CFP TOTAL EXAM QUESTIONS WITH
100% CORRECT ANSWERS
Identify the life cycle phase that is best described by the following characteristics:
Limited excess funds for investing
High degree of debt to net worth
Low net worth
Lack of concern for risks
A)
Conservation/protection phase
B)
Distribution/gifting phase
C)
Charitable/donation phase
D)
Asset accumulation phase - ANSWER-D
The answer is asset accumulation phase. The asset accumulation phase begins
between ages 20 and 25 and lasts until approximately age 45 or later, if the client's
children are not yet independent.
The beginning of this phase is characterized by the following:
Limited excess funds for investing
High degree of debt to net worth
Low net worth
Lack of concern for risks
LO 1.1.2
Which of the following are major components of a sound financial plan?
Estate planning
Insurance planning
Retirement planning
Investment planning
A)
I and IV
B)
I and III
C)
I, II, III, and IV
D)
I, III, and IV - ANSWER-C
The answer is I, II, III, and IV. All of these are major components of a sound financial
plan. Other components include savings, budgeting, education funding, and income tax
planning.
LO 1.1.1
,Which of the following types of data are considered qualitative?
Health status
List of current investments
Copies of wills and trusts
Risk tolerance level
A)
II and III
B)
I, II, and III
C)
I and IV
D)
III and IV - ANSWER-C
The answer is I and IV. A list of current investments and copies of wills and trusts are
quantitative data.
LO 1.1.1
To properly use the CFP® marks on documents or marketing materials, certain
guidelines must be followed. Identify the items that are required when the words
"CERTIFIED FINANCIAL PLANNER™" are used.
Always use capital letters or small cap font
Always use the ™ symbol
Always associate with CFP Board
Always use with one of CFP Board's approved nouns ("certificant," "professional,"
"practitioner," "certification," "mark" or "exam") unless directly following the name of the
individual certified by CFP Board
A)
I, II, and IV
B)
I and III
C)
I and II
D)
II and IV - ANSWER-A
The answer is I, II, and IV. If the words "CERTIFIED FINANCIAL PLANNER" are used,
they must be presented in capital letters or small cap font followed by a ™ because the
words are subject to trademark law. Statement III is incorrect; the words must always
associate with the individual(s) certified by CFP Board. "CERTIFIED FINANCIAL
PLANNER" must always be used with one of CFP Board's approved nouns
("certificant," "professional," "practitioner," "certification," "mark" or "exam") unless
directly following the name of the individual certified by CFP Board.
LO 1.2.1
Identify the number of steps in the Practice Standards for the Financial Planning
Process.
A)
,Fifteen
B)
Seven
C)
Six
D)
Eight - ANSWER-B
The answer is seven. There are seven steps in CFP Board's Practice Standards for the
Financial Planning Process (Practice Standards). They are: 1) Understanding the
Client's Personal and Financial Circumstances, 2) Identifying and Selecting Goals, 3)
Analyzing the Client's Current Course of Action and Potential Alternative Course(s) of
Action, 4) Developing the Financial Planning Recommendation(s), 5) Presenting the
Financial Planning Recommendation(s), 6) Implementing the Financial Planning
Recommendation(s), and 7) Monitoring Progress and Updating. The Practice Standards
set forth the level of professional practice expected of CFP® professionals engaged in
financial planning.
Which of these may be the responsibility of the financial planner during the
Implementing the Financial Planning Recommendation(s) step of the financial planning
process?
Sharing information as authorized
Coordinating with other professionals
Determining the likelihood of reaching stated objectives
Advising clients of the material advantages and disadvantages of the implemented
strategies
A)
I and II
B)
II and III
C)
I and III
D)
II and IV - ANSWER-A
The answer is I and II. In Step 3, Analyzing the Client's Current Course of Action and
Potential Alternative Course(s) of Action, the financial planner must deterine the
likelihood of reaching stated objectives by continuing the client's current activities.
Advising clients of the material advantages and disadvantages of the recommendations
is part of Step 5, Presenting the Financial Planning Recommendations.
LO 1.2.2
Which of these activities would be appropriate if you were understanding the client's
personal and financial circumstances?
Determining which stocks to purchase for the client's investment portfolio
Inquiring about the number of dependents
Collecting personal financial information
Inquiring about the age or dates of birth of dependents
, A)
I and III
B)
I only
C)
II, III, and IV
D)
II and IV - ANSWER-C
The answer is II, III, and IV. Understanding the client's personal and financial
circumstances does not include determining which stocks or investments to purchase.
This occurs in the fourth step of the financial planning process: developing the
recommendations.
Which activity that takes place during the financial planning process is generally the
most demanding?
A)
Gathering information necessary to fulfill the engagement
B)
Analyzing and evaluating the client's current financial status
C)
Communicating the recommendations
D)
Prospecting for new clients
Explanation - ANSWER-B
The analysis and evaluation of the client's financial status is considered the most
challenging financial planning activity because it often requires an in-depth knowledge
of insurance and employee benefits, investments, taxes, retirement planning, and estate
planning.
CFP Board provides guidelines regarding how the CFP® marks may be used in
documents or marketing materials. Identify the items that are required when the words
"CERTIFIED FINANCIAL PLANNER™" are used.
Always use the ™ symbol
Always associate with CFP Board
Always use capital letters or small cap font
Always use with one of CFP Board's approved nouns ("certificant," "professional,"
"practitioner," "certification," "mark," or "exam"), unless directly following the name of the
individual certified by CFP Board
A)
II and IV
B)
II and III
C)
I, III, and IV
D)
I and III - ANSWER-C
100% CORRECT ANSWERS
Identify the life cycle phase that is best described by the following characteristics:
Limited excess funds for investing
High degree of debt to net worth
Low net worth
Lack of concern for risks
A)
Conservation/protection phase
B)
Distribution/gifting phase
C)
Charitable/donation phase
D)
Asset accumulation phase - ANSWER-D
The answer is asset accumulation phase. The asset accumulation phase begins
between ages 20 and 25 and lasts until approximately age 45 or later, if the client's
children are not yet independent.
The beginning of this phase is characterized by the following:
Limited excess funds for investing
High degree of debt to net worth
Low net worth
Lack of concern for risks
LO 1.1.2
Which of the following are major components of a sound financial plan?
Estate planning
Insurance planning
Retirement planning
Investment planning
A)
I and IV
B)
I and III
C)
I, II, III, and IV
D)
I, III, and IV - ANSWER-C
The answer is I, II, III, and IV. All of these are major components of a sound financial
plan. Other components include savings, budgeting, education funding, and income tax
planning.
LO 1.1.1
,Which of the following types of data are considered qualitative?
Health status
List of current investments
Copies of wills and trusts
Risk tolerance level
A)
II and III
B)
I, II, and III
C)
I and IV
D)
III and IV - ANSWER-C
The answer is I and IV. A list of current investments and copies of wills and trusts are
quantitative data.
LO 1.1.1
To properly use the CFP® marks on documents or marketing materials, certain
guidelines must be followed. Identify the items that are required when the words
"CERTIFIED FINANCIAL PLANNER™" are used.
Always use capital letters or small cap font
Always use the ™ symbol
Always associate with CFP Board
Always use with one of CFP Board's approved nouns ("certificant," "professional,"
"practitioner," "certification," "mark" or "exam") unless directly following the name of the
individual certified by CFP Board
A)
I, II, and IV
B)
I and III
C)
I and II
D)
II and IV - ANSWER-A
The answer is I, II, and IV. If the words "CERTIFIED FINANCIAL PLANNER" are used,
they must be presented in capital letters or small cap font followed by a ™ because the
words are subject to trademark law. Statement III is incorrect; the words must always
associate with the individual(s) certified by CFP Board. "CERTIFIED FINANCIAL
PLANNER" must always be used with one of CFP Board's approved nouns
("certificant," "professional," "practitioner," "certification," "mark" or "exam") unless
directly following the name of the individual certified by CFP Board.
LO 1.2.1
Identify the number of steps in the Practice Standards for the Financial Planning
Process.
A)
,Fifteen
B)
Seven
C)
Six
D)
Eight - ANSWER-B
The answer is seven. There are seven steps in CFP Board's Practice Standards for the
Financial Planning Process (Practice Standards). They are: 1) Understanding the
Client's Personal and Financial Circumstances, 2) Identifying and Selecting Goals, 3)
Analyzing the Client's Current Course of Action and Potential Alternative Course(s) of
Action, 4) Developing the Financial Planning Recommendation(s), 5) Presenting the
Financial Planning Recommendation(s), 6) Implementing the Financial Planning
Recommendation(s), and 7) Monitoring Progress and Updating. The Practice Standards
set forth the level of professional practice expected of CFP® professionals engaged in
financial planning.
Which of these may be the responsibility of the financial planner during the
Implementing the Financial Planning Recommendation(s) step of the financial planning
process?
Sharing information as authorized
Coordinating with other professionals
Determining the likelihood of reaching stated objectives
Advising clients of the material advantages and disadvantages of the implemented
strategies
A)
I and II
B)
II and III
C)
I and III
D)
II and IV - ANSWER-A
The answer is I and II. In Step 3, Analyzing the Client's Current Course of Action and
Potential Alternative Course(s) of Action, the financial planner must deterine the
likelihood of reaching stated objectives by continuing the client's current activities.
Advising clients of the material advantages and disadvantages of the recommendations
is part of Step 5, Presenting the Financial Planning Recommendations.
LO 1.2.2
Which of these activities would be appropriate if you were understanding the client's
personal and financial circumstances?
Determining which stocks to purchase for the client's investment portfolio
Inquiring about the number of dependents
Collecting personal financial information
Inquiring about the age or dates of birth of dependents
, A)
I and III
B)
I only
C)
II, III, and IV
D)
II and IV - ANSWER-C
The answer is II, III, and IV. Understanding the client's personal and financial
circumstances does not include determining which stocks or investments to purchase.
This occurs in the fourth step of the financial planning process: developing the
recommendations.
Which activity that takes place during the financial planning process is generally the
most demanding?
A)
Gathering information necessary to fulfill the engagement
B)
Analyzing and evaluating the client's current financial status
C)
Communicating the recommendations
D)
Prospecting for new clients
Explanation - ANSWER-B
The analysis and evaluation of the client's financial status is considered the most
challenging financial planning activity because it often requires an in-depth knowledge
of insurance and employee benefits, investments, taxes, retirement planning, and estate
planning.
CFP Board provides guidelines regarding how the CFP® marks may be used in
documents or marketing materials. Identify the items that are required when the words
"CERTIFIED FINANCIAL PLANNER™" are used.
Always use the ™ symbol
Always associate with CFP Board
Always use capital letters or small cap font
Always use with one of CFP Board's approved nouns ("certificant," "professional,"
"practitioner," "certification," "mark," or "exam"), unless directly following the name of the
individual certified by CFP Board
A)
II and IV
B)
II and III
C)
I, III, and IV
D)
I and III - ANSWER-C
