Chapter 1 Flashcards
What’s a heuristic?
Mental shortcut, meaning NO careful analysis.
Investment profits are the result of good skill, losses are not your fault, what am I?
Selt attrition/Overconfidence bias
Does Media bias exist?
NO
Scenario Analysis, AKA Monte Carlo. Evaluate present or future?
Future
Young couple, low net worth, has a kid, paying off student loans. Should you talk to them about estate planning?
Estate doesn’t mean 40 or 50 years from now at death, it could be tomorrow, that kid needs safety net.
According to the CFP Board, how often should a client’s financial plan be monitored?
A. Every 3 months
B. Every 6 months
C. Annually
D. As deemed appropriate by the planner and the client
D
But it’s uncommon for it to be that way in the industry. Usually once-twice a year.
What types of specific information should be gathered in the planning process in regards to the client’s life insurance contracts?
I. Retirement account values
II. Property insured
III. Premium and dividend options IV. Policyloans
V. Ownership
A. All of the above
B. II, III, IV, V
C. III, IV, V
D. III, IV
E. I, II, III
LIFE INSURANCE, not II
III, IV, V
Dr. Walters, age 64, wants to retire next year. He would like a retirement projection. He is asking for an unrealistic retirement income payout based on all his usable assets. In order to meet his projections, you will have to use very high return assumptions. What would a CFP® professional most likely do?
A. Do nothing
B. Run the projections using only conventionally accepted return assumptions
C. Run the projections using both conventionally accepted return assumptions and necessary assumptions
to meet his required retirement income payout
D. Terminate the engagement
B
Completing the data survey on the client’s family members (family tree) allows the financial planner to determine which of the following?
I. The potential life expectancy of the client
II. The insurability of the client
III. The special needs of the client’s family members
IV. Thenetworthoftheclient
A. I, II, III
B. I,II
C. I, II, IV
D. II, III
E. III, IV
A
Learning about a client’s health should help the financial planner determine which of the following?
I. Retirement needs
II. Life insurance needs
III. Disability needs
IV. Estate tax consequence
A. All of the above
B. I, II
C. II, Ill
D. Ill, IV
All
In the gathering-client-data step of financial planning process, there are two types of data. Which of the following is an example of qualitative data?
A. Client’s date of birth
B. Amounts invested in stocks and bonds
C. Client would like to retire by age 65
D. Names of financial advisors
E. Copy of ILIT
C
