co., PA, CFPs
Frank Smith, CERTIFIED FINANCIAL PLANNER™
Frank Smith & Co., PA, CFPs
Frank Smith, CERTIFIED FINANCIAL PLANNER™
The answer is II and IV. The CFP® marks should never contain periods. In addition, the marks
should not be used as part of or incorporated in the name of a firm.
,Harry owns a financial planning firm with $8 million under management. CFP Board
recently told Harry that his rights to use the CFP marks were being suspended for six
months. Harry immediately removed the marks from his stationery, business cards,
and website. Thirty calendar days before the suspension was over, Harry filed an
affidavit with the Board stating that he had fully complied with the terms of the
suspension, then immediately added the marks back. Did Harry violate any Rules of
Conduct?
Yes, Harry did not notify his existing clients that his right to use the marks had been
suspended.
The answer is yes, Harry did not notify his existing clients that his right to use the marks
had been suspended. According to Rule 4.7 of the Rules of Conduct, Harry must advise all
current clients of any suspension or revocation received from the CFP Board. If Harry had
been an employee, he would have an obligation to report the suspension to his employer, but
as the owner, there is no obligation to notify the employees. Any suspension that lasts less
than one year will automatically end upon the certificant's filing with CFP Board within 30
calendar days of the expiration of the period of suspension an affidavit stating that the
suspended certificant has fully complied with the order of suspension unless such condition
was waived by the Commission.
In which step of the financial planning process is a planner charged with providing the
client ongoing support?
A) Developing the Financial Planning Recommendation(s)
B) Implementing the Financial Planning Recommendation(s)
C) Monitoring Progress and Updating
D) Identifying and Selecting Goals
c
The answer is Monitoring Progress and Updating. It is within step seven, Monitoring
Progress and Updating, that the planner is charged with providing the client ongoing
support.
Analyze the scenario. Ling, a CFP® professional, is providing financial advice to her
client. After considering the client's goals, family medical history, tax situation, and
,financial resources, she develops a financial plan that recommends that the client
purchase long-term care insurance. Which statement regarding implementation
responsibilities is NOT correct?
Ling is not responsible for implementing this planning recommendation because it only
involves the purchase of a single product.
Developing a financial plan often involves input from a team of financial advisors
employed by the client. Members of this team may include which of the following
professionals?
A trust officer
An estate-planning attorney
A property and casualty agent
A Certified Public Accountant (CPA)
all
This team may also include other financial professionals, such as a life insurance agent.
John and Shirley Smith recently retired and are planning a Mediterranean cruise to
celebrate John's 70th birthday. When they return, they would like to meet with you,
their financial planner, to discuss charitable contributions they would like to make.
The Smiths are currently in which life cycle phase?
Distribution phase
The answer is 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.
Alan and Gretchen are completing a data survey form for their financial planner to
use in reviewing their financial plan. Their planner has explained that a step in the
financial planning process is understanding the client's personal and financial
circumstances. During this step the planner obtains qualitative and quantitative
, information. Which of the following are qualitative rather than quantitative data?
Copies of wills and trusts
Risk tolerance level
Employee benefits and pension plan information
Goals and objectives
Risk tolerance level
Goals and objectives
The answer is II and IV. Risk tolerance levels as well as goals and objectives are qualitative
wants and/or desires. Completed documents, such as a will or trust, and business-
sponsored employee benefit plans are measurable and therefore quantitative.
Which of the following are primary reasons why a financial planner will ask for each
family member's date of birth during the information gathering process?
To calculate Social Security "blackout period" preretirement benefit amounts for
qualifying individuals
To calculate insurance policy internal rates of return
To help determine funding for the children's education
To help determine retirement planning needs
To help determine funding for the children's education
To help determine retirement planning needs
The answer is III and IV. A person's birth date has little or nothing to do with preretirement
Social Security benefit determination. If they have qualified for benefits, then the amount is
determined by the formula independent of their age. However, a person's birth date does
have an effect on other potential Social Security benefits. Birthdates also have little to do
with calculating an insurance rate of return.
Joyce has become more risk averse and is not focused on accumulating assets, but
maintaining the values of the ones she has. Joyce is in which financial life cycle
phase?
A) Conservation/protection phase
B) Distribution/gifting phase
AND VERIFIED ANSWERS/SOLUTIONS|GET IT 100% ACCURATE!!
A client who has become more concerned about losing what she has than in
accumulating more is most likely in which financial life cycle phase?
Conservation/protection phase
The answer is conservation/protection phase. Clients generally become more risk averse in
the conservation/protection phase and become aware and pay attention to risks they
ignored in the asset accumulation phase.
In developing a client-planner relationship, a CFP® certificant is allowed to do, or is
governed by, which one of the following?
A CFP® certificant is not prevented from advertising the size, scope, and areas of
competence of their financial planning practice.
The answer is a CFP® certificant is not prevented from advertising the size, scope, and
areas of competence of their financial planning practice .The size, scope, and areas of
competence of a financial planning practice are appropriate types of information to be used
in advertising. All of the other statements violate the rules and principles.
According to the rules established by CFP Board, which of the following uses of the
certification marks are CORRECT?
Frank Smith, C.F.P.
Frank Smith, CFP®
Frank Smith & Co., PA, CFPs
Frank Smith, CERTIFIED FINANCIAL PLANNER™
Frank Smith & Co., PA, CFPs
Frank Smith, CERTIFIED FINANCIAL PLANNER™
The answer is II and IV. The CFP® marks should never contain periods. In addition, the marks
should not be used as part of or incorporated in the name of a firm.
,Harry owns a financial planning firm with $8 million under management. CFP Board
recently told Harry that his rights to use the CFP marks were being suspended for six
months. Harry immediately removed the marks from his stationery, business cards,
and website. Thirty calendar days before the suspension was over, Harry filed an
affidavit with the Board stating that he had fully complied with the terms of the
suspension, then immediately added the marks back. Did Harry violate any Rules of
Conduct?
Yes, Harry did not notify his existing clients that his right to use the marks had been
suspended.
The answer is yes, Harry did not notify his existing clients that his right to use the marks
had been suspended. According to Rule 4.7 of the Rules of Conduct, Harry must advise all
current clients of any suspension or revocation received from the CFP Board. If Harry had
been an employee, he would have an obligation to report the suspension to his employer, but
as the owner, there is no obligation to notify the employees. Any suspension that lasts less
than one year will automatically end upon the certificant's filing with CFP Board within 30
calendar days of the expiration of the period of suspension an affidavit stating that the
suspended certificant has fully complied with the order of suspension unless such condition
was waived by the Commission.
In which step of the financial planning process is a planner charged with providing the
client ongoing support?
A) Developing the Financial Planning Recommendation(s)
B) Implementing the Financial Planning Recommendation(s)
C) Monitoring Progress and Updating
D) Identifying and Selecting Goals
c
The answer is Monitoring Progress and Updating. It is within step seven, Monitoring
Progress and Updating, that the planner is charged with providing the client ongoing
support.
Analyze the scenario. Ling, a CFP® professional, is providing financial advice to her
client. After considering the client's goals, family medical history, tax situation, and
,financial resources, she develops a financial plan that recommends that the client
purchase long-term care insurance. Which statement regarding implementation
responsibilities is NOT correct?
Ling is not responsible for implementing this planning recommendation because it only
involves the purchase of a single product.
Developing a financial plan often involves input from a team of financial advisors
employed by the client. Members of this team may include which of the following
professionals?
A trust officer
An estate-planning attorney
A property and casualty agent
A Certified Public Accountant (CPA)
all
This team may also include other financial professionals, such as a life insurance agent.
John and Shirley Smith recently retired and are planning a Mediterranean cruise to
celebrate John's 70th birthday. When they return, they would like to meet with you,
their financial planner, to discuss charitable contributions they would like to make.
The Smiths are currently in which life cycle phase?
Distribution phase
The answer is 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.
Alan and Gretchen are completing a data survey form for their financial planner to
use in reviewing their financial plan. Their planner has explained that a step in the
financial planning process is understanding the client's personal and financial
circumstances. During this step the planner obtains qualitative and quantitative
, information. Which of the following are qualitative rather than quantitative data?
Copies of wills and trusts
Risk tolerance level
Employee benefits and pension plan information
Goals and objectives
Risk tolerance level
Goals and objectives
The answer is II and IV. Risk tolerance levels as well as goals and objectives are qualitative
wants and/or desires. Completed documents, such as a will or trust, and business-
sponsored employee benefit plans are measurable and therefore quantitative.
Which of the following are primary reasons why a financial planner will ask for each
family member's date of birth during the information gathering process?
To calculate Social Security "blackout period" preretirement benefit amounts for
qualifying individuals
To calculate insurance policy internal rates of return
To help determine funding for the children's education
To help determine retirement planning needs
To help determine funding for the children's education
To help determine retirement planning needs
The answer is III and IV. A person's birth date has little or nothing to do with preretirement
Social Security benefit determination. If they have qualified for benefits, then the amount is
determined by the formula independent of their age. However, a person's birth date does
have an effect on other potential Social Security benefits. Birthdates also have little to do
with calculating an insurance rate of return.
Joyce has become more risk averse and is not focused on accumulating assets, but
maintaining the values of the ones she has. Joyce is in which financial life cycle
phase?
A) Conservation/protection phase
B) Distribution/gifting phase
