FPQP Module Review Questions

Andrew has accumulated $15,000 in a savings account over the last few years and has earmarked that money to buy a new car. His furnace breaks and requires $9,000 in repairs. Andrew is reluctant to spend the money in his savings account to make the repairs because he wants to use that money for a new car. Instead, he puts the $9,000 repair bill on his credit card at an annual interest rate of 23%. What behavior is represented by this scenario?

This represents mental accounting. This is because Andrew’s irrational financial decision resulted from mentally putting his money into separate accounts based on the function of those accounts.

Emily is meeting with Ollie, a financial planner, to review his planning recommendations. During their discussion, Emily explains to Ollie her concern about not having enough money saved for retirement if she follows his recommendations. Meanwhile, Ollie is thinking about a call he received earlier in the day about minor issues his child is having in school. After a minute or so, he realizes he did not hear everything Emily has said to him. He would like to wrap up his meeting with Emily so he can call his son’s teacher. What is the most appropriate action for Ollie to take?

Ollie should apologize to Emily for being distracted and ask her to begin again, this time paying full attention to what she is saying. The financial planner has the responsibility to engage in effective communication. Ollie was not actively listening to what Emma was saying. Though he was distracted only for a minute or so, Emily may have said something significant during that time. Asking closed-ended questions or trying to act on what he’s already heard is not in the client’s best interest and would not be considered effective communication.

Match the counseling skill to its correct description

1. Summarizing: Allows the planner to verify that they are capturing clients’ key goals, values, and intentions at that point in the dialogue

2. Reframing: Helps clients shift their perspectives by considering circumstances, feelings, or thoughts from another viewpoint

3. Advice: One of the most obvious and utilized directive skills that planners use

4. Explanation: A descriptive statement used to make something more straightforward or understandable

5. Clarifying: Ensures the planner understands the client

6. Paraphrasing Return to Question: Involves rephrasing clients’ statements or restating their meaning

Explain the FPQP® Standards of Professional Conduct

The Standards of Professional Conduct are:

• Fiduciary Duty. At all times when providing financial advice to a client, act as a fiduciary. This includes a duty of loyalty that involves placing the best interests of the client above your interests or your firm’s interests and avoiding conflicts of interest.

• Integrity. Provide professional services with integrity, honor, fairness, and dignity and maintain client trust and confidence.

• Competence. Maintain an adequate level of knowledge and skill and effectively apply that knowledge while recognizing its limitations.

• Diligence. Respond to reasonable client inquiries in a timely manner.

• Professionalism. Comply with all laws and regulations as required and applicable, refraining from actions that bring dishonor to you or your profession.

• Confidentiality. Keep client information confidential, disclosing only when authorized or compelled by law.