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Client Relations and Practice Management Flashcards

6 cards from real Financial Advisor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Client Relations and Practice Management flashcards as text

  1. Which professional certification is administered by the CFP Board and requires candidates to demonstrate competency in financial planning across multiple domains?

    Answer: CFP (Certified Financial Planner)

    The CFP designation is awarded by the CFP Board to advisors who complete required education, pass the CFP exam, meet experience requirements, and adhere to the CFP Board's Code of Ethics.

  2. A client asks their financial advisor to guarantee a specific investment return. The advisor should:

    Answer: Explain that investment returns cannot be guaranteed and set realistic expectations

    Guaranteeing specific investment returns is prohibited as it constitutes a misleading representation; advisors must set realistic expectations about risk and return.

  3. The primary goal of a comprehensive financial plan is to:

    Answer: Align a client's financial resources and strategies with their life goals and values

    A comprehensive financial plan integrates all aspects of a client's financial life—investments, taxes, insurance, estate planning—to achieve their personal goals.

  4. Which FINRA rule requires broker-dealers to establish policies to identify customers who may be victims of financial exploitation?

    Answer: FINRA Rule 2165

    FINRA Rule 2165 allows broker-dealers to place temporary holds on disbursements when they reasonably believe a customer is being financially exploited.

  5. A client insists on concentrating 80% of their portfolio in a single stock they believe is a sure winner. The advisor's most appropriate response is to:

    Answer: Discuss the risks of concentration, document the client's decision, and implement if they insist

    Advisors must educate clients about risks, document the discussion, and ultimately respect client autonomy for their own accounts while ensuring informed consent.

  6. Which of the following best describes the 'financial planning pyramid'?

    Answer: A hierarchy beginning with financial foundation (insurance, emergency fund) before building investment wealth

    The financial planning pyramid starts with foundational needs (protection, liquidity) at the base and progresses upward through savings, investment, and advanced planning.