CFP GENERAL PRINCIPLES EXAM
QUESTIONS AND ANSWERS
Gather data. - ANSWER-Summary of assets such as cost basis information, beneficiary
designations and titling.
Summary of liabilities such as balances, terms and interest rates. - ANSWER-Summary
of income and expenses.
Estate planning documents. - ANSWER-Education plan and resources.
Retirement plan information. - ANSWER-Employee benefits.
Government benefits such as social security and Medicare. - ANSWER-Special
circumstances such as legal documents and agreements, family situations.
Tax documents. - ANSWER-Investment statements.
Insurance policies and documents such as life, health, disability and liability. -
ANSWER-Closely held business documents such as shareholder agreements.
Inheritances, windfalls and other large lump sums. - ANSWER-Recognize need for
additional information.
Domain Three Analyzing and evaluating the clients current financial status. - ANSWER-
Evaluate and document the strengths and vulnerabilities of the client's current financial
situation.
Financial Status.
Statement of financial position/balance sheet.
Cash flow statement. - ANSWER-Budget.
Capital needs analysis- examples: insurance, retirement, major purchases.
Risk management and insurance evaluation.
Insurance coverage.
Retained risks. - ANSWER-Asset protection such as titling and trusts.
Client liquidity such as an emergency fund.
Benefits evaluation. - ANSWER-Government benefits such as social security and
Medicare.
Employee benefits.
Investment evaluation. - ANSWER-Asset allocation.
Investment strategies.
, Investment types.
Tax evaluation.
Current, deferred and future tax liabilities. - ANSWER-Income types.
Special situations such as stock options and international tax issues.
Retirement evaluation.
Retirement plans and strategies such as pension options and annuitizing. - ANSWER-
Accumulation planning.
Distribution planning.
Estate planning evaluation.
Estate documents.
Estate tax liabilities. - ANSWER-Ownership of assets.
Beneficiary designations.
Gifting strategies.
Business ownership. - ANSWER-Business form.
Employer benefits.
Succession planning and exit strategy.
Risk management.
Education planning evaluation. - ANSWER-Sources of financing.
Tax considerations.
Other considerations.
Special circumstances such as divorce, disabilities and family dynamics. - ANSWER-
Inheritances, windfalls and other large lump sums.
Charitable planning.
Eldercare such as long-term care and nursing home.
Identify and use appropriate tools and techniques to conduct analyses. - ANSWER-
Such as financial calculators, financial planning software, simulators and research
services.
Domain 4: developing the recommendations. - ANSWER-Synthesize findings from
analysis of client's financial status.
Consider alternatives to meet the client's goals and objectives. - ANSWER-Conduct
scenario analysis such as changing lifestyle variables.
Conduct sensitivity analysis such as changing assumptions such as inflation rate, rates
of return and time horizon.
Consult with other professionals on technical issues outside of planners expertise. -
ANSWER-Develop recommendations.
Consider client attitudes, values and beliefs.
QUESTIONS AND ANSWERS
Gather data. - ANSWER-Summary of assets such as cost basis information, beneficiary
designations and titling.
Summary of liabilities such as balances, terms and interest rates. - ANSWER-Summary
of income and expenses.
Estate planning documents. - ANSWER-Education plan and resources.
Retirement plan information. - ANSWER-Employee benefits.
Government benefits such as social security and Medicare. - ANSWER-Special
circumstances such as legal documents and agreements, family situations.
Tax documents. - ANSWER-Investment statements.
Insurance policies and documents such as life, health, disability and liability. -
ANSWER-Closely held business documents such as shareholder agreements.
Inheritances, windfalls and other large lump sums. - ANSWER-Recognize need for
additional information.
Domain Three Analyzing and evaluating the clients current financial status. - ANSWER-
Evaluate and document the strengths and vulnerabilities of the client's current financial
situation.
Financial Status.
Statement of financial position/balance sheet.
Cash flow statement. - ANSWER-Budget.
Capital needs analysis- examples: insurance, retirement, major purchases.
Risk management and insurance evaluation.
Insurance coverage.
Retained risks. - ANSWER-Asset protection such as titling and trusts.
Client liquidity such as an emergency fund.
Benefits evaluation. - ANSWER-Government benefits such as social security and
Medicare.
Employee benefits.
Investment evaluation. - ANSWER-Asset allocation.
Investment strategies.
, Investment types.
Tax evaluation.
Current, deferred and future tax liabilities. - ANSWER-Income types.
Special situations such as stock options and international tax issues.
Retirement evaluation.
Retirement plans and strategies such as pension options and annuitizing. - ANSWER-
Accumulation planning.
Distribution planning.
Estate planning evaluation.
Estate documents.
Estate tax liabilities. - ANSWER-Ownership of assets.
Beneficiary designations.
Gifting strategies.
Business ownership. - ANSWER-Business form.
Employer benefits.
Succession planning and exit strategy.
Risk management.
Education planning evaluation. - ANSWER-Sources of financing.
Tax considerations.
Other considerations.
Special circumstances such as divorce, disabilities and family dynamics. - ANSWER-
Inheritances, windfalls and other large lump sums.
Charitable planning.
Eldercare such as long-term care and nursing home.
Identify and use appropriate tools and techniques to conduct analyses. - ANSWER-
Such as financial calculators, financial planning software, simulators and research
services.
Domain 4: developing the recommendations. - ANSWER-Synthesize findings from
analysis of client's financial status.
Consider alternatives to meet the client's goals and objectives. - ANSWER-Conduct
scenario analysis such as changing lifestyle variables.
Conduct sensitivity analysis such as changing assumptions such as inflation rate, rates
of return and time horizon.
Consult with other professionals on technical issues outside of planners expertise. -
ANSWER-Develop recommendations.
Consider client attitudes, values and beliefs.
