HS 300 Fundamentals of Financial Planning (Chapter 1) Exam Questions with Verified
Answers| Latest Update Graded A+
How many steps are in the Financial Planning Process? 7
What is step 1 of the Financial Planning Process? Understanding the Client's Personal and
Financial Circumstances.
What is step 2 of the Financial Planning Process? Identifying and Selecting Goals
What is step 3 of the Financial Planning Process? Analyzing the Client's Current Course of
Action and Potential Alternative Course(s)
What is step 4 of the Financial Planning Process? Developing the Financial Planning
Recommendation(s)
What is step 5 of the Financial Planning Process? Presenting the Financial Planning
Recommendation(s)
What is step 6 of the Financial Planning Process? Implementing the Financial Planning
Recommendation(s)
What is step 7 of the Financial Planning Process? Monitoring Progress and Updating
What is Financial Planning? The process of formulating financial decisions to form an
integrated plan and implementing and monitoring those financial decisions.
What step of the Financial Planning Process is this?: A financial planner asks a new client about
her job, typical income, and common expenses. After getting "big picture" amounts, the
planner asks her to complete a detailed fact finder. Understanding the Client's Personal and
Financial Circumstances
,What step of the Financial Planning Process is this?: A financial planner asks her clients to
complete an activity to help them prioritize their goals. After identifying the client's main goals,
the planner writes down the goals on notecards then asks her clients to arrange them on the
table from "must have" to "nice to have." Identifying and Selecting Goals
What step of the Financial Planning Process is this?: A financial planner enters her clients' data
into dedicated planning software and then models a variety of scenarios. When she realizes the
clients will be unable to meet all of their goals, she runs a series of alternative scenarios that
delay those goals, use different funding sources, or omit those goals altogether. Analyzing
the Client's Current Course of Action and Potential Alternative Course(s) of Action
What step of the Financial Planning Process is this? A financial planner develops two education
funding recommendations: one in which the client pays for the entire cost of college, including
living expenses, and the other in which the client only pays for part of his tuition. The planner
also develops alternative recommendations for retirement and a vacation home purchase that
are dependent on the client's education-funding choice. Developing the Financial Planning
Recommendation(s)
What step of the Financial Planning Process is this?: A financial planner drafts an
implementation schedule that delineates his responsibilities and his clients' responsibilities. By
the next meeting, he will provide the clients with life and disability insurance applications. The
clients will move their IRAs from their current broker into a wrap account managed by the
planner. Implementing the Financial Planning Recommendation(s)
What step of the Financial Planning Process is this?: Every 6 months, a financial planner meets
with her clients. She collects new qualitative and quantitative data with a short act finer. If the
clients' progress toward their goals is short of expectations, she develops new
recommendations to help them catch up. Monitoring Progress and Updating
Your client, Jed, engaged you to help him with his financial situation. During the course of your
meetings you sold Jed a $1,000,000 life insurance policy. Which part of the financial planning
process were you engaged in? Implementing the financial planning recommendations
,After meeting with your client, Sid, you prepared his current financial statements. In which part
of the financial planning process were you engaged when you prepared the statements?
Analyzing the client's current course of action and potential alternative courses of action
During this step, planners will update client and planner responsibilities, check on goal
progress, and gather up-to-date client information. Monitoring Progress and Updating
What is the final step of the financial planning process? Monitoring Progress and Updating
What is an engagement letter? A legal agreement that is prepared by the advisor and should
be signed by both the advisor and the client before proceeding.
When should the financial planner and the client identify specific responsibilities? When
establishing the relationship.
What is internal data? Information that is specific to the client, which is obtained through
the use of questionnaires, interviews, and conversations.
Goals, values, risk tolerance and psychology are examples of which? (Qualitative or
Quantitative) Qualitative
Current income, expected future income, family member ages, and value of assets and debts
are examples of which? (Qualitative or Quantitative) Quantitative
What. determines whether a planner is regulated by the SEC? If they manage at least $100
million
All of the following are examples of qualitative information that should be collected by the
financial planner EXCEPT:
, A)
the client's general attitude about spending.
B)
the client's risk tolerance level.
C)
the client's age and number of children.
D)
the client's education goals. C
During a meeting with your client Cameron, you recommended that he purchase a personal
liability umbrella policy (PLUP). In which part of the financial planning process were you
engaged?
A)
Implementing the Financial Planning Recommendation(s)
B)
Presenting the Financial Planning Recommendation(s)
C)
Identifying and Selecting Goals
D)
Monitoring Progress and Updating B
Financial planners earn compensation in the form of
A)
a percentage of assets managed.
B)
an hourly rate or fee.
Answers| Latest Update Graded A+
How many steps are in the Financial Planning Process? 7
What is step 1 of the Financial Planning Process? Understanding the Client's Personal and
Financial Circumstances.
What is step 2 of the Financial Planning Process? Identifying and Selecting Goals
What is step 3 of the Financial Planning Process? Analyzing the Client's Current Course of
Action and Potential Alternative Course(s)
What is step 4 of the Financial Planning Process? Developing the Financial Planning
Recommendation(s)
What is step 5 of the Financial Planning Process? Presenting the Financial Planning
Recommendation(s)
What is step 6 of the Financial Planning Process? Implementing the Financial Planning
Recommendation(s)
What is step 7 of the Financial Planning Process? Monitoring Progress and Updating
What is Financial Planning? The process of formulating financial decisions to form an
integrated plan and implementing and monitoring those financial decisions.
What step of the Financial Planning Process is this?: A financial planner asks a new client about
her job, typical income, and common expenses. After getting "big picture" amounts, the
planner asks her to complete a detailed fact finder. Understanding the Client's Personal and
Financial Circumstances
,What step of the Financial Planning Process is this?: A financial planner asks her clients to
complete an activity to help them prioritize their goals. After identifying the client's main goals,
the planner writes down the goals on notecards then asks her clients to arrange them on the
table from "must have" to "nice to have." Identifying and Selecting Goals
What step of the Financial Planning Process is this?: A financial planner enters her clients' data
into dedicated planning software and then models a variety of scenarios. When she realizes the
clients will be unable to meet all of their goals, she runs a series of alternative scenarios that
delay those goals, use different funding sources, or omit those goals altogether. Analyzing
the Client's Current Course of Action and Potential Alternative Course(s) of Action
What step of the Financial Planning Process is this? A financial planner develops two education
funding recommendations: one in which the client pays for the entire cost of college, including
living expenses, and the other in which the client only pays for part of his tuition. The planner
also develops alternative recommendations for retirement and a vacation home purchase that
are dependent on the client's education-funding choice. Developing the Financial Planning
Recommendation(s)
What step of the Financial Planning Process is this?: A financial planner drafts an
implementation schedule that delineates his responsibilities and his clients' responsibilities. By
the next meeting, he will provide the clients with life and disability insurance applications. The
clients will move their IRAs from their current broker into a wrap account managed by the
planner. Implementing the Financial Planning Recommendation(s)
What step of the Financial Planning Process is this?: Every 6 months, a financial planner meets
with her clients. She collects new qualitative and quantitative data with a short act finer. If the
clients' progress toward their goals is short of expectations, she develops new
recommendations to help them catch up. Monitoring Progress and Updating
Your client, Jed, engaged you to help him with his financial situation. During the course of your
meetings you sold Jed a $1,000,000 life insurance policy. Which part of the financial planning
process were you engaged in? Implementing the financial planning recommendations
,After meeting with your client, Sid, you prepared his current financial statements. In which part
of the financial planning process were you engaged when you prepared the statements?
Analyzing the client's current course of action and potential alternative courses of action
During this step, planners will update client and planner responsibilities, check on goal
progress, and gather up-to-date client information. Monitoring Progress and Updating
What is the final step of the financial planning process? Monitoring Progress and Updating
What is an engagement letter? A legal agreement that is prepared by the advisor and should
be signed by both the advisor and the client before proceeding.
When should the financial planner and the client identify specific responsibilities? When
establishing the relationship.
What is internal data? Information that is specific to the client, which is obtained through
the use of questionnaires, interviews, and conversations.
Goals, values, risk tolerance and psychology are examples of which? (Qualitative or
Quantitative) Qualitative
Current income, expected future income, family member ages, and value of assets and debts
are examples of which? (Qualitative or Quantitative) Quantitative
What. determines whether a planner is regulated by the SEC? If they manage at least $100
million
All of the following are examples of qualitative information that should be collected by the
financial planner EXCEPT:
, A)
the client's general attitude about spending.
B)
the client's risk tolerance level.
C)
the client's age and number of children.
D)
the client's education goals. C
During a meeting with your client Cameron, you recommended that he purchase a personal
liability umbrella policy (PLUP). In which part of the financial planning process were you
engaged?
A)
Implementing the Financial Planning Recommendation(s)
B)
Presenting the Financial Planning Recommendation(s)
C)
Identifying and Selecting Goals
D)
Monitoring Progress and Updating B
Financial planners earn compensation in the form of
A)
a percentage of assets managed.
B)
an hourly rate or fee.
