CFP® Practice Question

Lisa, a CFP® professional, is working with her client, Tom. After gathering all necessary information about Tom’s financial situation, including his income, expenses, assets, liabilities, and risk tolerance, Lisa analyzes the data. She identifies that Tom’s current investment allocation is not aligned with his long-term retirement goals and recommends reallocating his portfolio to better match…

Sarah, a CFP® professional, is working with her client, Mark, who wants to ensure that his assets are distributed efficiently to his heirs and that his minor children are cared for in the event of his death. During their discussion, Sarah learns that Mark has a will but no other estate planning documents. Mark also…

Janet, a CFP® professional, is meeting with a prospective client, Thomas. During their conversation, Thomas mentions that he is looking for a financial advisor who can help him invest in sustainable and socially responsible funds. Janet does not have significant experience or expertise in sustainable investing but is eager to take on Thomas as a…

Emily, a CFP® professional, has her first meeting with a new client, David. During the meeting, Emily asks David about his financial goals, current assets, liabilities, and personal circumstances. She also explains the financial planning process, the services she provides, and the fees associated with her work. Which step of the 7-Step Financial Planning Process…

Mark and Jane, both 40 years old, have two young children and are concerned about protecting their family’s financial security in case of unexpected events. Mark earns $100,000 annually, while Jane stays home to care for their children. They currently have $50,000 in savings and a mortgage balance of $300,000. Mark has group term life…

John, a 45-year-old professional, recently inherited $100,000. He has no immediate need for the funds and wants to invest the money to help secure his retirement, which he plans for at age 65. John has moderate risk tolerance and currently contributes the maximum allowable amount to his 401(k) each year. He wants a diversified investment…

A financial planner is working with a client, Lisa, who is 35 years old, earns $100,000 annually, and has expressed an interest in maximizing her retirement savings. Lisa’s employer offers a 401(k) plan with a 100% match up to 5% of her salary. She also has a Roth IRA and an emergency fund covering six…

Lisa, age 50, is considering withdrawing funds from her traditional IRA to pay for her daughter’s college tuition. She is concerned about the tax implications and potential penalties. Which of the following is the best advice to give Lisa? She can withdraw the funds penalty-free because the withdrawal is for higher education expenses, but she…

Mary, age 52, has $300,000 in her 401(k) and plans to retire at age 67. She currently contributes $15,000 per year to her 401(k), and her employer matches 50% up to 6% of her salary. Mary’s salary is $100,000, and she expects to earn a 7% annual return on her investments. She wants to ensure…

John and Sarah are married, both 40 years old, and file jointly. They have two children, ages 8 and 12, and are in the 24% federal tax bracket. They want to save for their children’s college education and have asked you for advice. They estimate each child will need $40,000 per year for four years,…