CIC - Certified Investment Counselor Assessing Client Investment Goals Questions and Answers

Question 1

A 35-year-old surgeon has a high income, significant savings, and a multi-decade time horizon until retirement.
However, during an initial consultation, she expresses extreme anxiety about stock market volatility and states she 'couldn't sleep at night' if her portfolio value dropped by more than 5%.
How should a Certified Investment Counselor (CIC) BEST characterize this client's risk tolerance?

Accepted Answer

High ability but low willingness to take risk.

Answer

Low ability and low willingness to take risk.

Answer

High ability and high willingness to take risk.

Answer

Low ability but high willingness to take risk.

Question 2

When constructing a client's Investment Policy Statement (IPS), which of the following constraints would specifically address a client's desire to exclude companies involved in the production of tobacco and fossil fuels?

Accepted Answer

Unique Circumstances

Answer

Liquidity

Answer

Legal and Regulatory

Answer

Time Horizon

Question 3

A retired couple, both age 72, state that their primary investment objective is to ensure their portfolio can fund their living expenses indefinitely while leaving the initial principal intact for their heirs. Which investment objective does this statement MOST accurately represent?

Accepted Answer

Capital Preservation

Answer

Total Return

Answer

Capital Appreciation

Answer

Speculation

Question 4

A new client couple, both in their early 50s, have two primary investment goals: 1) Aggressively grow a portfolio to fund a comfortable retirement in 15-20 years. 2) Set aside funds for a down payment on a vacation home they wish to purchase in 2 years. What is the MOST significant challenge a CIC faces in reconciling these goals?

Accepted Answer

The goals require conflicting time horizons and necessitate different levels of risk.

Answer

It is impossible to pursue both capital appreciation and capital preservation simultaneously.

Answer

The clients' tax bracket will make achieving both goals inefficient.

Answer

Selecting appropriate investments for a two-year time frame is overly complex.

Question 5

Which type of investment goal is MOST appropriately defined in real, inflation-adjusted terms?

Accepted Answer

A long-term retirement funding goal.

Answer

A speculative goal to triple an investment in a high-risk asset.

Answer

A short-term liquidity goal for an emergency fund.

Answer

An intermediate goal to save for a new car in three years.

Question 6

A client is the executor of an estate and must manage the estate's assets according to the terms of the deceased's will. The will stipulates that all assets must be managed under the state's Prudent Investor Act. This stipulation is an example of which type of investment constraint?

Accepted Answer

Legal and Regulatory

Answer

Tax Concerns

Answer

Liquidity Needs

Answer

Unique Circumstances