FP511 Final UPDATED Exam Questions
and CORRECT Answers
Which of the following activities would be appropriate if you were establishing and defining
the client-planner relationship or gathering information necessary to fulfill the engagement?
I. Collecting personal financial information
II. Inquiring about the number of dependents
III. Inquiring about the age or dates of birth of dependents
IV. Determining which stocks to purchase for the client's investment portfolio - CORRECT
ANSWER- The correct answer is I, II, and III. Establishing and defining the client-planner
relationship does not include determining which stocks or investments to purchase. This
occurs in the fourth phase of the financial planning process, developing the
recommendations.
Which of the following CFP® certificants would likely be considered to be engaged in
financial planning or the material elements of financial planning?
I. Lance, who reviews a life insurance sales brochure with his client, Arthur, and completes a
variable life insurance application
II. Nadia, who conducts comprehensive data gathering regarding Jason's investments, life
insurance, retirement plans, wills, and trusts and makes recommendations for him -
CORRECT ANSWER- The correct answer is II only. Because Nadia's services involve
several of the financial planning subject areas and she is involved in the elements of financial
planning, she is likely providing financial planning. Lance's service to Arthur is limited, and
the engagement would likely not be considered financial planning.
According to CFP Board Code of Ethics, Connor, a CFP® professional, is responsible for
which of the following?
I. Acting in the client's best interests
II. Avoiding or disclosing and managing conflicts of interest
III. Acting with honesty, integrity, competence, and diligence
IV. Maintaining the confidentiality and protect the privacy of client information - CORRECT
ANSWER- The correct answer is I, II, III, and IV. A CFP® professional must
Act with honesty, integrity, competence, and diligence.
Act in the client's best interests.
Exercise due care.
,Avoid or disclose and manage conflicts of interest.
Maintain the confidentiality and protect the privacy of client information.
Act in a manner that reflects positively on the financial planning profession and CFP®
certification.
Amanda, a CFP® professional, is enjoying an afternoon at her son's school playground when
she is approached by Tracy, a fellow parent and teacher at a local elementary school. Their
conversation covers specifics about Tracy's personal and financial situation, with emphasis on
a recommended investment strategy for her 403(b) account. Amanda is aware that she is
providing Financial Advice to Tracy. Identify the correct application of rules from the Code
and Standards based on Amanda and Tracy's interaction. - CORRECT ANSWER- The correct
answer is although only Financial Advice has been determined, Amanda must uphold her
Fiduciary Duty and must follow the Code of Ethics. As a CFP® professional, Amanda is
obligated to uphold the Code of Ethics. In addition, since Financial Advice is occurring,
Amanda must act as a Fiduciary, in the best interest of Tracy. The introduction of the Code
and Standards specifically states "The Code of Ethics applies at all times, and sets forth
principles that guide the behavior of CFP® professionals, with elaboration provided in the
Standards."
Bill and Sophia have recently retired and want to travel to Europe and then volunteer for local
mission work. They would also like to meet with Humphrey, their financial planner, to
discuss charitable contributions they would like to make to these local missions. Humphrey
should determine Bill and Sophia's life cycle phase to be - CORRECT ANSWER- The
correct answer is the distribution phase. The distribution/gifting phase begins subtly when a
couple realizes that they can afford to spend on things they never believed possible. The asset
accumulation and conservation/protection phases make this phase possible. For many people,
there is a period when they are being influenced by all three phases simultaneously, though
not necessarily to the same degree.
Whitney is designing her new email template which will reflect her recent certification as a
CFP® professional. Under her name, she has identified herself as a CFP™. In a tagline at the
bottom of the template, she advertises herself as a "CFP® expert." According to CFP Board's
guidelines regarding how the CFP®" marks may be used, which of the following is
CORRECT?
I. Whitney has appropriately identified herself as a CFP™.
II. Advertising herself as a CFP® expert is prohibited by CFP Board. - CORRECT
ANSWER- The correct answer is II only. Statement I is incorrect. Although, Whitney can
identify herself as a CFP®, it must be done behind her name, not under it. If Whitney wants
to identify herself under her name, she should do so as a ™. Statement II is correct. "CFP®"
must always be used with one of CFP Board's approved nouns ("certificant", "professional",
, "practitioner", "certification", "mark", or "exam") unless directly following the name of the
individual certified by CFP Board. Here, it can be used alone.
Maxine, age 57, would like to retire in 10 years. Currently, her debt is decreasing as her cash
flow and net worth are steadily increasing. Based on Maxine's current financial life cycle
phase, which of the following goals is she likely to have? - CORRECT ANSWER- The
correct answer is long-term goals, such as investing for retirement. Maxine is in the
conservation/protection phase of the financial life cycle. As such, her goals are likely longer-
term goals, such as investing to provide for future retirement income. In the accumulation
phase of the financial life cycle, clients have only limited discretionary income and, as a
result, they are likely to focus on short-term, cost-of-living goals. Finally, in the
distribution/gifting phase, estate planning and capital preservation are usually most important.
Blanca, a CFP® professional, has recently entered into a financial planning engagement with
Simon. As his financial planner, which of the following are Blanca's roles?
I. Analyzing Simon's current financial status
II. Assisting Simon in implementing the financial plan
III. Helping Simon identify financial goals and objectives - CORRECT ANSWER- The
correct answer is I, II, and III. The financial planner is responsible for analyzing clients'
financial status, assisting clients in implementing their financial plans, and making
recommendations based on the client's goals and objectives.
Candice has referred Rochelle, a CFP® professional, to her brother, Nelson. In their initial
meeting, Rochelle explains how she can help Nelson develop a comprehensive financial plan.
Which of the following would be Rochelle's roles in a client-planner relationship with
Nelson?
I. Assisting Nelson in identifying his goals
II. Analyzing Nelson's current financial status
III. Recommending strategies that will meet Nelson's business goals
IV. Providing documentation Rochelle needs to complete the financial plan - CORRECT
ANSWER- The correct answer is I, II, and III. Rochelle is responsible for helping Nelson
with identifying his goals and making recommendations based on those goals. She is also
responsible for analyzing Nelson's current financial status. Nelson has the duty to provide
documentation Rochelle needs to complete the financial plan.
In 2012, the average cost of a new home in Oakville was $150,000. In 2014 the average cost
rose to $210,000. Due to an economic downturn in 2017, the average cost of a new home fell
to $185,000, and the reaction to the decreased cost was positive, even though the new average
