Certified Plan Fiduciary Advisor (CPFA®) Exam
2026 | Complete Practice Test with Detailed
Answers |PDF
1. A plan sponsor wants to ensure compliance with fiduciary responsibilities under
ERISA while selecting investment options. What is the MOST appropriate first step?
A. Choose funds with the highest historical returns regardless of risk
B. Develop and follow a documented prudent process for investment selection
C. Delegate all responsibilities to a third-party advisor without oversight
D. Select only low-cost index funds without further analysis
✅ Answer: B
Explanation: ERISA emphasizes a prudent process over outcomes. Documentation and
consistency are key.
2. Under ERISA, which party is primarily responsible for acting solely in the best
interest of plan participants and beneficiaries?
A. Recordkeeper
B. Plan participants
C. Fiduciary
D. Custodian
✅ Answer: C
3. A fiduciary is reviewing plan fees and notices that total costs appear higher than
industry benchmarks. What is the BEST course of action?
,A. Immediately terminate all service providers without review
B. Ignore the difference if participants are not complaining
C. Benchmark fees and document the review process before making decisions
D. Reduce participant communication to offset costs
✅ Answer: C
4. What is the primary purpose of an Investment Policy Statement (IPS) within a
retirement plan?
A. Guarantee specific investment returns for participants
B. Provide a framework for selecting and monitoring investments
C. Replace fiduciary responsibilities entirely
D. Eliminate the need for diversification
✅ Answer: B
5. A plan sponsor wants to reduce fiduciary liability when selecting investments.
Which option provides the MOST protection under ERISA?
A. Offering only actively managed funds
B. Using a 3(38) investment manager to assume discretionary control
C. Allowing participants to choose any investment without oversight
D. Avoiding documentation of decisions
✅ Answer: B
6. When evaluating service providers for a retirement plan, which factor is MOST
critical for fiduciaries to assess?
A. Marketing materials and branding
B. Personal relationships with providers
C. Reasonableness of fees relative to services provided
D. Office location of the provider
✅ Answer: C
, 7. A fiduciary fails to diversify plan investments, resulting in significant losses.
Which ERISA duty has been violated?
A. Duty of loyalty
B. Duty of diversification
C. Duty of disclosure
D. Duty of reporting
✅ Answer: B
8. Which of the following best describes a 3(21) fiduciary advisor role?
A. Has full discretionary control over plan investments
B. Provides advice but shares responsibility with the plan sponsor
C. Has no fiduciary responsibility
D. Acts only as a recordkeeper
✅ Answer: B
9. What is the main objective of conducting regular fiduciary committee meetings?
A. Eliminate all plan risks entirely
B. Ensure ongoing oversight and documentation of plan decisions
C. Reduce administrative costs automatically
D. Replace the need for audits
✅ Answer: B
10. A plan sponsor wants to improve participant outcomes. Which strategy is MOST
effective?
A. Limiting investment choices to one option
B. Providing ongoing education and automatic enrollment features
C. Eliminating communication to reduce confusion
D. Increasing plan fees to fund services
✅ Answer: B
2026 | Complete Practice Test with Detailed
Answers |PDF
1. A plan sponsor wants to ensure compliance with fiduciary responsibilities under
ERISA while selecting investment options. What is the MOST appropriate first step?
A. Choose funds with the highest historical returns regardless of risk
B. Develop and follow a documented prudent process for investment selection
C. Delegate all responsibilities to a third-party advisor without oversight
D. Select only low-cost index funds without further analysis
✅ Answer: B
Explanation: ERISA emphasizes a prudent process over outcomes. Documentation and
consistency are key.
2. Under ERISA, which party is primarily responsible for acting solely in the best
interest of plan participants and beneficiaries?
A. Recordkeeper
B. Plan participants
C. Fiduciary
D. Custodian
✅ Answer: C
3. A fiduciary is reviewing plan fees and notices that total costs appear higher than
industry benchmarks. What is the BEST course of action?
,A. Immediately terminate all service providers without review
B. Ignore the difference if participants are not complaining
C. Benchmark fees and document the review process before making decisions
D. Reduce participant communication to offset costs
✅ Answer: C
4. What is the primary purpose of an Investment Policy Statement (IPS) within a
retirement plan?
A. Guarantee specific investment returns for participants
B. Provide a framework for selecting and monitoring investments
C. Replace fiduciary responsibilities entirely
D. Eliminate the need for diversification
✅ Answer: B
5. A plan sponsor wants to reduce fiduciary liability when selecting investments.
Which option provides the MOST protection under ERISA?
A. Offering only actively managed funds
B. Using a 3(38) investment manager to assume discretionary control
C. Allowing participants to choose any investment without oversight
D. Avoiding documentation of decisions
✅ Answer: B
6. When evaluating service providers for a retirement plan, which factor is MOST
critical for fiduciaries to assess?
A. Marketing materials and branding
B. Personal relationships with providers
C. Reasonableness of fees relative to services provided
D. Office location of the provider
✅ Answer: C
, 7. A fiduciary fails to diversify plan investments, resulting in significant losses.
Which ERISA duty has been violated?
A. Duty of loyalty
B. Duty of diversification
C. Duty of disclosure
D. Duty of reporting
✅ Answer: B
8. Which of the following best describes a 3(21) fiduciary advisor role?
A. Has full discretionary control over plan investments
B. Provides advice but shares responsibility with the plan sponsor
C. Has no fiduciary responsibility
D. Acts only as a recordkeeper
✅ Answer: B
9. What is the main objective of conducting regular fiduciary committee meetings?
A. Eliminate all plan risks entirely
B. Ensure ongoing oversight and documentation of plan decisions
C. Reduce administrative costs automatically
D. Replace the need for audits
✅ Answer: B
10. A plan sponsor wants to improve participant outcomes. Which strategy is MOST
effective?
A. Limiting investment choices to one option
B. Providing ongoing education and automatic enrollment features
C. Eliminating communication to reduce confusion
D. Increasing plan fees to fund services
✅ Answer: B
