H.65 Client and planner attitudes, values, biases

Question 1

What is the main reason for a client to seek a financial planner’s services?

A. To have someone to manage their money
B. To have an expert provide them with financial advice
C. To make their money work harder for them
D. All of the above

Answer 1

B. To have an expert provide them with financial advice

H.65 Client and planner attitudes, values, biases

Question 2

Which of the following is NOT a bias that can affect financial decision-making?

A. Confirmation bias
B. Overconfidence bias
C. Herd mentality bias
D. All of the above are biases that can affect financial decision-making

Answer 2

D. All of the above are biases that can affect financial decision-making

H.65 Client and planner attitudes, values, biases

Question 3

How can a financial planner help mitigate the effects of cognitive biases on a client’s financial decision-making?

A. By providing unbiased advice
B. By educating the client about cognitive biases
C. By helping the client understand their own biases
D. All of the above

Answer 3

D. All of the above

H.65 Client and planner attitudes, values, biases

Question 4

Which of the following is NOT an example of a client’s values that may impact their financial decisions?

A. A desire for financial security
B. A desire to leave a financial legacy for their family
C. A desire to keep up with the latest fashion trends
D. A desire to support charitable causes

Answer 4

C. A desire to keep up with the latest fashion trends

H.65 Client and planner attitudes, values, biases

Question 5

Which of the following is an example of a confirmation bias that may affect a client’s financial decision-making?

A. A client only reads financial news from sources that confirm their existing beliefs
B. A client seeks out financial advice from a variety of sources
C. A client always makes decisions based on the latest financial trends
D. A client seeks out opinions that differ from their own

Answer 5

A. A client only reads financial news from sources that confirm their existing beliefs

H.65 Client and planner attitudes, values, biases

Question 6

A client has recently inherited a large sum of money and is considering investing it in a high-risk stock. What bias may be affecting the client’s decision?

A. Overconfidence bias
B. Confirmation bias
C. Sunk cost fallacy bias
D. Herd mentality bias

Answer 6

A. Overconfidence bias

H.65 Client and planner attitudes, values, biases

Question 7

A client is hesitant to invest in a certain stock because their friend lost money investing in the same stock. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Overconfidence bias
C. Anchoring bias
D. Loss aversion bias

Answer 7

D. Loss aversion bias

H.65 Client and planner attitudes, values, biases

Question 8

A client is considering investing in a startup company founded by a close friend. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Overconfidence bias
C. Anchoring bias
D. Affinity bias

Answer 8

D. Affinity bias

H.65 Client and planner attitudes, values, biases

Question 9

A client is considering investing in a stock because it has been performing well over the past year. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Overconfidence bias
C. Sunk cost fallacy bias
D. Recency bias

Answer 9

D. Recency bias

H.65 Client and planner attitudes, values, biases

Question 10

A client is considering investing in a new product based solely on the recommendations of a single financial advisor. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Authority bias
C. Sunk cost fallacy bias
D. Availability bias

Answer 10

B. Authority bias

H.65 Client and planner attitudes, values, biases

Question 11

A client is hesitant to invest in a socially responsible mutual fund because they believe it may underperform compared to other mutual funds. What bias may be affecting the client’s decision?

A. Overconfidence bias
B. Anchoring bias
C. Confirmation bias
D. Sunk cost fallacy bias

Answer 11

B. Anchoring bias

H.65 Client and planner attitudes, values, biases

Question 12

A client is considering investing in a new startup company because it is run by a well-known entrepreneur. What bias may be affecting the client’s decision?

A. Recency bias
B. Affinity bias
C. Authority bias
D. Sunk cost fallacy bias

Answer 12

C. Authority bias

H.65 Client and planner attitudes, values, biases

Question 13

A client is hesitant to invest in a particular mutual fund because it has a higher expense ratio than other mutual funds. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Sunk cost fallacy bias
C. Anchoring bias
D. Availability bias

Answer 13

C. Anchoring bias

H.65 Client and planner attitudes, values, biases

Question 14

A client is considering investing in a stock because they have heard many positive news stories about the company’s products and services. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Availability bias
C. Overconfidence bias
D. Sunk cost fallacy bias

Answer 14

B. Availability bias

H.65 Client and planner attitudes, values, biases

Question 15

A client is hesitant to invest in a particular stock because they had a negative experience with a previous investment in the same industry. What bias may be affecting the client’s decision?

A. Recency bias
B. Loss aversion bias
C. Availability bias
D. Anchoring bias

Answer 15

A. Recency bias

H.65 Client and planner attitudes, values, biases

Question 16

A client is considering investing in a stock because they believe the company’s products align with their personal values and beliefs. What bias may be affecting the client’s decision?

A. Affinity bias
B. Confirmation bias
C. Overconfidence bias
D. Availability bias

Answer 16

A. Affinity bias

H.65 Client and planner attitudes, values, biases

Question 17

A client is hesitant to invest in a particular mutual fund because they do not understand the investment strategy. What bias may be affecting the client’s decision?

A. Confirmation bias
B. Anchoring bias
C. Overconfidence bias
D. Familiarity bias

Answer 17

D. Familiarity bias

H.65 Client and planner attitudes, values, biases

Question 18

A client is considering investing in a particular mutual fund because they have a personal connection with the fund manager. What bias may be affecting the client’s decision?

A. Affinity bias
B. Authority bias
C. Sunk cost fallacy bias
D. Availability bias

Answer 18

A. Affinity bias

H.65 Client and planner attitudes, values, biases

Question 19

Derek, a recent retiree, refuses to adjust his retirement investment portfolio due to his belief that the market will rebound to its former levels, even though analysts and financial data suggest otherwise. Which cognitive bias is Derek most likely exhibiting?

A. Hindsight bias
B. Anchoring bias
C. Confirmation bias
D. Status quo bias

Answer 19

D. Status quo bias.

H.65 Client and planner attitudes, values, biases

Question 20

Sarah has consistently invested in tech stocks because they have performed well for her in the past. She believes that because she has been successful with these investments before, she will continue to be in the future. Which cognitive bias is Sarah most likely exhibiting?

A. Confirmation bias
B. Representativeness heuristic
C. Availability heuristic
D. Gambler’s fallacy

Answer 20

B. Representativeness heuristic.

H.65 Client and planner attitudes, values, biases

Question 21

Tom, a client of yours, decides to sell his stocks in a successful company because he’s been hearing news about an economic downturn. Despite the company showing strong performance indicators, he is swayed by the recent negative news. Which cognitive bias is Tom most likely exhibiting?

A. Hindsight bias
B. Confirmation bias
C. Availability heuristic
D. Anchoring bias

Answer 21

C. Availability heuristic.

H.65 Client and planner attitudes, values, biases

Question 22

Rachel, a 45-year-old professional, firmly believes that she will not need to save for retirement as she expects to inherit a significant amount from her parents. This is despite your professional advice that it is not wise to depend solely on this expectation. What cognitive bias is Rachel most likely demonstrating?

A. Overconfidence bias
B. Self-serving bias
C. Anchoring bias
D. Confirmation bias

Answer 22

A. Overconfidence bias.

H.65 Client and planner attitudes, values, biases

Question 23

Mike, a long-time client, feels more regret for losses in his portfolio than satisfaction for an equal amount of gains. This fear of potential losses causes him to be overly cautious in his investments. Which cognitive bias is Mike most likely exhibiting?

A. Hindsight bias
B. Confirmation bias
C. Loss aversion
D. Anchoring bias

Answer 23

C. Loss aversion.

H.65 Client and planner attitudes, values, biases

Question 24

What is the number one fear clients have when meeting with a CFP® professional?

A. They will be judged
B. Their information will be leaked
C. They will be overcharged
D. They will be given wrong advice

Answer 24

A. They will be judged

H.65 Client and planner attitudes, values, biases