FP1 FULL PRACTICE EXAM QUESTIONS AND ANSWERS (VERIFIED
FP1 / FULL PRACTICE EXAM
AND WELL DETAILED ANSWERS) LATEST UPDATE 2025/2026
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1. Which statement regarding the traits or val- A. Professionalism is displayed by being
ues of financial advisors is correct? competent and knowledgeable.
A. Professionalism is displayed by being com- Professionalism is displayed by being
petent and knowledgeable. competent and knowledgeable by keep-
B. Diligence is displayed by being honest with ing up to date regarding key aspects of
clients. the financial services industry.
C. Objectivity requires respecting clients' pri-
vacy.
D. Confidentiality requires the advisor to
make impartial recommendations.
2. By and large, what statement below is true in B. The role has shifted to a client driven
regards to the current landscape in Canada model where building a strong client re-
for financial advisors? lationship is key.
A. There has been a dramatic shift to fee The role of the Advisor in the financial
based advice as it's perceived as unbiased. services industry has changed in recent
B. The role has shifted to a client driven mod- years from one that is product driven to
el where building a strong client relationship one that is client driven. Reference: Mod-
is key. ule 1, Section 1
C. The business is now product driven where
it's all about selling higher commissioned
products.
D. The industry is focusing on reducing costs
and finding the most inexpensive invest-
ments for clients.
3. Which statements about the evolution of the B. I and III only.
role of financial advisors is/are correct?
Advisors have to work within a highly
[I] The financial services industry has moved integrated financial services market and
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towards an integrated market and so have must possess a much higher level of
advisors. knowledge than before to satisfy increas-
[II] Advisors have fewer products and ser- ingly sophisticated clients.
vices to offer to clients.
[III] Advisors require a greater level of knowl-
edge to recommend sophisticated alterna-
tives to clients.
A. I only.
B. I and III only.
C. II and III only.
D. I and II only.
4. Select the first step in the financial planning C. Establishing a relationship with the
process. client.
A. Analyzing a client's data and information. The first step in the financial planning
B. Recommending strategies to meet goals. process is for an advisor to establish a re-
C. Establishing a relationship with the client. lationship with the client; everything else
D. Collecting a client's data and information. follows.
5. Select the item that would provide you with A. Profit sharing plan statement.
quantitative data about your new client.
Only the profit-sharing statement would
A. Profit sharing plan statement. provide you with quantitative data, i.e.
B. Risk tolerance assessment. numeric or other specific data that can be
C. Goal setting questionnaire. quantified. The other options would pro-
D. Fees and services agreement. vide qualitative data. Reference: Module
1, Section 2.
6. Your client's goal is to improve her cash flow. C. Increase income and reduce expens-
Select the strategy that will be most effective es.
in helping her to reach her goal.
, FP1 / FULL PRACTICE EXAM
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Cash flow is the amount of money avail-
A. Improve investment return. able for investment or other purposes. In
B. Reduce flexible expenses and lengthen this scenario, the client is best able to free
time frame for investments. up money for investments by increasing
C. Increase income and reduce expenses. the amount of money coming in (income)
D. Contribute regularly to an emergency and reducing the amount of money go-
fund. ing out (expenses). While (b) would im-
prove cash flow by reducing some ex-
penses, the addition of the increase in
income in (c) makes it more effective.
7. Kim does not recommend an investment C. Objectivity.
fund to her clients that is heavily promoted
by her own firm's marketing department be- Kim is fulfilling the responsibility of "Ob-
cause her analysis demonstrates that it is not jectivity" which states that an adviser
consistent for her clients' goals. Select the must not make recommendations that
type of responsibility that she is demonstrat- benefit the adviser or the adviser's in-
ing. stitution when there are other products
and services that might serve an adviser's
A. Integrity. clients better. Reference: Module 1, Sec-
B. Professionalism. tion 2.
C. Objectivity.
D. Diligence.
8. Select the most useful goal for setting invest- C. "We will need 70% of our current in-
ment priorities. come level to retire and maintain our
lifestyle."
A. "I'm not sure when we'll retire, but we want
to be able to travel for 10 or so years at that General Feedback:
time."
B. "We want to buy a big house in a nice Options a, b, and d are not measurable
neighbourhood" or quantifiable; only c is measurable and
quantifiable. Thus, only "c" is usual for
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C. "We will need 70% of our current income setting priorities. Encouraging clients to
level to retire and maintain our lifestyle." set specific, measurable targets instead
D. "I want to be able to retire comfortably of vague and general goals serves two
based on my current lifestyle." functions:
It helps to clearly and explicitly define
financial objectives.
It helps to measure and monitor the per-
formance of the financial plan.
Reference: Module 1, Section 2
9. Nabila, an advisor, receives a call from an in- C. Confidentiality.
surance broker asking for information about
the assets she manages for a client. Nabi- General Feedback: Nabila is fulfilling the
la refuses to speak to the broker about her responsibility of Confidentiality, which
client without the client's permission. What states that an adviser must respect a
type of responsibility is he demonstrating? clients' privacy and treat their information
with confidentiality. Reference: Module 1,
A. Integrity. Section 2.
B. Professionalism.
C. Confidentiality.
D. Diligence.
10. Haseeb is an advisor who regularly attends B. Professionalism.
industry seminars and takes continuing edu-
cation courses. What type of responsibility is Haseeb is demonstrating the responsi-
he demonstrating? bility of professionalism, which states that
an advisor must be competent, knowl-
A. Integrity. edgeable and up to date regarding all
B. Professionalism. aspects of the financial services industry.
C. Objectivity. Reference: Module 1, Section 2.
D. Diligence.
FP1 / FULL PRACTICE EXAM
AND WELL DETAILED ANSWERS) LATEST UPDATE 2025/2026
Study online at https://quizlet.com/_hb060w
1. Which statement regarding the traits or val- A. Professionalism is displayed by being
ues of financial advisors is correct? competent and knowledgeable.
A. Professionalism is displayed by being com- Professionalism is displayed by being
petent and knowledgeable. competent and knowledgeable by keep-
B. Diligence is displayed by being honest with ing up to date regarding key aspects of
clients. the financial services industry.
C. Objectivity requires respecting clients' pri-
vacy.
D. Confidentiality requires the advisor to
make impartial recommendations.
2. By and large, what statement below is true in B. The role has shifted to a client driven
regards to the current landscape in Canada model where building a strong client re-
for financial advisors? lationship is key.
A. There has been a dramatic shift to fee The role of the Advisor in the financial
based advice as it's perceived as unbiased. services industry has changed in recent
B. The role has shifted to a client driven mod- years from one that is product driven to
el where building a strong client relationship one that is client driven. Reference: Mod-
is key. ule 1, Section 1
C. The business is now product driven where
it's all about selling higher commissioned
products.
D. The industry is focusing on reducing costs
and finding the most inexpensive invest-
ments for clients.
3. Which statements about the evolution of the B. I and III only.
role of financial advisors is/are correct?
Advisors have to work within a highly
[I] The financial services industry has moved integrated financial services market and
, FP1 / FULL PRACTICE EXAM
Study online at https://quizlet.com/_hb060w
towards an integrated market and so have must possess a much higher level of
advisors. knowledge than before to satisfy increas-
[II] Advisors have fewer products and ser- ingly sophisticated clients.
vices to offer to clients.
[III] Advisors require a greater level of knowl-
edge to recommend sophisticated alterna-
tives to clients.
A. I only.
B. I and III only.
C. II and III only.
D. I and II only.
4. Select the first step in the financial planning C. Establishing a relationship with the
process. client.
A. Analyzing a client's data and information. The first step in the financial planning
B. Recommending strategies to meet goals. process is for an advisor to establish a re-
C. Establishing a relationship with the client. lationship with the client; everything else
D. Collecting a client's data and information. follows.
5. Select the item that would provide you with A. Profit sharing plan statement.
quantitative data about your new client.
Only the profit-sharing statement would
A. Profit sharing plan statement. provide you with quantitative data, i.e.
B. Risk tolerance assessment. numeric or other specific data that can be
C. Goal setting questionnaire. quantified. The other options would pro-
D. Fees and services agreement. vide qualitative data. Reference: Module
1, Section 2.
6. Your client's goal is to improve her cash flow. C. Increase income and reduce expens-
Select the strategy that will be most effective es.
in helping her to reach her goal.
, FP1 / FULL PRACTICE EXAM
Study online at https://quizlet.com/_hb060w
Cash flow is the amount of money avail-
A. Improve investment return. able for investment or other purposes. In
B. Reduce flexible expenses and lengthen this scenario, the client is best able to free
time frame for investments. up money for investments by increasing
C. Increase income and reduce expenses. the amount of money coming in (income)
D. Contribute regularly to an emergency and reducing the amount of money go-
fund. ing out (expenses). While (b) would im-
prove cash flow by reducing some ex-
penses, the addition of the increase in
income in (c) makes it more effective.
7. Kim does not recommend an investment C. Objectivity.
fund to her clients that is heavily promoted
by her own firm's marketing department be- Kim is fulfilling the responsibility of "Ob-
cause her analysis demonstrates that it is not jectivity" which states that an adviser
consistent for her clients' goals. Select the must not make recommendations that
type of responsibility that she is demonstrat- benefit the adviser or the adviser's in-
ing. stitution when there are other products
and services that might serve an adviser's
A. Integrity. clients better. Reference: Module 1, Sec-
B. Professionalism. tion 2.
C. Objectivity.
D. Diligence.
8. Select the most useful goal for setting invest- C. "We will need 70% of our current in-
ment priorities. come level to retire and maintain our
lifestyle."
A. "I'm not sure when we'll retire, but we want
to be able to travel for 10 or so years at that General Feedback:
time."
B. "We want to buy a big house in a nice Options a, b, and d are not measurable
neighbourhood" or quantifiable; only c is measurable and
quantifiable. Thus, only "c" is usual for
, FP1 / FULL PRACTICE EXAM
Study online at https://quizlet.com/_hb060w
C. "We will need 70% of our current income setting priorities. Encouraging clients to
level to retire and maintain our lifestyle." set specific, measurable targets instead
D. "I want to be able to retire comfortably of vague and general goals serves two
based on my current lifestyle." functions:
It helps to clearly and explicitly define
financial objectives.
It helps to measure and monitor the per-
formance of the financial plan.
Reference: Module 1, Section 2
9. Nabila, an advisor, receives a call from an in- C. Confidentiality.
surance broker asking for information about
the assets she manages for a client. Nabi- General Feedback: Nabila is fulfilling the
la refuses to speak to the broker about her responsibility of Confidentiality, which
client without the client's permission. What states that an adviser must respect a
type of responsibility is he demonstrating? clients' privacy and treat their information
with confidentiality. Reference: Module 1,
A. Integrity. Section 2.
B. Professionalism.
C. Confidentiality.
D. Diligence.
10. Haseeb is an advisor who regularly attends B. Professionalism.
industry seminars and takes continuing edu-
cation courses. What type of responsibility is Haseeb is demonstrating the responsi-
he demonstrating? bility of professionalism, which states that
an advisor must be competent, knowl-
A. Integrity. edgeable and up to date regarding all
B. Professionalism. aspects of the financial services industry.
C. Objectivity. Reference: Module 1, Section 2.
D. Diligence.
