FIN 430 Chapter 1 Homework

During your meeting with your client, Hayden Doyle, you recommended he purchase a personal liabilityumbrella policy (PLUP). Which part of the financial planning process were you engaged in?

- Monitoring Progress and Updating.

- Implementing the Financial Planning Recommendations.

- Presenting the Financial Planning Recommendations.

- Identifying and Selecting Goals.

Presenting the Financial Planning Recommendations.

Your suggestion to purchase a new insurance policy falls under Step 5 (Presenting the Financial PlanningRecommendations) of the financial planning process. It is not until the new policy is actually purchasedthat you move on to the Implementing the Financial Planning Recommendations step.

Financial planners earn compensation in the form of:

1. A percentage of assets managed.

2. An hourly rate or fee.

3. A commission on investment and insurance products sold.

- 1 only

- 1 and 2

- 1, 2, and 3

- 2 only

1, 2, and 3

Financial Planners can utilize any of these methods or a combination of several to earn compensation.

Tiffany Evans, a medical doctor and prospective client, has come to your office for the first time. Which isthe most appropriate way to greet her?

- "Welcome to my office."

- "Welcome to my office, Ms. Evans."

- "Welcome to my office, Dr. Evans."

- "Hi. Tiffany. Welcome to my office

"Welcome to my office, Dr. Evans."

You should always greet new clients with appropriate salutations. Your goal is to make the client feel atease with you and utilizing the client's formal salutation will help. This formality can be relaxed later inthe relationship if the client is more comfortable with first names.

Maria Chen has been a client of yours for many years. In your quarterly meeting with Maria, you evaluate her retirement portfolio performance and ensure that progress is being made as expected.Which part of the financial planning process are you engaged in?

- Monitoring Progress and Updating.

- Developing the Financial Planning Recommendations.

- Understanding the Client's Personal and Financial Circumstances.

- Implementing the Financial Planning Recommendations.

Monitoring Progress and Updating.

Once the plan's recommendations have been implemented it is important to regularly revisit the financialplan to monitor its progress. If adjustments need to be made, the financial planning process may need to start over at Step 1: Understanding the Client's Personal and Financial Circumstances (gathering client data).

Your client, Donald, provides you with his tax returns from the previous year.

Which of the following stages of the financial planning process is the planner engaged?

1. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action

2. Monitoring Progress and Updating

3. Identifying and Selecting Goals

4. Understanding the Client's Personal and Financial Circumstances

5. Implementing the Financial Planning

6. Presenting the Financial Planning Recommendations

7. Developing the Financial Planning Recommendations

- 7

- 2

- 1

- 4

4

Collecting tax returns is a key component in the Understanding the Client's Personal and Financial Circumstances(gathering client data) step.

Which of the following is usually included in an engagement letter?

1. Defined parties to the agreement.

2. Description of the fees and costs.

3. Time horizon for the work to be completed.

- 2 only

- 1, 2, and 3

- 1 and 2

- 2 and 3

1,2, and 3

During their meeting with you, Johnny and June call the benefits office to adjust their tax withholding tobetter suit their financial needs.

Which of the following stages of the financial planning process is the planner engaged?

1. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action

2. Monitoring Progress and Updating

3. Identifying and Selecting Goals

4. Understanding the Client's Personal and Financial Circumstances

5. Implementing the Financial Planning

6. Presenting the Financial Planning Recommendations

7. Developing the Financial Planning Recommendations

- 7

- 1

- 2

- 5

5

The action taken by Johnny and June to adjust their financial plan indicates they are in the Implementation step of the financial planning process.

Which of the following is most likely to take place in the Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action step?

- You provide your client with a description of the fees and costs of your financial planning services.

- After meeting with David, you prepare his current financial statements.

- During your meeting with Alexis, she provides you with several documents including her employee benefits information and bank statements.

- In your meeting with Rosie, you sell her a new life insurance policy.

After meeting with David, you prepare his current financial statements.

Preparing and evaluating financial statements takes place in the Analyzing the Client's Current Course ofAction and Potential Alternative Courses of Action (analyze and evaluate) step. Option B is Implementing the Financial Planning Recommendations, option C is Understanding the Client's Personal and Financial Circumstances (gathering client data), and Option D takes place in the preliminary step where the relationship with the client is established and defined.

During your meeting with Jeff, you provide him with three education saving plans to choose from.

Which of the following stages of the financial planning process is the planner engaged?

1. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action

2. Monitoring Progress and Updating

3. Identifying and Selecting Goals4. Understanding the Client's Personal and Financial Circumstances

5. Implementing the Financial Planning

6. Presenting the Financial Planning Recommendations

7. Developing the Financial Planning Recommendations

- 6

- 4

- 2

- 1

6

After analyzing and evaluating the client's financial status, in the developing step the planner will review and narrow down a large number of potential alternatives. The planner will then present the selected alternatives and recommended course of action to the client in the Presenting the Financial Planning Recommendations step.

All of the following are examples of qualitative information that should be collected by the financial planner EXCEPT:

A. Risk tolerance

B. Client age and number of children

C. General attitude towards spending

D. Education Goals

Client age and number of children