CIC Assessing Client Investment Goals 5

Question 1

A client receives a $500,000 inheritance and wants to invest it 'safely.' To properly assess goals, the advisor should FIRST:

Accepted Answer

Explore the client's specific financial goals, time horizon, and what 'safely' means to her

Answer

The word 'safely' is vague and must be clarified through discovery of specific goals, time horizon, and risk tolerance before any allocation is made.

Question 2

Which scenario describes a client with HIGH liquidity needs that must be reflected in the portfolio?

Accepted Answer

Small business owner with irregular monthly income and unpredictable business expenses

Answer

Irregular income and unpredictable business expenses create ongoing liquidity demands that must be reflected in the portfolio's cash allocation.

Question 3

A client's IPS should be reviewed and potentially updated when which of the following occurs?

Accepted Answer

A major life event such as divorce, job loss, or inheritance

Answer

Major life events change a client's financial situation, goals, or risk tolerance, triggering a need to revise the IPS.

Question 4

A 45-year-old client has a $1.5M portfolio but $900,000 in mortgage and student loan debt. How should the advisor incorporate this when assessing goals?

Accepted Answer

Net worth and debt service obligations reduce effective investable assets and risk capacity

Answer

Liabilities reduce net wealth and increase cash flow demands, directly constraining risk capacity and portfolio strategy.

Question 5

Which method BEST helps a client understand the trade-off between spending today and achieving a long-term retirement goal?

Accepted Answer

Running a financial planning projection showing how monthly savings affect retirement wealth

Answer

A forward-looking projection connects today's savings decisions directly to future retirement wealth, making the trade-off concrete and actionable.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Assessing Client Investment Goals 5