CFP® Practice Question of the Week: Financial Planning

This question uses the same facts as the previous practice question: Harold and Mary Anne Miller are a married couple in their early 40s with three children, ages 7, 10, and 12. Harold earns $350,000 per year as General Counsel of a mid-sized IT firm and Mary Anne is a homemaker. They have major assets…

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CFP® Practice Question of the Week: Financial Planning

Harold and Mary Anne Miller are a married couple in their early 40s with three children, ages 7, 10, and 12. Harold earns $350,000 per year as General Counsel of a mid-sized IT firm and Mary Anne is a homemaker. They have major assets of $1,500,000 cash and $1,000,000 in stock options. They have done…

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CFP® Practice Question of the Week: Taxable Gifts

Kevin, a 55-year-old corporate executive, wants advice as to when he can retire. His current salary is $240,000 and he receives an annual bonus of $300,000; he also has annual stock options and restricted stock awards valued at $100,000. His employer contributes to a cash balance pension plan as and matches his contributions to a…

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CFP® Practice Question of the Week: Income Planning

A 56-year-old client becomes unemployed due to disability. The client tells a CFP® professional that he hopes to go back to work eventually, but is not sure when that might be. Until then, he needs to generate replacement income. His only available asset is his traditional 401(k) plan. What is the best way for the…

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CFP® Practice Question of the Week: Financial Planning

A client has a $1,200,000 portfolio consisting of the following four stocks:    $300,000 ABC @ 1.1 beta    $225,000 RTR @ 0.7 beta    $405,000 XYZ @ 0.3 beta    $270,000 PDQ @ 1.3 beta What is the beta of the portfolio as a whole?   0.8   0.85   0.91   1.0 CLICK TO REVEAL ANSWER Expand This question appeared…

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CFP® Practice Question of the Week: Social Security

Ron and his wife Susan, both 61 years of age, ask a CFP® professional to provide a recommendation on whether or not Susan should start to draw Social Security benefits when she first becomes eligible at age 62. Which of the following would be the least important to obtain in order to provide a recommendation?…

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CFP® Practice Question of the Week: Mortgage

A CFP® professional meets with two new clients who would like advice about their mortgage. In the review, the CFP® professional finds that their essential expenses exceed their income. Mortgage rates have come down significantly and they intend to refinance their current 30-year mortgage to a 15-year mortgage. Their payments will be higher than their current payment.…

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CFP® Practice Question of the Week: Retirement

During an annual review with Anna and Lawrence Harvey, a CFP® professional discusses their retirement objectives. Because of weak market performance over the past few years, it appears that they are no longer on track for retirement. How should the CFP® professional best direct discussion of this situation?   Tell the Harveys that they must increase their monthly…

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CFP® Practice Question of the Week: Sensitive Information

A CFP® professional observes that John and Barbara are constantly living a few steps ahead of their means. They assure the CFP® professional that they will reign in their spending, but their credit card balances continue to rise. All of the following are acceptable strategies EXCEPT:   Terminate the relationship with the clients   Document their inability to take…

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CFP® Practice Question of the Week: Tax Liability

Kevin’s non-qualified stock options are as follows: 2,000 shares: strike price $34 5,000 shares: strike price $30 Current stock price: $65 Kevin’s tax bracket: 42% (federal and state) Kevin has decided to exercise the above stock option awards, which will expire in the next 2 years. Assuming he exercises them today, what is his tax…

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