CIC Assessing Client Investment Goals 4

Question 1

Which life stage typically involves the HIGHEST tolerance for investment risk?

Accepted Answer

Early career, ages 25–35, with a long time horizon

Answer

Early career investors have the longest time horizon to recover from losses, supporting higher equity allocations.

Question 2

A client's investment policy states a real return objective of 4%. If inflation is 3%, what nominal return must the portfolio generate?

Accepted Answer

7%

Answer

Nominal return ≈ real return + inflation = 4% + 3% = 7%.

Question 3

Which of the following client goals is MOST likely to be funded with a dedicated, lower-risk allocation regardless of the client's overall portfolio risk tolerance?

Accepted Answer

Emergency fund covering 6 months of expenses

Answer

Emergency funds must be safe and liquid regardless of overall risk tolerance because they may be needed at any time.

Question 4

An advisor discovers a client's portfolio is invested in a concentrated position of employer stock representing 70% of net worth. The most immediate goal-assessment concern is:

Accepted Answer

Unsystematic risk exposure undermining diversification and financial security

Answer

A 70% concentration in a single employer's stock creates extreme unsystematic risk that jeopardizes the client's financial goals.

Question 5

When prioritizing multiple client goals, which framework ranks goals from survival (basic needs) to aspirational (nice-to-have)?

Accepted Answer

Goal hierarchy or needs-based framework

Answer

A goal hierarchy prioritizes essential needs (housing, retirement income) before aspirational goals (vacation home, luxury travel).

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Assessing Client Investment Goals 4