Financial Planning Quiz with Correct
Answers
Which of the following is true regarding risk? - ✅✅ Defining the nature of risk
is objective for each person
Which is true regarding financial objectives? - ✅✅ After they have been
identified, they should be prioritized
Which is true regarding developing a financial plan? - ✅✅ This involves
budgeting income and expenses
Which is true regarding a person's standard of living? - ✅✅ Income not allocated
to maintaining a person's standard of living should be allocated to other financial
objectives
A financial planning professional must do all of the following except - ✅✅
Prove to the client why taking more risk is needed
Which is an association of fee-only financial planners? - ✅✅ NAPFA
Which was created as a result of a merger of 2 organizations - ✅✅ FPA
CFP wants to accomplish all of the following except - ✅✅ Facilitate the weeding
out of incompetent financial advisors
Which is true regarding the relationship a planner has with the client? - ✅✅ It is
possible that the scope of the relationship will change over time
Which is true about a client's data? - ✅✅ The client facilitates the goal-setting
process with the planner
What is true regarding a client, or potential client's, finances? - ✅✅ The planner
should consider the likelihood of the client reaching recommended financial
objectives
, All of the following factors need to be considered in assessing the adequacy of
funds needed to fund a client's income needs during retirement except - ✅✅
Living trust funds
Which is true regarding inflation? - ✅✅ Inflation impacts retirees differently
than those who are working
Contributions to Roth IRAs, but not earnings, can be withdrawn at any time
without a penalty - ✅✅ True
The penalty for withdrawing less than the minimum required distribution from a
qualified plan is 10% of the required distribution for the year. - ✅✅ False; 50%
The age at which retirees can receive full Social Security retirement benefits is
being raised to age 67 for those born in 1960 or later. - ✅✅ True
False - ✅✅ The financial planner must always assume the role of the
quarterback of the financial planning team
False - ✅✅ Clients who put return of principal above return on principal should
only use risk-free investments
True - ✅✅ Automatic investment plans are a more effective way to build wealth
than discretionary investments as they allow clients to put aside money before they
consider spending it
False - ✅✅ The philosophy of "owning, not loaning" is the belief that fixed
income investments are a better alternative to equities for building wealth.
True - ✅✅ "Multidimensional" diversification means diversifying across classes
of investment vehicles, by geographic location, time, etc.
True - ✅✅ Clients are best served by a financial planning team with expertise in
different fields rather than a single advisor.
True - ✅✅ The author suggest that risk/reward principles must include both
economic and psychological considerations
True - ✅✅ The truly professional advisor will continue his/her education
through various means, including joining organizations such as FPA, NAPFA, etc.
Answers
Which of the following is true regarding risk? - ✅✅ Defining the nature of risk
is objective for each person
Which is true regarding financial objectives? - ✅✅ After they have been
identified, they should be prioritized
Which is true regarding developing a financial plan? - ✅✅ This involves
budgeting income and expenses
Which is true regarding a person's standard of living? - ✅✅ Income not allocated
to maintaining a person's standard of living should be allocated to other financial
objectives
A financial planning professional must do all of the following except - ✅✅
Prove to the client why taking more risk is needed
Which is an association of fee-only financial planners? - ✅✅ NAPFA
Which was created as a result of a merger of 2 organizations - ✅✅ FPA
CFP wants to accomplish all of the following except - ✅✅ Facilitate the weeding
out of incompetent financial advisors
Which is true regarding the relationship a planner has with the client? - ✅✅ It is
possible that the scope of the relationship will change over time
Which is true about a client's data? - ✅✅ The client facilitates the goal-setting
process with the planner
What is true regarding a client, or potential client's, finances? - ✅✅ The planner
should consider the likelihood of the client reaching recommended financial
objectives
, All of the following factors need to be considered in assessing the adequacy of
funds needed to fund a client's income needs during retirement except - ✅✅
Living trust funds
Which is true regarding inflation? - ✅✅ Inflation impacts retirees differently
than those who are working
Contributions to Roth IRAs, but not earnings, can be withdrawn at any time
without a penalty - ✅✅ True
The penalty for withdrawing less than the minimum required distribution from a
qualified plan is 10% of the required distribution for the year. - ✅✅ False; 50%
The age at which retirees can receive full Social Security retirement benefits is
being raised to age 67 for those born in 1960 or later. - ✅✅ True
False - ✅✅ The financial planner must always assume the role of the
quarterback of the financial planning team
False - ✅✅ Clients who put return of principal above return on principal should
only use risk-free investments
True - ✅✅ Automatic investment plans are a more effective way to build wealth
than discretionary investments as they allow clients to put aside money before they
consider spending it
False - ✅✅ The philosophy of "owning, not loaning" is the belief that fixed
income investments are a better alternative to equities for building wealth.
True - ✅✅ "Multidimensional" diversification means diversifying across classes
of investment vehicles, by geographic location, time, etc.
True - ✅✅ Clients are best served by a financial planning team with expertise in
different fields rather than a single advisor.
True - ✅✅ The author suggest that risk/reward principles must include both
economic and psychological considerations
True - ✅✅ The truly professional advisor will continue his/her education
through various means, including joining organizations such as FPA, NAPFA, etc.
