CFP Technology & Digital Applications 5

Question 1

A client asks whether their robo-advisor account is SIPC-insured. Which statement is accurate?

Accepted Answer

SIPC protects customers of broker-dealer robo-advisors against firm failure, but does not protect against investment losses

Answer

SIPC protects brokerage customers if the firm fails by covering up to $500,000 in securities and cash, but it does not insure against market losses.

Question 2

A CFP wants to use predictive analytics to identify clients at risk of abandoning their financial plan. Which data source is MOST appropriate?

Accepted Answer

CRM behavioral data such as login frequency, meeting attendance, and response rates

Answer

Behavioral engagement signals from the firm's own CRM—like declining logins or missed reviews—are the most appropriate and privacy-compliant predictors of disengagement.

Question 3

Which factor primarily distinguishes a fee-based digital financial plan from a subscription-based model?

Accepted Answer

Fee-based plans typically charge a one-time project fee, while subscription models charge recurring fees for ongoing access and updates

Answer

A one-time fee-based digital plan covers a specific deliverable, whereas subscription pricing gives ongoing access to the planner and plan updates for a recurring fee.

Question 4

What does 'behavioral finance technology' refer to in a digital financial planning platform?

Accepted Answer

Tools that incorporate behavioral economics insights to nudge clients toward better financial decisions

Answer

Behavioral finance technology applies insights from psychology—like default enrollment and loss aversion framing—to guide clients toward savings and planning goals.

Question 5

A CFP is recommending a financial planning software platform to a small practice. Which security certification BEST indicates the vendor properly safeguards client data?

Accepted Answer

SOC 2 Type II report demonstrating ongoing operational security controls

Answer

A SOC 2 Type II report provides independent auditor verification of a vendor's security controls over an extended period, making it the strongest indicator of operational data security.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Technology & Digital Applications 5