Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 3
Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 3
1. What is the primary purpose of ethical standards in financial planning?
a) To maximize profits
b) To quickly identify and eliminate unethical behavior
c) To impose unnecessary restrictions
d) To complicate decision-making processes
2. Who may oversee the work of a financial planner?
a) The client’s family members
b) Insurance agencies only
c) The financial planner’s professional firm
d) Government regulatory bodies
3.What term encompasses individuals or entities closely associated with a financial planner?
a) Unrelated parties
b) Independent contractors
c) Related parties
d) Business affiliates
4. What actions may automatically disqualify an individual from becoming a certified financial planner?
a) Loss of professional license due to failure to renew
b) A felony conviction for a violent crime within the last five years
c) Bankruptcy filings unrelated to financial crimes
d) Customer complaints from civil proceedings
5. Which of the following is NOT a duty of a financial planner?
a) Duty of loyalty
b) Duty of confidentiality
c) Duty of honesty
d) Duty of marketing
6. What is a key aspect of disclosing conflicts of interest?
a) Disclosing only to select clients
b) Fully disclosing all conflicts, regardless of material impact
c) Disclosing conflicts verbally only
d) Avoiding disclosure altogether
7. What is the primary objective of disclosing compensation structures to clients?
a) To confuse clients
b) To comply with legal requirements
c) To reduce transparency
d) To hide financial arrangements
8. What should financial planners prioritize when recommending professionals to clients?
a) Personal relationships
b) Professional competence and expertise
c) Hidden agreements for compensation
d) Financial incentives
9. In what scenario can a financial planner disclose client information without consent?
a) At the request of any third-party
b) In cases of government investigations
c) Only with written consent from the client
d) When the planner deems it necessary
10. What precaution should financial planners take to protect client information?
a) Leave sensitive documents in open areas
b) Share client information freely with colleagues
c) Utilize computer security measures
d) Disclose client information publicly
11. Which regulatory body oversees privacy regulations for financial planners?
a) Securities and Exchange Commission (SEC)
b) Federal Bureau of Investigation (FBI)
c) Financial Industry Regulatory Authority (FINRA)
d) Financial Planning Board
12. What must financial planners provide to clients regarding their services?
a) A summary of their vacation plans
b) A detailed description of the engagement scope
c) A list of personal hobbies
d) A summary of personal financial struggles
13. What is the key requirement regarding technology recommendations?
a) Avoid making recommendations altogether
b) Exercise reasonable judgment and care
c) Randomly select technology tools
d) Rely solely on client preferences
14. What action should financial planners avoid regarding client funds?
a) Borrowing money from clients
b) Investing in client-approved ventures
c) Consulting with clients before investing
d) Sharing profits with clients
15. What is the fundamental principle guiding financial planners’ conduct?
a) Maximizing personal gain
b) Full disclosure and transparency
c) Hiding information from clients
d) Ignoring ethical guidelines
16. What type of relationship should financial planners maintain with their clients?
a) Unprofessional and distant
b) Lax and informal
c) Professional and respectful
d) Deceptive and manipulative
17. What is the primary purpose of financial planning ethics?
a) To confuse clients
b) To maximize profits
c) To maintain trust and integrity
d) To avoid regulatory scrutiny
18. What should financial planners prioritize regarding client information?
a) Public disclosure
b) Confidentiality and privacy
c) Open sharing with colleagues
d) Ignoring client requests
19. Which action may disqualify an individual from taking the financial planner exam?
a) Participation in civil proceedings
b) Recent felony conviction for violent crimes
c) Loss of professional license due to non-payment
d) Minimal customer complaints
20. What is the ethical duty regarding conflicts of interest?
a) Conceal conflicts whenever possible
b) Fully disclose and manage conflicts
c) Minimize transparency
d) Exploit conflicts for personal gain
Answer Key:
1 b) To quickly identify and eliminate unethical behavior
2 c) The financial planner’s professional firm
3 c) Related parties
4 b) A felony conviction for a violent crime within the last five years
5 d) Duty of marketing
6 b) Fully disclosing all conflicts, regardless of material impact
7 b) To comply with legal requirements
8 b) Professional competence and expertise
9 b) In cases of government investigations
10 c) Utilize computer security measures
11 a) Securities and Exchange Commission (SEC)
12 b) A detailed description of the engagement scope
13 b) Exercise reasonable judgment and care
14 a) Borrowing money from clients
15 b) Full disclosure and transparency
16 c) Professional and respectful
17 c) To maintain trust and integrity
18 b) Confidentiality and privacy
19 b) Recent felony conviction for violent crimes
20 b) Fully disclose and manage conflicts
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