Financial Planning Exam 1 – Budgeting, Saving, Risk, Credit & Investment Basics
Mock Exam
Which of the following stated goals of a client is most workable for financial planning purposes?
A)To get out of debt.
B) To enjoy a comfortable retirement lifestyle.
C)Of most importance, to purchase a vacation home within 5 years at a cost of about
$100,000.Rationale
D)To increase the amount of life insurance owned. - ANS ✔✔C)
A workable goal for financial planning purposes should be specific, prioritized, and quantified.
Answer choices a, b, and d fail to meet these criteria.
Financial Planning Process - ANS ✔✔1. Understand the client
2. Identifying and selecting goals
3. Analyze their current plan
4. Develop the plan
5. Present the plan
6. Implement the plan
7. Monitor and update the plan
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?
. - ANS ✔✔Implementation
One of the most important qualities a professional financial planner brings to the client/planner
relationship is - ANS ✔✔Objectivity
, Raven recently came to your office for her second appointment after receiving your
engagement letter. During the meeting you collect several documents from her including her
prior year tax returns, estate planning documents, and investment statements and history. You
also worked with her on identifying her goals and objectives. Which of the following is the next
step in the financial planning process? - ANS ✔✔Analyze the client's current course of action
and potential alternative courses of action.
Which of the following is/are basic premises in Behavioral Finance?
1. Investors are normal
.2. Markets are inefficient.
3. The Behavioral Portfolio Theory governs. - ANS ✔✔All of the above
Abner and his son Alfonso were outside doing some yard work when a wealthy neighbor drove
by in an expensive new convertible. As the neighbor drove by, Abner said to Alfonso "Don't ever
be like that man. He is a doctor who got rich by charging people five times what his services are
worth." Which of the following money scripts most likely applies to Abner? - ANS ✔✔Money
Avoidance
Which of the following is an example of how choice architecture can be appropriately applied in
the financial planning process? - ANS ✔✔Xavier, when presenting alternative college savings
vehicles to a client whose goal is to maximize financial aid, frames each alternative around the
amount of after-tax money likely to be available for paying college expenses and the
corresponding likely decrease in available financial aid; thus presenting the net outcome of each
option.
Rationale
Choice architecture refers to the structure surrounding the manner in which choices are
presented and recognizing that the context in which choices are presented influences the
decision maker. Framing alternatives around goals can help clients understand the value of their
decisions; not only monetary value, but in terms of reaching their goals. In understanding how
Mock Exam
Which of the following stated goals of a client is most workable for financial planning purposes?
A)To get out of debt.
B) To enjoy a comfortable retirement lifestyle.
C)Of most importance, to purchase a vacation home within 5 years at a cost of about
$100,000.Rationale
D)To increase the amount of life insurance owned. - ANS ✔✔C)
A workable goal for financial planning purposes should be specific, prioritized, and quantified.
Answer choices a, b, and d fail to meet these criteria.
Financial Planning Process - ANS ✔✔1. Understand the client
2. Identifying and selecting goals
3. Analyze their current plan
4. Develop the plan
5. Present the plan
6. Implement the plan
7. Monitor and update the plan
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?
. - ANS ✔✔Implementation
One of the most important qualities a professional financial planner brings to the client/planner
relationship is - ANS ✔✔Objectivity
, Raven recently came to your office for her second appointment after receiving your
engagement letter. During the meeting you collect several documents from her including her
prior year tax returns, estate planning documents, and investment statements and history. You
also worked with her on identifying her goals and objectives. Which of the following is the next
step in the financial planning process? - ANS ✔✔Analyze the client's current course of action
and potential alternative courses of action.
Which of the following is/are basic premises in Behavioral Finance?
1. Investors are normal
.2. Markets are inefficient.
3. The Behavioral Portfolio Theory governs. - ANS ✔✔All of the above
Abner and his son Alfonso were outside doing some yard work when a wealthy neighbor drove
by in an expensive new convertible. As the neighbor drove by, Abner said to Alfonso "Don't ever
be like that man. He is a doctor who got rich by charging people five times what his services are
worth." Which of the following money scripts most likely applies to Abner? - ANS ✔✔Money
Avoidance
Which of the following is an example of how choice architecture can be appropriately applied in
the financial planning process? - ANS ✔✔Xavier, when presenting alternative college savings
vehicles to a client whose goal is to maximize financial aid, frames each alternative around the
amount of after-tax money likely to be available for paying college expenses and the
corresponding likely decrease in available financial aid; thus presenting the net outcome of each
option.
Rationale
Choice architecture refers to the structure surrounding the manner in which choices are
presented and recognizing that the context in which choices are presented influences the
decision maker. Framing alternatives around goals can help clients understand the value of their
decisions; not only monetary value, but in terms of reaching their goals. In understanding how
