Question 1

Which of the following is not required for the disclosure of compensation?&#10;A) Amount of compensation.&#10;B) Method of compensation, except for the impact of indirect compensation.&#10;C) Noncash benefits, received by the member for referrals to other providers&#10;D) Time period of which compensation will be received.

Accepted Answer

The method of compensation, except for the impact of indirect compensation, does not need to be disclosed. The other options (amount of compensation, noncash benefits received for referrals, and time period of compensation) should be disclosed.

Question 2

In a personal financial planning engagement, a conflict of interest:&#10;A) Creates a need for client consent.&#10;B) Prohibits any objectivity.&#10;C) Results in termination of the engagement.&#10;D) Should not be disclosed to protect confidentiality.

Accepted Answer

A conflict of interest in a personal financial planning engagement should be disclosed to the client, and client consent should be obtained. This helps ensure transparency and helps manage any potential bias that the conflict of interest may cause. Prohibiting objectivity or terminating the engagement may not always be necessary, but full disclosure is necessary. Disclosing the conflict of interest would not violate confidentiality, as it is an important piece of information to share with the client to establish a trusting relationship.

Question 3

All of the following are types of Additional Engagements except:&#10;A) Discovery engagement.&#10;B) Implementation engagement.&#10;C) Monitoring engagement.&#10;D) Updating engagement.

Accepted Answer

A

Question 4

Which of the following is not a personal financial planning service?&#10;A) Charitable planning.&#10;B) Elder planning.&#10;C) Retirement planning.&#10;D) Income tax preparation.

Accepted Answer

Income tax preparation is generally considered an accounting or tax professional service rather than a personal financial planning service. Personal financial planning typically involves long-term strategies for managing personal finances, including planning for retirement, education, and other life events, rather than the annual task of preparing and filing taxes.

Question 5

An implementation engagement should include all of the following except:&#10;A) Description of limitations on the work performed.&#10;B) Frequency and time period of measuring the client's progress toward reaching the stated goals.&#10;C) Summary of recommended actions to be taken.&#10;D) Summary of the planning decisions being implemented.

Accepted Answer

The answer of An implementation engagement should include all of...

Question 6

A personal financial planning client expressing an attitude or a desire is an example of:&#10;A) Heuristics.&#10;B) Qualitative data.&#10;C) Quantitative Data.&#10;D) Socratic Questioning.

Accepted Answer

A personal financial planning client expressing an attitude or desire is an example of qualitative data, which involves subjective information such as opinions, feelings, and attitudes. Heuristics are mental shortcuts or rules of thumb used to make quick decisions, while quantitative data involves numerical measurements and objective information. Socratic questioning is a method of inquiry used to explore beliefs and assumptions.

Question 7

The construction of a dream home is an example of:&#10;A) Cash flow category.&#10;B) IRC Section 121.&#10;C) Life planning goal.&#10;D) Personal financial planning.

Accepted Answer

The construction of a dream home falls under life planning goals as it is a desire for personal fulfillment rather than strictly financial objectives.

Question 8

How many steps are required in the PFP process?&#10;A) Two.&#10;B) Four.&#10;C) Seven.&#10;D) Eleven.

Accepted Answer

The answer of How many steps are required in the...

Deck 1: Personal Financial Planning