FREE Certified Financial Planner Questions and Answers

Question 1

James and Lou Olsen are meeting with Tony, a CFP expert and a representative of an investment adviser, to evaluate their financial strategy, which includes investing and retirement planning. Jimmy questions the tax implications of their strategy as they go over it. A referral agreement between Tony and his CPA colleague states that the CPA will pay Wayne $125 for each client he introduces who hires the CPA for tax preparation or planning services. Wayne suggests his CPA colleague to the Olsens. The referral agreement is not mentioned by him.
Which of the following statements most accurately sums up Wayne's behavior during the meeting?

Accepted Answer

Tony violated the CFP Board's Standards of Conduct for failing to disclose that he might get paid a referral fee if they decide to work with his CPA colleague at the time of the recommendation.

Answer

The referral money is not regarded as a major sum needing disclosure, hence Tony did not transgress the standards of conduct for the CFP Board regarding transparency and conflicts of interest.

Answer

Due to the disclosure of the referral agreement in the firm's ADV part 2, which the customer had already received before the recommendation, Tony complied with the CFP Board's Standards of Conduct.

Answer

When he recommended a different expert to assist the client with the tax element of their financial plan, Tony violated the CFP Board's Standards of Conduct for the duty of care owed to the Olsens.

Question 2

In order to lower their yearly tax burden, married professionals Mark and Mary, both in their late 50s, are meeting with Ken, a CFP expert, to review alternatives for extra tax-advantaged accounts. Mark is the chief thoracic surgeon at a neighborhood nonprofit hospital, and Helen runs her own private mental health practice. Helen has been contributing fully to a SEP IRA for the past two years, and Mark has been contributing fully to his 403(b) and 457 plans. Mark and May have high-deductible health insurance through Mark's place of employment. Which of the following accounts might offer Mark and Mary more tax-free and deferred benefits?

Accepted Answer

Health Savings Account

Answer

Non-deductible IRA

Answer

Roth IRA

Answer

Flexible Savings Account

Question 3

When in the business cycle do demand and hiring start to slow down, while inflation is trending up and unemployment is still declining but more slowly?

Accepted Answer

Peak phase

Answer

Contraction phase

Answer

Expansion phase

Answer

Trough phase

Question 4

Mark owns a neighborhood convenience store. He recently began selling a popular candy and noticed that the revenue and the inventory counts on hand were not adding up. Mark decided to move the placement of the candy display from in front of the counter, where he could not see the product, to the top of the counter near the register. What risk management technique did Mark demonstrate?

Accepted Answer

Risk Reduction

Answer

Risk Retention

Answer

Risk Transfer

Answer

Risk Avoidance

Question 5

Deborah, 64, just lost her 67-year-old husband William. She is feeling a little overwhelmed as she tries to understand the money that William managed entirely. Although she has some money in the bank, it won't be there for long. Deborah has spent her whole 42-year marriage to William as a stay-at-home mother and wife. William was the only source of income and a self-employed contractor. She is meeting with Dan, a CFP expert, so he can assist her in determining her prospective sources of income. Six months' worth of bank statements and unopened investment account statements Deborah received in the mail is given to Dan. When Dan opens the statements, he discovers that William had taxable investment accounts worth $175,000, $57,000 in SEP IRAs, and $19,000 in Roth IRAs.
Which of the following should Deborah use as her primary source of income, according to Dan's advice?

Accepted Answer

Social Security

Answer

Individual retirement accounts

Answer

Reverse mortgage

Answer

Taxable investment accounts

Question 6

Jane comes to you for help with financial planning. Within two years, she wants to purchase a brand-new Mercedes Benz for $40,000. She just went through a divorce. She claims that since she can spend her money on whatever she wants, she wants to reward herself. She presently has $5,000 saved toward the objective and is able to easily set aside $250 each month for the following two years. After taxes and fees, the Mercedes will actually cost $46,000. You discover that the monthly payment will be more than twice as much as the $250 per month she is saving toward her goal after performing a 60-month amortization calculation. The cost is significantly more than $250 even with an amortization of 80 months.
Which aspect of the psychology of financial planning ought to you go over with Jane to get a better understanding of her motivation?

Accepted Answer

Sources of money conflicts – you should discuss with Jane the lack of financial freedom she felt during her marriage.

Answer

Goal transition – you should discuss with Jane how she can transition from saver to buyer.

Answer

Money scripts – you should discuss with Jane what money scripts she may be following that are causing her to want something she can’t afford.

Answer

Goal congruence – you should discuss with Jane her lack of goal congruence with what she can afford.

Question 7

Married couple Tommy and Marilyn run a quaint antique shop together. They have copies of their K-1 and 1065 tax forms from their CPA and are meeting with their tax preparer today. What kind of business structure does it have?

Accepted Answer

Partnership

Answer

S-Corporation

Answer

Sole proprietorship

Answer

Limited Liability Company