CFP Research & Evidence-Based Practice 2 — Questions and Answers
Question 1: A CFP practitioner wants to evaluate the long-term effectiveness of a dollar-cost averaging strategy. Which research design is most appropriate?
- Cross-sectional survey
- Longitudinal study using historical market data (Correct answer)
- Single case study of one client
- Expert opinion panel
Correct answer: Longitudinal study using historical market data
A longitudinal study using historical market data allows analysis of outcomes over time, which is essential for evaluating a time-based investment strategy.
Question 2: When a financial planner reads a study claiming 'p < 0.05,' what does this indicate about the findings?
- The effect size is large and practically significant
- There is less than a 5% probability the results occurred by chance under the null hypothesis (Correct answer)
- The study has no limitations
- The finding will replicate in all future studies
Correct answer: There is less than a 5% probability the results occurred by chance under the null hypothesis
A p-value less than 0.05 means there is less than a 5% probability of obtaining the observed results if the null hypothesis were true.
Question 3: Which of the following best describes 'publication bias' in financial planning research?
- Authors plagiarizing published works
- Journals favoring studies with statistically significant or positive results (Correct answer)
- Researchers citing only their own prior work
- Databases excluding non-English studies
Correct answer: Journals favoring studies with statistically significant or positive results
Publication bias occurs when journals are more likely to publish studies showing significant or positive results, skewing the available evidence base.
Question 4: A planner reviews two studies: one with n=30 and one with n=3,000. Holding all else equal, which finding is more reliable and why?
- n=30, because smaller samples are easier to control
- n=3,000, because larger samples reduce sampling error and increase statistical power (Correct answer)
- Both are equally reliable if properly randomized
- n=30, because smaller samples have less data noise
Correct answer: n=3,000, because larger samples reduce sampling error and increase statistical power
Larger samples reduce sampling error and increase statistical power, making the findings from n=3,000 more reliable when all else is equal.
Question 5: A CFP practitioner is applying evidence-based practice. Which source of evidence should be given the highest weight?
- Anecdotal client testimonials
- A single randomized controlled trial with a small sample
- A systematic review of multiple high-quality randomized controlled trials (Correct answer)
- A financial columnist's opinion in a major newspaper
Correct answer: A systematic review of multiple high-quality randomized controlled trials
Systematic reviews synthesizing multiple high-quality RCTs sit at the top of the evidence hierarchy and provide the strongest basis for practice decisions.
Question 6: In a research study on retirement savings behavior, the variable 'annual household income' is classified as which type of variable?
- Nominal
- Ordinal
- Interval
- Ratio (Correct answer)
Correct answer: Ratio
Annual household income is a ratio variable because it has a true zero point (zero income) and equal intervals between values.
Question 7: A financial planner wants to understand how clients feel about financial risk after a market crash. Which method is most appropriate for capturing rich, nuanced client perspectives?
- Structured telephone survey with Likert scales
- In-depth qualitative interviews (Correct answer)
- Analysis of account balance data
- Review of SEC enforcement actions
Correct answer: In-depth qualitative interviews
In-depth qualitative interviews are best suited to capture nuanced, subjective experiences and feelings that structured quantitative methods may miss.
CFP Research & Evidence-Based Practice 2
A CFP practitioner wants to evaluate the long-term effectiveness of a dollar-cost averaging strategy.
Which research design is most appropriate?