Client Communication & Financial Advice Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Communication & Financial Advice flashcards as text
A non-English-speaking client is applying for a mortgage. What is the advisor's responsibility under fair lending principles?
Answer: Provide or arrange for translated materials and clear communication to ensure the client understands all loan terms and disclosures
Fair lending principles and the Equal Credit Opportunity Act prohibit discrimination based on national origin, requiring advisors to make reasonable accommodations.
A client asks what 'points' mean on their Loan Estimate. How should the advisor explain this?
Answer: One point equals 1% of the loan amount paid upfront to reduce the interest rate or cover origination costs
Mortgage points represent 1% of the loan balance and can be discount points (to buy down the rate) or origination points (lender fees).
A client is comparing loan offers from two lenders. What document should the advisor tell the client to use for an apples-to-apples comparison?
Answer: The Loan Estimate provided within three business days of application
The standardized Loan Estimate form allows borrowers to directly compare interest rates, APR, monthly payments, and closing costs across lenders.
A client asks why the advisor needs to verify their bank statements for the past two months. What is the correct explanation?
Answer: Lenders verify bank statements to confirm sufficient funds for down payment and closing costs and to identify undisclosed liabilities
Two months of bank statements confirm available assets, sourcing of funds, and can reveal undisclosed debts or irregular deposits that affect qualification.
A client is anxious about the mortgage process timeline. What is the most effective communication approach the advisor should use?
Answer: Provide a clear written timeline of the key milestones from application through closing and proactively update the client at each stage
Setting clear expectations with a written timeline and proactive milestone updates reduces client anxiety and builds trust throughout the process.
A client asks about the three-day right of rescission. Which loan type does this apply to and what does it mean?
Answer: It applies to refinances and home equity loans on a primary residence, giving the borrower three business days to cancel after closing
Under TILA, borrowers have a three-business-day right to rescind certain refinance and home equity transactions on their primary residence.
A client tells the advisor they received a much lower rate quote online and wants to know why the advisor's quote is higher. What is the best response?
Answer: Explain that online quotes are often based on ideal scenarios; review the client's actual profile and clarify what rate they can realistically qualify for based on their credit, LTV, and loan type
Advertised rates reflect best-case borrower profiles; the advisor should transparently explain how the client's specific factors affect their actual rate.