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Technology & Digital Applications Flashcards

7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Technology & Digital Applications flashcards as text

  1. A client asks whether their robo-advisor account is SIPC-insured. Which statement is accurate?

    Answer: SIPC protects customers of broker-dealer robo-advisors against firm failure, but does not protect against investment losses

    SIPC protects brokerage customers if the firm fails by covering up to $500,000 in securities and cash, but it does not insure against market losses.

  2. A CFP wants to use predictive analytics to identify clients at risk of abandoning their financial plan. Which data source is MOST appropriate?

    Answer: CRM behavioral data such as login frequency, meeting attendance, and response rates

    Behavioral engagement signals from the firm's own CRM—like declining logins or missed reviews—are the most appropriate and privacy-compliant predictors of disengagement.

  3. Which factor primarily distinguishes a fee-based digital financial plan from a subscription-based model?

    Answer: Fee-based plans typically charge a one-time project fee, while subscription models charge recurring fees for ongoing access and updates

    A one-time fee-based digital plan covers a specific deliverable, whereas subscription pricing gives ongoing access to the planner and plan updates for a recurring fee.

  4. What does 'behavioral finance technology' refer to in a digital financial planning platform?

    Answer: Tools that incorporate behavioral economics insights to nudge clients toward better financial decisions

    Behavioral finance technology applies insights from psychology—like default enrollment and loss aversion framing—to guide clients toward savings and planning goals.

  5. A CFP is recommending a financial planning software platform to a small practice. Which security certification BEST indicates the vendor properly safeguards client data?

    Answer: SOC 2 Type II report demonstrating ongoing operational security controls

    A SOC 2 Type II report provides independent auditor verification of a vendor's security controls over an extended period, making it the strongest indicator of operational data security.

  6. How does digital identity verification (e.g., Know Your Customer technology) benefit a CFP's onboarding process?

    Answer: It automates client identity authentication, reducing fraud risk and streamlining regulatory compliance during account opening

    Automated KYC tools verify government IDs and cross-check watchlists in real time, speeding onboarding while satisfying AML and BSA regulatory requirements.

  7. A client is concerned about the environmental impact of their investments and wants to use technology to screen their portfolio. Which tool best supports ESG integration?

    Answer: ESG screening and scoring software that rates holdings on environmental, social, and governance criteria

    ESG screening software analyzes portfolio holdings against environmental, social, and governance metrics, allowing the CFP to align investments with the client's values.