CIC Assessing Client Investment Goals 2

Question 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?

Accepted Answer

$56,000

Answer

$80,000

Answer

$24,000

Answer

$104,000

Question 2

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

Accepted Answer

Financial capacity to absorb losses

Answer

Emotional tolerance for volatility

Answer

Investment time horizon

Answer

Knowledge of financial markets

Question 3

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

Accepted Answer

Rely on the behavioral response, not the stated preference

Answer

Override her anxiety and maintain moderate allocation

Answer

Increase equity exposure to help her get comfortable with volatility

Answer

Document only her stated preference for compliance

Question 4

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

Accepted Answer

Allocating separate portfolios to specific life goals with tailored risk levels

Answer

Maximizing total portfolio return regardless of spending needs

Answer

Selecting assets based solely on historical performance

Answer

Minimizing taxes across all investment accounts

Question 5

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

Accepted Answer

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

Answer

Ignore the psychological concern and invest for the 20-year horizon

Answer

Recommend cash equivalents to eliminate all anxiety

Answer

Defer the decision until market conditions improve

Question 6

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

Accepted Answer

Investment Policy Statement (IPS)

Answer

Form ADV Part 2

Answer

Suitability questionnaire

Answer

Account opening agreement

Question 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:

Accepted Answer

Capital preservation with income generation

Answer

Aggressive capital appreciation

Answer

Speculative growth

Answer

Tax minimization only