Financial Advisor Cheat Sheet 2026

The 30 highest-yield Financial Advisor facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which of the following must a financial advisor disclose to clients under Form ADV Part 2? → Material conflicts of interest
2. Which type of risk CANNOT be eliminated through diversification? → Systematic (market) risk
3. Which type of employer retirement plan allows employees to make pre-tax contributions and employers to make matching or profit-sharing contributions? → 401(k) plan
4. Which life insurance policy type combines a permanent death benefit with a cash value component that grows at a guaranteed interest rate? → Whole life insurance
5. The efficient market hypothesis (EMH) in its strong form states that: → All public and private information is fully reflected in stock prices
6. What activities are regulated and supervised by (FINRA) in the United States? → Brokerage firms
7. Which of the following is the difference between an investment's actual return and its predicted return? → Abnormal Return
8. What is 'churning' in the context of financial advisory compliance? → Excessive trading in a client account to generate commissions
9. Which document must an investment adviser deliver to a prospective client before or at the time of entering an advisory contract? → Form ADV Part 2 (brochure)
10. Which fundamental insurance principle holds that a policyholder cannot profit from an insurance claim beyond their actual financial loss? → Principle of indemnity
11. Which definition of disability in a disability income insurance policy is most favorable to the insured? → Own occupation definition
12. The step-up in basis at death means that inherited assets receive a new cost basis equal to: → The fair market value at the date of the decedent's death
13. Under IRC Section 101(a), life insurance death benefits paid to a named beneficiary are generally: → Received income-tax-free by the beneficiary
14. Which retirement plan is most commonly used by self-employed individuals and allows the highest contribution limits? → Solo 401(k)
15. What is the primary purpose of rebalancing a client's investment portfolio? → To restore the portfolio to its target asset allocation
16. An umbrella liability insurance policy is primarily designed to: → Provide additional liability coverage above the limits of underlying policies
17. A client wants to transfer retirement assets from one IRA to another without tax consequences. The safest method is: → Direct trustee-to-trustee transfer
18. Which of the following investment strategies reduces current taxable income by harvesting losses to offset capital gains? → Tax-loss harvesting
19. Which of the following best describes a 'soft dollar' arrangement in financial advisory practice? → Using client commission dollars to pay for research and brokerage services
20. A 'paid-up' life insurance policy means: → No further premiums are required and the policy remains in full force
21. The term "financial adviser" refers to who? → Provide advice
22. A Health Savings Account (HSA) can only be opened and funded by individuals enrolled in which type of health plan? → A High-Deductible Health Plan (HDHP)
23. Dollar-cost averaging is best described as: → Investing equal dollar amounts at regular intervals regardless of price
24. Which life insurance concept involves paying premiums for a limited number of years while maintaining lifetime coverage? → Limited pay whole life insurance
25. When using the human life value (HLV) approach to determine a client's life insurance need, the primary factor considered is: → The present value of the client's projected future earnings
26. Which of the following is a tax-efficient strategy for a high-income client with a large traditional IRA who wants to reduce future RMDs? → Converting portions of the traditional IRA to a Roth IRA in low-income years
27. There are several investing options, with the exception of: → Collateral securities
28. An investor in a 32% tax bracket holds a bond yielding 5%. What is the tax-equivalent yield of a municipal bond yielding 3.5%? → 5.15%
29. For Social Security retirement benefits, the full retirement age (FRA) for individuals born in 1960 or later is: → 67
30. Additionally, financial planners offer some information on? → Savings