FPQP Module 1 Principles of Financial Planning
Preparedness Baseline Exam Knowledge Questions with
Expertly Written Financial Solutions 2025/2026
Self-Control Bias - correct answer Poor financial decisions are made for immediate
gratification
status quo bias - correct answer comfort with the existing situation and unwilling to
make changes even if it would benefit you.
Nondirective Counseling Skills - correct answer Encourages clients to reflect and
share their goals allowing a client to open up
Affinity Bias - correct answer Wanting to make decisions based on values and beliefs
Directive Counseling Skills - correct answer Planner guides the discussion in
presenting the ideas
Clarification - correct answer Ensures the planner understands the client, asking
questions to illustrate the clients point
Paraphrase - correct answer Rephrasing the clients statements and restating their
meanings
Summarizing - correct answer Briefly outlines the discussion, verifies the clients key
goals are being accounted
Reframing - correct answer Helps clients shift their perspective by considering things
from another viewpoint
,Explanation - correct answer Descriptive statement used to make somethin more
straightforward or understandable
Advice - correct answer Giving direction to a client. One of the most utilized directive
skills
Politeness and Sensibility - correct answer Behaving in a socially acceptable way and
responding thoughtfully to clients
Inclusion and Exclusion - correct answer Delivering messages to all clients to show
they are valued and not excluded individuals through technical language
Standards of Professional Conduct - correct answer I: Fiduciary Duty
II: Integrity
III: Competence
IV: Diligence
V: Professionalism
VI: Confidentiality
Financial planning CFPB Definition - correct answer a collaborative process that helps
maximize a Clients potential for meeting life goals through financial advice that
integrates relevant elements of the clients personal and financial circumstances
Comprehensive Financial Plan - correct answer a financial plan that incorporates a
clients full financial picture regarding retirement, insurance and estate planning needs
Targeted Financial Plan - correct answer a financial plan that only focuses on a
singular financial goal for a client such as saving for a down payment or education
savings for a child.
3 elements of setting up a financial goal - correct answer Purpose, Timeframe, Amount
, Qualitative Data - correct answer Data that covers the client side of finance ie. goals,
rapport, values, belief and risk tolerance
Quantitative Data - correct answer Data that deals with objective things like assets and
liabilities.
2 types of Biases - correct answer Cognitive Biases: Decision making errors on well
known concepts that may or may no be correct
Emotional Biases: impulsive based feelings of individuals when a choice is made
Illusion of Control - correct answer When you believe you can control the outcome of
an event when you cannot
Money Illusion - correct answer When people believe money will hold its same value
over the course of time.
Conservatism Bias - correct answer Not changing your belief even with the presence
of new information
Mental Accounting - correct answer When a client mentally separates their money into
different accounts meant for different purposes
self-attribution bias - correct answer A bias in which people take personal credit for
successes and attribute failures to external factors outside the individual's control.
Monitoring progress and updating - correct answer During the monitoring progress and
updating step, the planner periodically reviews the performance of a client's
investments. LO 1-3
Potential problems that might interfere with clients achieving their objectives are
identified in which of the following steps in the financial planning process?
Preparedness Baseline Exam Knowledge Questions with
Expertly Written Financial Solutions 2025/2026
Self-Control Bias - correct answer Poor financial decisions are made for immediate
gratification
status quo bias - correct answer comfort with the existing situation and unwilling to
make changes even if it would benefit you.
Nondirective Counseling Skills - correct answer Encourages clients to reflect and
share their goals allowing a client to open up
Affinity Bias - correct answer Wanting to make decisions based on values and beliefs
Directive Counseling Skills - correct answer Planner guides the discussion in
presenting the ideas
Clarification - correct answer Ensures the planner understands the client, asking
questions to illustrate the clients point
Paraphrase - correct answer Rephrasing the clients statements and restating their
meanings
Summarizing - correct answer Briefly outlines the discussion, verifies the clients key
goals are being accounted
Reframing - correct answer Helps clients shift their perspective by considering things
from another viewpoint
,Explanation - correct answer Descriptive statement used to make somethin more
straightforward or understandable
Advice - correct answer Giving direction to a client. One of the most utilized directive
skills
Politeness and Sensibility - correct answer Behaving in a socially acceptable way and
responding thoughtfully to clients
Inclusion and Exclusion - correct answer Delivering messages to all clients to show
they are valued and not excluded individuals through technical language
Standards of Professional Conduct - correct answer I: Fiduciary Duty
II: Integrity
III: Competence
IV: Diligence
V: Professionalism
VI: Confidentiality
Financial planning CFPB Definition - correct answer a collaborative process that helps
maximize a Clients potential for meeting life goals through financial advice that
integrates relevant elements of the clients personal and financial circumstances
Comprehensive Financial Plan - correct answer a financial plan that incorporates a
clients full financial picture regarding retirement, insurance and estate planning needs
Targeted Financial Plan - correct answer a financial plan that only focuses on a
singular financial goal for a client such as saving for a down payment or education
savings for a child.
3 elements of setting up a financial goal - correct answer Purpose, Timeframe, Amount
, Qualitative Data - correct answer Data that covers the client side of finance ie. goals,
rapport, values, belief and risk tolerance
Quantitative Data - correct answer Data that deals with objective things like assets and
liabilities.
2 types of Biases - correct answer Cognitive Biases: Decision making errors on well
known concepts that may or may no be correct
Emotional Biases: impulsive based feelings of individuals when a choice is made
Illusion of Control - correct answer When you believe you can control the outcome of
an event when you cannot
Money Illusion - correct answer When people believe money will hold its same value
over the course of time.
Conservatism Bias - correct answer Not changing your belief even with the presence
of new information
Mental Accounting - correct answer When a client mentally separates their money into
different accounts meant for different purposes
self-attribution bias - correct answer A bias in which people take personal credit for
successes and attribute failures to external factors outside the individual's control.
Monitoring progress and updating - correct answer During the monitoring progress and
updating step, the planner periodically reviews the performance of a client's
investments. LO 1-3
Potential problems that might interfere with clients achieving their objectives are
identified in which of the following steps in the financial planning process?
