Practice Test Geeks(CIC) Crisis Intervention Counselor Practice Test
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Assessing Client Investment Goals Flashcards

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  1. A 58-year-old client wants to retire at 62 with $80,000 annual income. She has $600,000 saved and expects $24,000/year from Social Security. What is her approximate annual portfolio withdrawal need?

    Answer: $56,000

    She needs $80,000 total minus $24,000 Social Security = $56,000 from her portfolio annually.

  2. Which factor most directly determines a client's ABILITY to take investment risk?

    Answer: Financial capacity to absorb losses

    Ability to take risk is determined by financial capacity — income, assets, liabilities, and ability to recover from losses.

  3. A client states she is 'comfortable with moderate risk' but becomes anxious when her portfolio drops 5%. This conflict signals the advisor should:

    Answer: Rely on the behavioral response, not the stated preference

    Behavioral responses to actual losses are more reliable indicators of true risk tolerance than self-reported comfort levels.

  4. Which of the following best describes a 'goal-based' investment approach?

    Answer: Allocating separate portfolios to specific life goals with tailored risk levels

    Goal-based investing segments assets by distinct goals — such as retirement, education, or legacy — each with appropriate risk and time horizon.

  5. A client has a 20-year investment horizon but says he cannot sleep when markets fall. How should this tension be resolved?

    Answer: Design a portfolio reflecting the lower of his time horizon capacity or psychological tolerance

    The portfolio should reflect the binding constraint — whichever of time horizon or risk tolerance is more restrictive — to ensure the client stays invested.

  6. Which document is the primary record of an investment counselor's understanding of a client's goals, risk tolerance, and constraints?

    Answer: Investment Policy Statement (IPS)

    The IPS formally documents the client's objectives, constraints, and the agreed investment strategy.

  7. A widowed client, age 72, needs $3,000/month from her $400,000 portfolio with no other income. Her primary investment goal should be classified as:

    Answer: Capital preservation with income generation

    A 72-year-old dependent on portfolio withdrawals primarily needs capital preservation to sustain income without depleting assets too quickly.

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