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

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

Question 2

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

Accepted Answer

Financial capacity to absorb losses

Answer

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

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

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

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

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

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

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

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Assessing Client Investment Goals 2