CFP BOARD'S FINANCIAL PLANNING
PRACTICE STANDARDS EXAM
QUESTIONS AND ANSWERS
Must the scope of engagement be in writing? - Answer-No.
- It also may include more than one financial planning subject area or it may be limited
to specific activities.
200-1: Determining a Client's Personal and Financial Goals, Needs, and Priorities -
Answer-A CFP professional and the client must mutually define the client's personal and
financial goals, needs and priorities that are relevant to the scope of the engagement
before any recommendation is made and/or implemented
200-2: Obtaining Quantitative Information and Documents - Answer-- A CFP
professional must obtain sufficient quantitative information and documents about a
client relevant to the scope of the engagement before any recommendation is made
and/or implemented
Qualitative data - Answer-includes a client's attitudes, beliefs, values, and similar
information that is subjective in nature
Quantitative data - Answer-includes facts, figures, and verifiable information that can be
objectively measured
As an element of her practice, Lindsey, a CFP professional, requires each new client to
complete a risk-tolerance assessment, in addition to other forms designed to measure
each client's attitudes and expectations. Lindsey uses the risk-tolerance score obtained
from her assessment as a key input into portfolio decisions. Today, after meeting with a
prospective client, Lindsey learned that the prospect refused to complete the risk-
tolerance assessment. What should Lindsey do? - Answer-Lindsey should either restrict
the financial planning engagement to elements that do not require the use of a risk-
tolerance score and, in doing so, arrive at this decision mutually with the prospective
client or terminate the engagement.
300-1: Analyzing and Evaluating the Client's Information - Answer-A financial planning
practitioner must analyze the information to gain an understanding of the client's
financial situation and then evaluate to what extent the client's goals, needs and
priorities can be met by the client's resources and current course of action.
Personal assumptions - Answer-Which include age of retirement, life expectancy, asset
and income needs, market risk factors, risk attitudes, time horizon, and special needs
and requirements
PRACTICE STANDARDS EXAM
QUESTIONS AND ANSWERS
Must the scope of engagement be in writing? - Answer-No.
- It also may include more than one financial planning subject area or it may be limited
to specific activities.
200-1: Determining a Client's Personal and Financial Goals, Needs, and Priorities -
Answer-A CFP professional and the client must mutually define the client's personal and
financial goals, needs and priorities that are relevant to the scope of the engagement
before any recommendation is made and/or implemented
200-2: Obtaining Quantitative Information and Documents - Answer-- A CFP
professional must obtain sufficient quantitative information and documents about a
client relevant to the scope of the engagement before any recommendation is made
and/or implemented
Qualitative data - Answer-includes a client's attitudes, beliefs, values, and similar
information that is subjective in nature
Quantitative data - Answer-includes facts, figures, and verifiable information that can be
objectively measured
As an element of her practice, Lindsey, a CFP professional, requires each new client to
complete a risk-tolerance assessment, in addition to other forms designed to measure
each client's attitudes and expectations. Lindsey uses the risk-tolerance score obtained
from her assessment as a key input into portfolio decisions. Today, after meeting with a
prospective client, Lindsey learned that the prospect refused to complete the risk-
tolerance assessment. What should Lindsey do? - Answer-Lindsey should either restrict
the financial planning engagement to elements that do not require the use of a risk-
tolerance score and, in doing so, arrive at this decision mutually with the prospective
client or terminate the engagement.
300-1: Analyzing and Evaluating the Client's Information - Answer-A financial planning
practitioner must analyze the information to gain an understanding of the client's
financial situation and then evaluate to what extent the client's goals, needs and
priorities can be met by the client's resources and current course of action.
Personal assumptions - Answer-Which include age of retirement, life expectancy, asset
and income needs, market risk factors, risk attitudes, time horizon, and special needs
and requirements
