Exam (elaborations)
CRPC (2).
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Exam of 20 pages for the course CRPC Sample Tests at CRPC Sample Tests (CRPC (2).)
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CRPCThe Department of Labor requirements regarding advice given to retirement investors
will most likely - ANS-INCREASE CLIENT EXPECTATIONS OF ADVISERS AND PUT
DOWNWARD PRESSURE ON FEES
If asking you to solve for an annuity due where payments occur at the beginning of the
period - ANS-you would set calculator for BEG.
identifying specific funds in which to invest are discussed on? - ANS-Specific
investments are not discussed until step four of the planning process, when the planner
develops and presents the retirement plan
The client's ability to purchase insurance or investments is reviewed - ANS-in step three
of the planning process, in which an analysis and evaluation of financial status takes
place.
During the data gathering process the planner should identify - ANS-the clients
retirement account balances, income sources and amounts and determine his or her
risk tolerance.
Net worth is defined as - ANS-assets minus liabilitie
Net cash flow is calculated by - ANS-subtracting total cash outflows from total cash
inflows.
College funding is considered a - ANS-a lifestyle goal
Foundation goals are those that - ANS-contribute to more basic living needs such as
food, insurance, and emergency funds. The coverage of risk exposures is also
considered a foundation financial goal.
You have completed all of the activities involved in the data gathering step of the
financial planning process, including obtaining sufficient quantitative information and
documents. What is the next step of the process - ANS-Analyzing and evaluating the
client's information. Once you have gathered all of the appropriate data needed, the
next step is to analyze it.
,With some exceptions, most categories of living expenses, such as transportation,
clothing, and housing - ANS-decrease during retirement years.
Some expenses may even increase during retirement years. - ANS-such as travel and
medical
It is true that Social Security benefits may? - ANS-may increase for people who work
past their Social Security full retirement age. Additionally, wages and salaries earned
during retirement will obviously increase retirement income.
longer life spans will result - ANS-in a need for more retirement income
If client retirement funds are insufficient to meet goals - ANS-gifts to children should
decrease.
Delaying retirement - ANS-will decrease the need for retirement income.
When a client's funds are insufficient to attain retirement goals, it is appropriate for the
planner to suggest - ANS-retiring later than initially planned, performing part-time work
during retirement, spending less and saving more during retirement.
During retirement, CLIENT wants to receive $50,000 at the end of each year for the rest
of his life. To calculate the amount that she will need to save, you need to solve for -
ANS-ordinary annuity—set calculator at end. You do need to set the calculator in END
mode and solve for ordinary annuity.
If asked to solve for an annuity due (where payments occur at the beginning of the
period) - ANS-you would set calculator for BEG.
client wants to retire the 1st of next year. She wants to receive monthly retirement
income payments on the 1st day of each month. To solve the amount of capital required
to provide her the income she wants, you need to solve for - ANS-annuity due—set
calculator at begin. you would need to solve for annuity due, and set the calculator at
begin.
When gathering data during the retirement planning process, financial goals should be
quantified in dollar amounts and which of the following - ANS-established time frames
When saving on a level basis - ANS-the inflation rate does not come into play if the
question notes on a level basis.
, When assisting the client in establishing realistic goals, the planner - ANS-should help
define financial goals so that they are quantified in dollar amounts and have established
time frames instead of remaining general in nature.
Goals may be organized based on - ANS-type, ownership, and priority but those are not
ways of quantifying them and making them more specific.
by type of goal
A statement of financial position shows - ANS-a client's net worth, which is defined as
assets minus liabilities, as of a specific date.
A cash flow statement shows - ANS-a client's net cash flow or deficit over a period of
time usually one year.
Income replacement percentage is another name for - ANS-"replacement ratio" and is
used as a rough guide in determining the amount of income needed in retirement
relative to pre-retirement income.
One of the purposes of lifelong wealth accumulation - ANS-is to provide for a
comfortable retirement.
Industry standards typically consider expenses lasting beyond ____ - ANS-1 year to be
long-term liabilities.
Long-term liabilities are - ANS-those that are payable over a period greater than one
year. Mortgage notes and auto loans are examples that fall into this category.
Which of the following types of information are important to gather from a client prior to
developing retirement planning recommendations? - ANS-his or her desired age of
retirement, the client's assumption for the long-term rate of inflation, investments the
client prefers not to use, number of children client and spouse intend to have
the age of retirement is required for - ANS-determining investment and life insurance
needs.
Economic assumptions need - ANS-to be gathered from the client. While the planner
may help refine the assumption, it is nonetheless the client's assumption that is needed.
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